Government gives in to energy suppliers

michaels

TruckerT wrote: »

Actually, there are several so-called independent energy suppliers who appear to offer much better deals. One of them appeared on the Select Committee TV show, and said that his company was currently buying energy at a lower price than several years ago.


For some reason, neither the Select Committee nor the meedja has taken any interest at all.


Why are these companies described as 'independent'? In what way are the Big6 not 'independent'? Why has D.Cameron not been recommending these independents in his Parliamentary statements?


TruckerT

So where is the market failure, it appears it is possible to choose a competitively priced energy supplier in the UK?

If people instead choose to stay with one of the big 6 suppliers who are more expensive (and indeed on their more expensive standard tariffs) the market failure seems to be with the consumers not the suppliers. If I was at a street market and two stalls were selling identical apples and I chose the more expensive one because I couldn't be bothered to walk 2m to the cheaper one then whose fault would it be that i paid more?

grizzly1911

michaels wrote: »

So where is the market failure, it appears it is possible to choose a competitively priced energy supplier in the UK?

If people instead choose to stay with one of the big 6 suppliers who are more expensive (and indeed on their more expensive standard tariffs) the market failure seems to be with the consumers not the suppliers. If I was at a street market and two stalls were selling identical apples and I chose the more expensive one because I couldn't be bothered to walk 2m to the cheaper one then whose fault would it be that i paid more?

There is no need for the energy companies to compete. They certainly don't compete to retain existing customers. I have been switching for around seven years. I have also done over several years for relatives. We have only remained with an existing supplier once and that was for a single supply in a Multi occupancy property and it allowed early cancellation.

It is almost as though they take it in turns to be the lead cheap supplier on fixes. The fixes being phased differently to their headline pricing.

I have noticed the same effect with brands on offer in supermarkets.

If everyone was constantly switching the tarrifs would simply be adjusted to compensate. They can only offer so many apparently cheaper tariffs and are dependant on the lazy inertia to bolster profitability.

CLAPTON

michaels wrote: »

So where is the market failure, it appears it is possible to choose a competitively priced energy supplier in the UK?

If people instead choose to stay with one of the big 6 suppliers who are more expensive (and indeed on their more expensive standard tariffs) the market failure seems to be with the consumers not the suppliers. If I was at a street market and two stalls were selling identical apples and I chose the more expensive one because I couldn't be bothered to walk 2m to the cheaper one then whose fault would it be that i paid more?

there are several complicating factors


-until very recently all three main parties have been content with the green stealth taxes which are impossible for a lay person to understand


- the price comparison sites are often simply wrong: I recently changed by own supplier : I used a comparison site and when I checked in detail found the figures were inaccurate

- no-one can really say where to have a fixed or variable price -just guess work.

- if we had a genuinely competitive market the prices of all should be very similar

- people frequently report problems switching suppliers for which there seems no effective redress if things go wrong.

- tenants frequently aren't allowed to change supplier

- different suppliers seem to have different customer service ratings : how does anyone know how to offset a price difference to a service provision

I'm not sure the main problem with the utilities is the lack of competition but rather the green taxes and inefficiencies and costs they bring with little actual 'green' result.

kabayiri

The need to comply with Green deal, and the targets within, was a big cost issue for the Big 6. As Clapton pointed out the smaller suppliers weren't hindered by such issues.

I freely confess to being a sceptic when it comes to our Green approach. The FIT scheme / micro generation, something like 42p per unit I think, that was never a good deal for the majority of energy customers was it? No wonder they ditched it.

TruckerT

CLAPTON wrote: »

if we had a genuinely competitive market the prices of all should be very similar

Overall, we would probably find that the Big6 do in fact charge very similar prices. Their products are identical. In a street market, a greengrocer would understand the folly of setting up her stall only 2m away from another greengrocer.


Ford and Vauxhall offer very similar ranges at very similar prices. But they can compete in different ways. There are lots of minor differences in the details of their products, and their supply points are spread around fairly randomly. The buyer has lots of reasons, other than price, to shop around.


If the Big6 were to be combined into a Big One, then overall costs would fall dramatically, and prices should follow. But the rules of Monopoly would come into play.


State monopolies have been replaced by a range of government 'OfCon's, which are supposed to regulate the excesses of the operators of captive markets. Normal market forces do not apply to essential services.


TruckerT

michaels

With a 'big one' though there would be no 'price discovery' - how would anyone know if they were being efficient or not? Profit would probably be regulated to a percentage of turnover thus for the supplier it would actually make sense to be as inefficient as possible as the bigger the cost base, the bigger the profit they could make.

Would you expect mobile phone contracts to be cheaper if we only had one supplier as they could save on advertising, account set up etc costs?

CLAPTON

TruckerT wrote: »

Overall, we would probably find that the Big6 do in fact charge very similar prices. Their products are identical. In a street market, a greengrocer would understand the folly of setting up her stall only 2m away from another greengrocer.


Ford and Vauxhall offer very similar ranges at very similar prices. But they can compete in different ways. There are lots of minor differences in the details of their products, and their supply points are spread around fairly randomly. The buyer has lots of reasons, other than price, to shop around.


If the Big6 were to be combined into a Big One, then overall costs would fall dramatically, and prices should follow. But the rules of Monopoly would come into play.


State monopolies have been replaced by a range of government 'OfCon's, which are supposed to regulate the excesses of the operators of captive markets. Normal market forces do not apply to essential services.


TruckerT

Competition drives down prices; in a perfect market prices for the same goods with equivalent services should be the same.

Monopolies always have high prices as there is no incentive to reduce them.
One can be absolutely sure that if utilities were still state monopolies the prices would be higher and there would be no discussion about them either.


Normal market forces apply just as much to essential goods and services as to any other market.

What matters is whether there is genuine competition : so for the essentials like food and clothing there is lots of competition so price, quality etc are excellent.
Only the mad left would suggest state food or clothing monopolies on the grounds they would be cheaper.

The main problems with the gas/electricity is government intervention to meet the green tick boxes and the lack of sufficient competition

grizzly1911

CLAPTON wrote: »

One can be absolutely sure that if utilities were still state monopolies the prices would be higher and there would be no discussion about them either.

How can you be so certain?

CLAPTON

grizzly1911 wrote: »

How can you be so certain?

There is, in truth, always philosophical uncertainty.

In such a mode I can't be absolutely sure that the earth will turn or the sun is still there.


But on an ordinary forum, it isn't really feasible to qualify all our statements with such philosophical musings or even to define what I mean by 'cheaper' or 'more expensive'.

TruckerT

I tried very hard in my earlier post to make it impossible to be interpreted as meaning that I thought that monopolies are a good idea. No such luck!


Mobile phone companies are like car manufacturers - they offer a wide range of products, and you can go and look at them before buying. It is entirely possible that you would take out an unnecessarily expensive contract in order to get some particular phone.


The Big6 seem to be operating like a monopoly - they all offer the same two products, and they compete only in the level of confusion or apathy which they can generate in their customer base.


I was under the impression that 'OfTwat', and her sister organisations, were supposed to be some kind of answer to the monopolistic nature of an undifferentiated market (thanks to Clapton for the word 'undifferentiated')


TruckerT