Privatisation of British Gas

Robingaselec

Is it just me or has privatisation increased the costs of gas dramatically. Before privatisation British Gas, was the only supplier of gas and had great bargaining powers when negotiating the purchase of gas from countries like Norway.
After privatisation there are now many gas companies negotiating with suppliers of gas - simple economics show the more buyers of gas in the market will push prices higher.

Also, there is a duplicity of manpower within the industry over 10 companies with offices and staff all trying to sell gas contracts to a captive audience. Hence, all the economies of scale are lost.

French consumers must be elated that EDF has not gone the same route as British Gas. It would be interesting see a gas price comparison between the two countries

bob_bank_spanker

Robingaselec wrote: »

Is it just me or has privatisation increased the costs of gas dramatically. Before privatisation British Gas, was the only supplier of gas and had great bargaining powers when negotiating the purchase of gas from countries like Norway.
After privatisation there are now many gas companies negotiating with suppliers of gas - simple economics show the more buyers of gas in the market will push prices higher.

Also, there is a duplicity of manpower within the industry over 10 companies with offices and staff all trying to sell gas contracts to a captive audience. Hence, all the economies of scale are lost.

French consumers must be elated that EDF has not gone the same route as British Gas. It would be interesting see a gas price comparison between the two countries

Robingaselec wrote: »

simple economics show the more buyers of gas in the market will push prices higher

Does it?

http://www.energy.eu/

Scroll down for natural gas prices. The French pay about 40% more, I doubt they're elated.

steve-L

A lot of things have increased the price of gas, privatisation certainly hasn't made things any easier though.

Supply.... The UK's own supply has dwindled thus we buy more.... but this is also now locked into European gas prices....

Holland's supply is all but dry.... so they import more and push up the price.

A lot of our gas needs mixing with higher calorific value gas (such as we get from Norway)

Coal usage in power generation has dropped to almost nothing thus meaning we burn more gas to generate electricity

The UK has crap incentives to land gas in the UK.... its cheaper for production companies to export to Europe.

Replacement of coal generated electricity was meant to be by nuclear

Stricter environmental controls make it more expensive to produce

More stringent HSSE makes it more expensive to produce and everything from then on. The costs involved with forcing everyone at the companies to hold handrails, use lids on cups and even removing cocktail sticks from rollmop herrings (yes really) is passed on. Not to mention the costs of firing the employees who forget to put a lid on the cup of lukewarm coffee or walk down 3 steps without using the handrail

Introduction of LNG providing a new market for gas and increasing the futures market

As for France, they have very little domestic gas...

Overall it's hard to do a cost comparison.... when I was a kid then cheap heating came from coal, cooking from gas and light from electricity.... without coal more gas is being used domestically.

However, the easy fact is that all the middlemen take a cut and when British Gas was split up each part had to be given a profit so now lots of companies are looking to make a profit .....

At the end of the day there is still no real choice.... so what did we gain from privatisation other than the one off it made the government look like it had actually increased GDP as opposed to sold a national asset off cheap?

encoderX

It's ridiculous to even attempt to compare then with now as so much has changed inc. attitudes.

The North sea gas field depleted, environmental issue now prevent coal ... more demand from costlier resources ... times have changed my friend!

If you break down the costing you'll soon realise it's the government (right or wrong) pushing up the price to implement environmental rules.

Would this still happen if it was government owned?

I seriously doubt it as it'd be a vote loser & governments love to pass the buck to save themselves ;-)

IMHO the gas co's get too much flack from ignorant & or selfish people.

It'd be good if everything was free but, people would only abuse it if it were possible lol

My 2 cents worth :-D

Terrylw1

No, because you are assuming that the rest of the world has also remained on hold.

You are also assuming:

- we now have so many departments because we have so many companies. This hasn't changed at all because staffing levels match volume of work. So, you adjust your staffing levels downwards because you portfolio is % of market share. Also, if you look at elec, each region had all the same departments so really we have less departments now but they are bigger.

- suppliers are implementing new billing systems to move (well try and catch up a bit) with technology. This would happen regardless of who owned who.

- processes were often a bit of shambles in "the good old days" and the fallout of 1998 still affects suppliers now.

- these companies were not very efficient. They didn't need to be...you couldn't vote with your feet. Do we believe that energy prices wouldn't increase to tackle the governments deficit issues? It would be another stealth tax and it would easily be exploited.

steve-L

Terrylw1 wrote: »

No, because you are assuming that the rest of the world has also remained on hold.

You are also assuming:

- we now have so many departments because we have so many companies. This hasn't changed at all because staffing levels match volume of work. So, you adjust your staffing levels downwards because you portfolio is % of market share. Also, if you look at elec, each region had all the same departments so really we have less departments now but they are bigger.

- suppliers are implementing new billing systems to move (well try and catch up a bit) with technology. This would happen regardless of who owned who.

- processes were often a bit of shambles in "the good old days" and the fallout of 1998 still affects suppliers now.

- these companies were not very efficient. They didn't need to be...you couldn't vote with your feet. Do we believe that energy prices wouldn't increase to tackle the governments deficit issues? It would be another stealth tax and it would easily be exploited.

No but people could vote at the ballot box!
Inefficient is not all bad...... it creates employment for a start.... and that stimulates the economy....

What is shocking is that in 2012 people are still dying due to lack of affordable heating and many others are living uncomfortable lives with cold or damp houses and scared of the next utility bill.

[Deleted User]

There are also added costs of all the supplier switching ( approx £30 a go ) and extra complaints compared to the old days which all have a cost which is passed on in the end

grahamc2003

sacsquacco wrote: »

There are also added costs of all the supplier switching ( approx £30 a go ) and extra complaints compared to the old days which all have a cost which is passed on in the end

£30?

Most people who switch pick up a £70 cashback!

I reckon the cost is closer to £300 per switch rather than £30.

Terrylw1

steve-L wrote: »

No but people could vote at the ballot box!
Inefficient is not all bad...... it creates employment for a start.... and that stimulates the economy....

What is shocking is that in 2012 people are still dying due to lack of affordable heating and many others are living uncomfortable lives with cold or damp houses and scared of the next utility bill.

Well yes, inefficiency does create jobs but I can't agree that wasting hundreds of millions per year is a good thing.

The fact businesses across the world have focused on improving efficiency for a good 50 years would agree its a bad thing.

Inefficiency does also lead to higher bills, its not just about wholesale price.

Sadly in this sector, efficiency improvements don't lead to lower prices because everyone is distracted by the wholesale price issue.

It is shocking that people are still in fuel poverty and afraid of these bills. Hopefully the properties will be improved but the same can't be said for gaining control of the bills issue.

C_Mababejive

The UK is one of the most fiercely competitive markets in the world outside the US and people really dont know how lucky they are. I'm not just talking energy,I'm talking almost everything apart from housing which is controlled through availability of land,much of which is claimed to be owned by a cartel..see my sig.

steve-L

grahamc2003 wrote: »

£30?

Most people who switch pick up a £70 cashback!

I reckon the cost is closer to £300 per switch rather than £30.

The cost to the supplier every-time someone switches should be the motivation for them to keep customers through competitive prices and good service.

Q: Where does that £70 come from?
A: The utilities companies

So in the end it gets distributed amongst ALL the consumers, those who keep switching cost the energy companies more... those who find it harder then pick up the tab.