MSE News: Energy customers 'pay too much'

Uxb

The suppliers will also have to pay in the futures market to 'fix the price' from their side as a way of transferring risk from them to other intermediaries of the price significantly varying.

Much like companies due to receive say £1m in payment for work done in 6 months time will sell that amount forward at the point of order to convert to £ so they know 'now' what will be the exact amount of £ they will receive from the intermediary in the 6 months - regardless of what the market does in the meantime.
Same with airline buying/fixing the price of fuel in advance for delivery in 6 months or 1 years' time.

Equally buying yourself out of a deal that is subsequently not to your advantage is of course equally expensive as you chose to let someone else have the risk and they have in this example won out... wheras had it gone the other way and you won out then the intermediary providing the 'hedge' of your risk would have lost out..... hence ths high early exit fees to discourage consumers from reneging on the deal which if lots did would force the utility company to re-negotiate its hedge down the line which would cost them a LOT of money.

So all this fixing/removing of oil price/currency risk all costs money.
As to the consumer and energy prices it depends on their attitude to risk of price varying up/down and their future opinions on how the price will change as to whether they go for fixed or variable tariff........welcome to the world.

But yes at the end most people with busy lives, work, children, elderly parents, houses to maintain, cars to fix, things to do, etc have better things to do with the lives than obsess about energy prices or broadband prices or constantly swap.
After all commercial companies have whole buying/tech' departments dedicated to dealing with suppliers and evaluating alternatives from both price, quality, performance point of view, before considering swapping and any knock on effects.

robin58

So we are getting ripped off by the utility companies.

All I can say is 'No sh t Sherlock'

So what the hell is to be done.

Nought. Because every time Ofgem get involved, they make it worse.

cepheus

The only alternative to re-nationalization, is to introduce a non profit distributing company into the market, funded by a ultra-cheap government loan. This would have a mandate to focus on customers rather than shareholders. Other than that it would have to operate within the constraints of a competitive market. This would be a benchmark to which others can be compared by, and price controls introduced if necessary.

Simplistic price controls irrespective of other factors such as fuel retail prices, the need to invest and provide competitive pay levels is unworkable IMO.

Pincher

Just for the fun of it, they should do a trial study.


Advertise for people who haven't switched for say ten years.
They need to record what they are paying before and after, and whether the outcome is better or worse than before. A compensation fund could be set up for people who became worse off.


If they did this a year ago, long term fix would be a terrible choice, but right now it's not so certain, as oil price could bounce back.


Some people are always going to jump like lemmings for lowest cost, and end up with NPower, First Utility etc. There's also all the usual problems with the wrong kind of meter, transposed readings, etc. The result I want to see is how many people


1. Are happy they switched,
2. Wished they never heard of the idea, and
3. Feel it wasnt' worth the bother.

Joyful

I speak to many elderly people daily. As my company (BG) has been asking them to check their tariffs many call who have already fixed to see if there are better ones. These are the proactive ones. There will always be elderly that do not act on this or state they are happy as they are , even if you advise you can save them money.

On the other side I will speak to younger people who cannot understand that a tariff that cannot go up but can come down with no fees is better than the standard tariff!

This shows both that many older people manage their finances great with the information provided to them but also there are many of any age who do not want change, even if they complain about the price.

One price cannot fit all companies especially as the bigger ones are often open longer hours and spend more money on vulnerability that the smaller suppliers do not have to do. This includes the Millions helping insulate and homes and putting in new heating systems for deprived communities. The government needs to remember all these companies do to save them money too.

Nada666

Malcnascar wrote: »

Switching energy should be as easy as moving from Tesco to Sainsburys or Aldi and Lidl but its not, nor is their a one size fits all solution which prevailed when these industries were in public ownership.

It is far easier to choose a tariff than it is to buy anything from a supermarket.

davidgmmafan

"Are Caroline Flint et al really wanting the price of cheapest tariffs to increase by £200 so lazy people can save £34 per year? What other result do they want?"

I agree this is an issue. This is pretty much what happened when they limited the number of tariffs, brought back standing charges, and equalized prepayment prices to standard.

The bottom line is that, the market is broken and unsustainable. As others have said if EVERYONE shopped around then the current system could not survive. They can only offer these lower rates based on the inertia of lots of sticky customers usually in the suppliers home region.

This is also a barrier to new entrants as they will only be able to attract the keenest customers with low prices, which puts them at an advantage right away.

Sadly politicians and Ofgem have shown themselves to be pretty clueless on the issue. Ofgem's interventions often have unintended consequences which are detrimental to consumers, and policiticans too often yell SWITCH at the wrong time. This results in a bad experience for customers and further erodes confidence in switching.

For me Martin Lewis has spoken a lot of sense on this issue, which is why I was surprised to see the line about customers being ripped off by X amount. Some are, and some could be on more expensive tariffs than standard.

For my part I would make one simple suggestion. Get rid of standing charges, have one price per unit.

I know suppliers have long argued that they have fixed costs for distribution etc but so do petrol stations and supermarkets.

The only other idea I've seen of any note is to have a basic state run supplier to keep the others honest as it were.

I do have a question for those who say those who never switch should have lower bills. Whilst I accept that the savings made through direct debit payment and online billing may not be as big as the companies suggest, how do you propose companies fund reductions?

The only possible way I can see is to make the engaged active customers pay more. I fail to see how this will improve the state of the market.

Finally the governments announcement about suppliers refunding credit over about a fiver or whatever it was is typical of the sort of thing you get when people who know next to nothing about a topic get involved.

I've seen better ideas and discussions on here...