EDF call for flat prices and Ofgem's nonsensical response

MillicentBystander

penrhyn wrote: »

Ebico have flat unit pricing, and as a result its only worth going with them if you are a very low user.

Wholly irrelevant and if you don't get that I've over estimated you. Ebico not only resell SSE but also have the added burden of allowing their customers to choose to pay by any method with no difference in price. A tad different to how the Big 6 operate, don't you think?

Wywth

MillicentBystander wrote: »

Wholly irrelevant and if you don't get that I've over estimated you. Ebico not only resell SSE but also have the added burden of allowing their customers to choose to pay by any method with no difference in price. A tad different to how the Big 6 operate, don't you think?

If you read the ebico website carefully, you will see they actually admit they are only cheap for low users.
They try to market the fact they are expensive for higher users by claiming they want to reduce consumption for environmental reasons.

(I wonder if the likes of the supermarkets and fast food chains will ever encourage us to eat less? :cool:)

e.g.

Good news - Ebico is cheap for low energy users!

...
We encourage you to use less energy in your home, which will help the environment and save you money!

https://www.ebico.org.uk/lowenergyusers

and

You're assuming pre-payment meter customers are on low incomes. But owners of second homes and students in digs also use pre-payment meters, and persistent non-payers are forced to use them.

There is quite a good correlation between household income and method of utility bill payment, though clearly in some situations our tariffs will be attractive to customers on higher incomes who also use pre-payment meters for different reasons.

However, our flat rate is not the only way we help those on low incomes. We also don't levy a standing charge on any of our customers. And while a number of other utility companies have followed suit in this respect, they actually replicate the effect of the standing charge by imposing a much higher unit rate on the customers' first units of gas/electricity. This penalises those who use relatively small quantities of gas/electricity – and many low income households fall into this category – just as much as the standing charge.

Rather than making value judgements about our customers, we believe that it is sufficient to offer a tariff that very many low-income households will find cuts the cost of heating and lighting their homes.

https://www.ebico.org.uk/customer-care/faqs#pre

It stands to reason that if a company are to continue to receive the same revenue for the same total energy they supply, then any reduction in price for low users must be subsidised by other customers

Assuming no change in total revenue for the same amount of energy currently supplied, how could any other supplier change the basis that a single unit priced tariff would favour those who are low users (and conversely disadvantage those who are not)?
:huh:

Cardew

Utility companies sell the same product (i.e. gas and electricity) produced from the same sources and delivered by the same pipes and wires.

So what real scope does any single company have to undercut their opposition.

Would firms like, say, UW be banned from including gas and electricity in their 'package' deals of phone/internet/mobile etc?

A big company like, say, BG which is backed by Centrica, could sell gas and electricity as a 'loss leader' and put much of the opposition out of business - except it is illegal.

So if the EDF idea was adopted with flat prices and no discounts, what would be the spread of prices between the companies - 1%? 2%?

MillicentBystander

If we are entirely honest we all know that flat pricing with no standing charge is the fairest, least complicated way of doing this. The fact that some of us would pay more is not reason enough to dismiss the principle unless the dismissal is based on nothing but self interest.

The over-complicated nature of the industry at present seeks only to restrict competitiveness and transparency. Plus it's allowed a whole parasitic industry to be born which ultimately only adds to fuel prices.

Wywth

Cardew wrote: »

Utility companies sell the same product (i.e. gas and electricity) produced from the same sources and delivered by the same pipes and wires.

So what real scope does any single company have to undercut their opposition. ...

The gas & electricity is produced from various sources, and so there is some opportunity to buy at a different price to their competitor ... either as a result of better purchasing negotiation/opportune buying or from a different source.

e.g. EDF buy a lot of their electricity from nuclear sources in order to get a lower price.

Other than a difference in the cost of energy produced, the only other real option for suppliers to charge differing prices (which they obviously all do) is to either cut their profit margin and/or lower their own expenses in providing customer services, billing, etc.

One other thing that favours many of the smaller suppliers is that they are not hit by some of the additional costs imposed by government on the Big 6 suppliers (but conversely you would expect a smaller supplier to have a higher overhead per customer due to their lack of size)

Wywth

MillicentBystander wrote: »

If we are entirely honest we all know that flat pricing with no standing charge is the fairest, least complicated way of doing this. The fact that some of us would pay more is not reason enough to dismiss the principle unless the dismissal is based on nothing but self interest....

It is on what is supposed to be a moneysaving site ... even if a vote by MSE'ers previously did oddly suggest they would be willing to pay higher prices for their energy in return for simplified billing.

MillicentBystander

Wywth wrote: »

It is on what is supposed to be a moneysaving site ... even if a vote by MSE'ers previously did oddly suggest they would be willing to pay higher prices for their energy in return for simplified billing.

But I would suggest that the majority of people on here have been ultra critical of the industry's unnecessarily complicated practices and have pontificated enough to lead me to believe what EDf are proposing is what they always wanted. That fact that some of these posters now aren't so keen due to the fact they may pay more (even though the industry will be adopting the practices they have long asked for) is not something i can take seriously.

The practice of the industry's standard tariff punters subsidising their supplier's foray to the tyop of the switching sites with loss leading, short lived online tariffs has largely been eradicated (and even though it means I pay more I totally support the move) the next stage is surely to make the industry totally transparent and fairer and that can only mean flat pricing with no standing charges.

JSR

MillicentBystander wrote: »

If we are entirely honest we all know that flat pricing with no standing charge is the fairest, least complicated way of doing this. The fact that some of us would pay more is not reason enough to dismiss the principle unless the dismissal is based on nothing but self interest.

It may be the least complicated but that doesn't mean it is the fairest. What does fair mean anyway? If the starting point is to pay in proportion to the cost to the supplier then a standing charge plus unit rates that decreases with higher usage and with length of future commitment is probably the fairest. If you want to have some kind of social fairness so the poorest pay less than the richest then that requires yet another layer of complexity.

Nada666

Nicholas-bloody-Parsons wrote: »

The advertised tariffs bear no relationship whatsoever with my gas usage as they use the metric system and my meter is imperial. It might as well quote the prices in Martian.

Where on earth are you seeing gas tariffs advertised priced in metric meter units?

penrhyn

Gas meters read volume of gas, not power.