Big six energy firms face competition probe

Ken68

Some of the energy users need a reality check.
Energy assessments should be part of the Council Tax system, the more insulation you have , the less you pay.

Bark01

Here is my 2 cents - the big problem is BG, 40% market share and consistently one of the most expensive suppliers with the cheapest overheads. They also consistently offer cheap electricity and high gas because their incumbent supply base is gas (obviously).

The 5% margin is an average so most of that is going to BG.

Market share breaks down to roughly

BG 40%
SSE 20%
Npower /E.on/EDF/Scottish Power ~9% each
Smaller suppliers combined 5%

Speaking about the big 6 under the same breath is really hiding the elephant in the room.

Also as the final stage of the Ofgem RMR goes live on Monday, it would be good for everyone to pause a few months to see what effect it has on competition. No one really seems to reference the RMR and its the biggest change in the industry for a number of years.

Bark01

NPowerUser wrote: »

Don't be fooled by this 5% rubbish, nobody knows what some charge themselves via connected companies within the supply chain.

That's why the competition enquiry needs to provide us with greater transparency showing how much they make selling electricity etc to themselves?

Generation margins are around 10-15%. Only 2 companies are making any real profits from the retail side, BG/SSE make around 5% the rest of the so called big 6 report hardly any profit from retail, with 1 or 2 consistently reporting losses. For them all profit comes from generation.

Genuine question: I'm not sure how breaking up the supply and retail business would equal lower bills, if the retail arm didn't have the generation profits to back them up wouldn't they need to charge more? Or is the thinking that the generation side would reduce their prices?

BusyBoy

insanegloss wrote: »

Secondly, there is an enormous amount of regulation in the industry and just because you don't see it doesn't mean it doesn't exist. Trust me on that

"Trust you on that", Insanegloss you sound like you have been one of those door step energy sales people fooling vulnerable consumers into changing there energy supplier to a more expensive one. You also seem to be quoting jargons from a business text book - "barriers to entry". Only thing you missed out is a quotation from Michael Porter, I think you know who he is.

What barrier to entry? these companies hardly needed to make any investment. They took over from a nationalised energy supplier with the infrastructure already in place. You think as society we are all too quick to place blame on others rather than looking in at ourselves. So do you think companies in the industry like E.ON who have called for deeper inquiry by the Competition and Markets Authority (CMA) are being too quick to blame others. Do organisations such as Which, AgeUK, FuelPoverty all need to go back to the drawing board and educate themselves about markets and energy?

Not only have the big six been fleecing us for years and years, whenever proposals emerged that would disturb the status quo they would warn us that lights will go out, Britain would face energy shortage, there would be blackouts while at the same time these companies have seen their own market share remain at over 95% year after year.

You say a few hours research is all one needs to take control of their lives. I can tell you I have done all the research I need. Year on year I have researched new deals using the price comparator sites, invested in home insulation still my energy bills have risen year on year while energy price in the wholesale market has fallen. why? Perhaps I have been doing the wrong kind of research.

One thing I am mildly in agreement with you, whatever the CMA comes up with in the way of findings or even action, no amount of market restructuring, supplier switching and trust rebuilding will fix everything.

MillicentBystander

NPowerUser wrote: »

The £50 is what some companies make from the retail side.

Some of the Big 6 also make money from generating and transmission as well as the retail side.

A bit like me selling potatoes, owning the land, the farm and the wholesalers, warehouse and selling it to myself.

I could turn round and say I only make 50p on a tonne of potatoes, doesn't sound very much does it?

I can then keep from you, how much I have made along the supply chain?

Don't be fooled by this 5% rubbish, nobody knows what some charge themselves via connected companies within the supply chain.

That's why the competition enquiry needs to provide us with greater transparency showing how much they make selling electricity etc to themselves?

I completely agree with this but it's really no use telling Cardew as he's been taken to task on this £50/5% per household nonsense before but still keeps on trotting out the same old energy industry spin. It's the same with his European comparison nonsense. It's literally like virtually banging your head against the wall trying to get through to him. Not worth it.

System

What i would like to know is, if and a very small if they have been doing dodgy prices for us and we all been paying more for years then what, will we get our moneys back somehow i dont see that happening.

lstar337

mackemps3 wrote: »

What i would like to know is, if and a very small if they have been doing dodgy prices for us and we all been paying more for years then what, will we get our moneys back somehow i dont see that happening.

No, they said as much in the news. This will not result in any compensation for the public.

Cardew

MillicentBystander wrote: »

I completely agree with this but it's really no use telling Cardew as he's been taken to task on this £50/5% per household nonsense before but still keeps on trotting out the same old energy industry spin. It's the same with his European comparison nonsense. It's literally like virtually banging your head against the wall trying to get through to him. Not worth it.

Never misses a chance does MillicentBystander(his latest user name).


As stated earlier:

There are about 20 million properties in UK. If that figure of £1.1 billion is correct, it means that the average profit made per household is around £50 p.a. which IMO hardly seems excessive

So is that not correct? If incorrect where is it wrong.

However bear in mind I stated in post 9 of this thread:

My hope is that the investigation will have the power to uncover the relationship between the distribution companies and their parent generating companies e.g. British Gas/Centrica. In the past they have pleaded commercial confidentiality on pricing contracts.

New readers might suspect that there is 'history' between MillicentBystander(and all his other user names) and myself. He is the scourge of all the Utility Companies - with one major exception, his favoured company - Utility Warehouse.

This was his latest post on a company with some of the very highest gas and electricity prices in UK

As well as the company, of course , SOMEONE must be making money with UW if you look at how the company has performed from a standing start in 1997. The way the industry count these things (not households but customer accounts) UW have 2 million customers gathered with no absolutely no advertising by the company and the holding company, Telecom Plus, I believe, is currently amongst the biggest 200 (by market cap) publicly listed companies in the UK (market cap currently hovering around £1.5 billion). Which puts it ahead of such household names like W H Smith, Cable & Wireless, Halfords, Betfair and Bovis Homes!

To give you some idea as to how they have progressed,when the first (that I can find) UW thread started on here in 2005 the market cap of the company was in the region of £200 million! The share price is up 85% over the last 12 months, a period of time that saw the company break the habit of a lifetime and borrow substantially from the bank.

There's no getting away from it, the company is a huge British success story and to the chagrin of a few on here doesn't appear to be showing any signs of ultimately not ending up in the FTSE100.

So a company that Millicent supports with gusto, with very high gas/electricity prices and making large profits is apparently 'a huge British success story.'

scaredofdebt

I think the real problem is that there is a strange level of expectation here. The companies are all selling the same product, they are largely all subject to the same costs so is it realistic to expect prices to vary much?

The government could help by reducing taxes but they don't want to do that, so let's have a costly and time wasting inquiry to shut up the largely ignorant electorate.

The way things are going soon everyone will pay the same price, regardless of how they pay, so no more cheaper tariffs or direct debit discounts etc. The more enlightened consumers will lose out by 10% or so to allow the less enlightened to save 1 or 2%.

I agree that the profits made from generation need to be made clearer, but my understanding is that some of the "big 6" made a loss from this last year, I'll try to dig up the report I read about that.

The utility companies are "protected" in the same way the banks are, you can't really break them up or force them out of business.

I seem to recall the banks were going to be "broken up" after the "credit crunch", did I miss that?

davidgmmafan

"Don't be fooled by this 5% rubbish, nobody knows what some charge themselves via connected companies within the supply chain.

That's why the competition enquiry needs to provide us with greater transparency showing how much they make selling electricity etc to themselves?"

If BG or Centrica wanted to they could probably put all of the other suppliers out of business but this would be abusing their position in the market and is not allowed.

As others have suggested I don't see how seperation will drive prices down for consumers, in fact I think it will have the opposite effect.

However the one simple idea which WOULD improve competition is to have petrol forecourt style pricing. People understand this, which is why the companies do not want this...