british gas...centrica

DreamerV

MillicentBystander wrote: »

In a recession many business actually make losses! Probably because they are in a properly competitive market and can't up their prices by much due to that. So they look at costs. This is why I have long asserted on here that the energy industry (certainly for the Big 6) is a very easy business. You simply look at your costs each year and put your prices up by enough to make that £50 per household. There are 25 million households in the UK, plenty to go round the Big 6 without the need to actually, you know, try and really undercut your rivals to get some of their customers (the fall out from such a happening is the energy company's worst nightmare). Easy peasy.

Due to the uncompetitive nature of this industry there are no incentives whatsoever for companies to try and reduce their costs because they simply don't have to in order to make that easy profit.

Many companies make losses, many make gains, a few companies break around even. In terms of keeping the economy afloat or improving it, I'm no expert, but making taxable profits would be a positive thing? As would providing jobs to 10s of thousands of people, who pay tax on their income and also spend money which stimulates the economy? I don't know about whether they could cut costs more or not, but I could only make a guess that they try their best to keep costs down like most businesses do, as this would mean improving their profit levels further which would be great for them. Your assertion seems to also be based on an educated guess at best on what they do. I guess we will never really know. I would only guess they would try to keep costs down as they have no reason to want to not have lower costs. I may be wrong.

I disagree that it is easy business, with energy here being cheaper than many other countries, with them having to meet so many obligations out of their own pocket, and again with their margins being so low - more so than a lot of other industries would put up with. It is still worth it for them due to the volumes of customers they make those margins from, but I doubt it is easy.

I do agree that with more competition may come further improvements on costs, but I don't think there would be vast improvements. Even if the companies didn't take their £50 profit, bills would still be well over £1000 on average! Basing it just on costs, I really doubt anyone would just leave them high and not bother to try to reduce them.

MillicentBystander

DreamerV wrote: »

They all hedge their fuel prices but in the mean time they have similar obligations and rising costs forced upon them, so it makes sense bills all rise. In reality, some have more costs than others, but because there is competition, some will accept raising prices a bit less than they would have otherwise, bringing down their profit margin. This would keep prices roughly in line with each other...

You missed out your answer to this one:

PS We don't seem to hear the 'gas prices are linked to oil prices' excuse/theory anymore? Why not?

DreamerV

MillicentBystander wrote: »

You missed out your answer to this one:

I am not that aware of the former argument so didn't know how to comment on it at all really. From a pure guess, which didn't seem worth writing, companies hedge more now than they used to, trying to keep the costs of the gas/oil as constant as possible rather than volatile and linked to oil prices. I'm no expert, and am maybe a bit young to know some of the former arguments (or more likely, I'm old enough but never really took an interest till circumstances forced me to keep more of an eye on where my money was going. And/or I was just a bit lazy with looking up info).

Interesting debate though

Perelandra

I had a quick look at Direct Energy's tariffs. Interestingly, there's only 3 in more areas- a fix, a fix for military personnel and a fix for senior citizens... different rates in different areas, but essentially each person has only a single tariff available to them.



NB: I work for British Gas, but post here in a private capacity. Any opinion is my own, and does not necessarily reflect that of my employer.

cynicalgit_2

MillicentBystander wrote: »

Nothing like a bit of industry bashing in the OP to bring out the industry shills. What i can't get my head around is we are frequently told the energy companies buy their fuel sometimes many months in advance so as not to fall prey to short term volatility in the wholesale market (and that these agreements vary in length between the different suppliers). Given that most of the Big 6 increase their retail prices at more or less the same price are we really to believe they all basically bought their fuel at the same time and with the same length advance agreements? It all seems very cosy.

PS We don't seem to hear the 'gas prices are linked to oil prices' excuse/theory anymore? Why not?

Couldn't agree more. The oil market is a classic example of an imperfect market.
There is no oil shortage it's guys in suits trading oil futures at a casino.
Ships tied up in ports waiting for the best price for its oil cargo, whilst Joe punter gets shafted at the petrol station.
Petrol consumption is declining yet prices keep rising.

robshed

Perelandra wrote: »

I had a quick look at Direct Energy's tariffs. Interestingly, there's only 3 in more areas- a fix, a fix for military personnel and a fix for senior citizens... different rates in different areas, but essentially each person has only a single tariff available to them.



NB: I work for British Gas, but post here in a private capacity. Any opinion is my own, and does not necessarily reflect that of my employer.

thanks very much for checking .. I thought this would be the case ...US & Canada unlikely to allow the sort of scrum we have to put up with here in uk.
So now I just need to find out why it is this way here .
we should have just one normal tariff by each provider.
Oap plus one other . less confusion and hasstle .
I.ll ask newspapers and Martin to investigate reasons .
thanks again ...robshed

tberry6686

If you have one tariff for all then electric heating will becomes so expensive that it will be unaffordable. Ok in towns and cities with mains gas but large areas of the country would then have the choice of LPG, oil or relocate just to be able to afford to heat their homes.

Demand for gas would increase with the result that the market price would rise and the price of gas would increase.

As it stands Ofgem's demand that suppliers reduce the amount of tariffs they offer to (I believe) 4 may sound the death knell for electric heating in this country as most are keeping social tariffs leaving things like economy 7 and economy 10 on a sticky wicket

SwanJon

E7 & E10 won't be affected by Ofgem's new rules as they are not a tariff in themselves.
It is possible to get different tariffs on E7 (e.g. Standard E7, Fixed E7).

The bigges risk to E10 (or similar) is that there are so many variations and only one or two suppliers will accept each variation.

tberry6686

SwanJon wrote: »

E7 & E10 won't be affected by Ofgem's new rules as they are not a tariff in themselves.
It is possible to get different tariffs on E7 (e.g. Standard E7, Fixed E7).

The bigges risk to E10 (or similar) is that there are so many variations and only one or two suppliers will accept each variation.

If E7 and E10 aren't tarrif's then what are they ?

cynicalgit_2

After today's shockingly predictable news about NPOWER' s price hike I notice all the apologists for the Energy Utilities have gone amazingly quiet.
So where was that competition again?