What does my energy company do?

Iranoutofusernamesalongtimeago

Hello folks, 

I have a simple question, one which has arisen from a matter involving my elderly mothers' energy company and a rise in payments, the question being is what exactly do energy companies do for you or I, as paying customers? 

I understand they work as what are essentially brokers and buy gas and  electricity from the suppliers and are therefore able to pass on savings to us but if I have a gas emergency for example I call the gas board and someone comes out to fix the problem, not my energy supplier.

 I take my own meter readings and send them onto the company, no one comes round to read the meter anymore. I am expected to contact them to increase my direct debit if I notice that my energy consumption has gone up and I believe I need to pay more, they don’t contact me to advise me I need to pay more, they just send monthly statements and place the responsibility upon you. 

What exactly am I paying my energy provider to do, apart from sending me monthly emails requesting payments? 

Or am I being completely naïve, despite numerous searches on the internet with no luck in finding information, and my energy company in fact runs small industries of power plants, maintains transformers, power lines, cabling, and employs fleets of trucks to ferry fuel around??? 

All I could find out was thus,

There are 14 licensed distribution network operators (DNOs) in Britain and each is responsible for a regional distribution services area. The 14 DNOs are owned by six different groups. Hence why it's regulated by Ofgem, it being a monopoly and all. There are eight gas distribution networks (GDNs), each of which covers a separate geographical region of Great Britain. 

There seem to be an unending amount of energy brokers? Suppliers? Out there currently and while I can take a reasonably intelligent guess at what they do, it would be nice to have a definitive answer on what I am actually paying them for? Aside from negotiating a bulk order of gas and energy? As it seems I do all the work for them currently and they just send me an email asking me for money.

I did ask the energy provider in question the same question but it's been two weeks and they have yet to reply.

 

Thank you in advance for any light you can shed upon this question.

niktheguru

you're along the right lines. The energy suppliers on the whole are merely brokers. But when you say "what are you paying for", well you're paying for the energy, and for your contribution to metering maintainance, the smart meter roll out, the infrastructure, VAT and profits.
Your energy company is responsible for your meter. If there is a problem with your meter then they need to send someone out to fix or replace it. If there is an energy emergency then the DNO is responsible to come and fix it.
At the end of the day, the money you pay is for your energy and the upkeep of the network. Your energy company doesn't do it directly, but they pay their share towards it from your charges.
The fact that there are so many companies is good as it encourages competition for custom and brings rates down. We don't want to go back to the days where you only had one provider to choose from and had to pay the standard charge and thats it.

Verdigris

And you have a choice. Bare-bones, DIY meter read, paperless accounts or pay twice as much for a traditional "full-fat" account. The great thing is the gas and electric continue to flow whichever you choose.

Gerry1

Welcome to the forum.

The Gas Board?

Do you read the News Chronicle, drive a Hillman and fly BOAC? 

Mickey666

Iranoutofusernamesalongtimeago said:

Hello folks, 

I have a simple question, one which has arisen from a matter involving my elderly mothers' energy company and a rise in payments, the question being is what exactly do energy companies do for you or I, as paying customers? 

I understand they work as what are essentially brokers and buy gas and  electricity from the suppliers and are therefore able to pass on savings to us but if I have a gas emergency for example I call the gas board and someone comes out to fix the problem, not my energy supplier.

 I take my own meter readings and send them onto the company, no one comes round to read the meter anymore. I am expected to contact them to increase my direct debit if I notice that my energy consumption has gone up and I believe I need to pay more, they don’t contact me to advise me I need to pay more, they just send monthly statements and place the responsibility upon you. 

What exactly am I paying my energy provider to do, apart from sending me monthly emails requesting payments? 

Or am I being completely naïve, despite numerous searches on the internet with no luck in finding information, and my energy company in fact runs small industries of power plants, maintains transformers, power lines, cabling, and employs fleets of trucks to ferry fuel around??? 

All I could find out was thus,

There are 14 licensed distribution network operators (DNOs) in Britain and each is responsible for a regional distribution services area. The 14 DNOs are owned by six different groups. Hence why it's regulated by Ofgem, it being a monopoly and all. There are eight gas distribution networks (GDNs), each of which covers a separate geographical region of Great Britain. 

There seem to be an unending amount of energy brokers? Suppliers? Out there currently and while I can take a reasonably intelligent guess at what they do, it would be nice to have a definitive answer on what I am actually paying them for? Aside from negotiating a bulk order of gas and energy? As it seems I do all the work for them currently and they just send me an email asking me for money.

I did ask the energy provider in question the same question but it's been two weeks and they have yet to reply.

 

Thank you in advance for any light you can shed upon this question.

You've answered your own question - you're paying for their brokerage (and the cost of the energy itself of course).

You also say ". . . As it seems I do all the work for them currently . . . " but that's not true is it?  Or do you actually help them broker deals on the global energy markets?

If by "all the work" you mean things like having to read your own meter, supply monthly readings, monitor you account balance and adjust your direct debit accordingly, etc, then that's one of the reasons for lower energy prices.  They don't do all of that and (presumably) don't charge for it either.  Would you prefer to have a meter reader visit every month to do these things for you?  How much do you think that would add to your energy bills?

I really don't understand the points you're trying to make . . . unless you're pining for the good old days of monopoly gas and electricity companies?

[Deleted User]

Some suppliers are nothing more than power brokers,  but there are also an increasing number who both generate and the supply the energy that we all use. For example, EDF runs a number of our nuclear power stations; Octopus Energy has recently taken over a renewables company, and Ecotricity has long been a green energy producer and supplier.

Suppliers also collect taxes and charges as the wholesale price of our energy accounts for c.40p in every £ that we pay. Charges include the cost of getting energy to our homes; the cost of metering and the cost of such things as the Consumer levy. Taxes include VAT and Green energy stealth taxes imposed by Government. Then there is that nasty word profit which accounts for less than you might think.

Why so many suppliers and so many tariffs? The simple answer is that they reflect the political mantra of the Party that we elected to Govern us. They see competition as a driver of change and lower prices. The latter has caught out a number of suppliers. Suppliers such as Octopus would, in my opinion, argue fairly that their disruptive tactics have resulted in significant change within the industry. Just look at how many suppliers are now buying into Octopus’ Kraken technology platform because it requires fewer staff and it is cheaper to run. It is only through competition that one of the Big 6 (or is it 5) would pay for such a platform.

Ectophile

You are essentially paying a broker.  In return, they are:

• Paying the people who generated your energy (or who stuffed your gas into the pipelines)
• Paying the running costs of National Grid and the DNOs
• Paying the taxes due on your electricity and gas.
• Paying for the roll out of smart meters (and before that, replacing end-of-life meters)

Also bear in mind that they are balancing out the difference in price between what you're paying and the current wholesale price.  This means if you take out a one year fixed price contract with them, then they need to make sure they can source enough energy from you at that price, for a year.  Good luck trying to get a deal like that from your local power station.

Carrot007

*A lot for the 5% they generally make on domestic customers. (Youur anger may increase ;-) ).

Anyanka1

OK, I did not think I would ever be defending energy suppliers but, as above.  To put it differently, what are supermarkets doing to earn your money?  Would you prefer to go out and sow, tend, raise, harvest and kill your own food?  Neither would I.

Energy companies do as described in the above posts.  They are, essentially, shops.  You can choose where to shop and how much to pay but (just like supermarkets/other food shops/don't even get me started on water companies) you cannot really do without them... Not even if you are that Fearnley-Whittingstall idiot or (again with the !!!s, I mean short for Richard) Strawbridge... Who builds a bridge from straw?

Iranoutofusernamesalongtimeago

Thank you for your replies, most of them helpful. I feel the need to iterate that this was simply a question asking for help on a topic I willingly admit I know little about and not intended to cause offense or imply points that cannot be understood, I hadn't realized I had done that and I apologize for any confusion it may have caused some of you. 

I feel then, that for the most part, we have a consensus that the various companies act as energy brokers. Is it that we then as consumers are expecting too little in customer services? Perhaps it is the very difference in our individual standards that has made me post this in the first place. Do please feel free to disagree with what I am about to write as it will lend credence to my observation of differing expectations as I do like to take stock in my own personal beliefs.

I feel, personally, that as a customer to any company for which I am paying a service for I should receive at the very least a minimum of customer service but from what a few of you are saying I should be happy with the bare bones as it is saving me money and be grateful for everything these magicians do behind the curtain that we are not privy to see.
This is hard to reconcile when I have just read this article Martins Warning: Energy prices in crisis. Sadly I have been here long enough to put the link, ironically from the same forum.

Let me expand upon the reason why I posted this initially, my elderly mother who is nearly 80 and does not have a smart meter has received her six-monthly review, apparently, the industry only requires a 12-month review so the energy provider was doing her a service by catching it when they did.
They are now requesting a two-fold increase of payments over the next six months as she was underpaying during the winter months for the fuel used. 
Clearly, she is from a generation that obviously is used to different standards when it comes to customer service and she didn't realize the onus was upon her to check her monthly statements and raise the issue with the energy company.
What puzzles me here though is the fact that having reviewed the emailed statements which are being constructed they clearly show the underpayments and the increased energy cost and the requests for payments. It also shows a predicted yearly usage which is calculated every month and shows the increase over the year but with no calculated increase in payments to cover the forecasted usage. 
 Am I to assume then that this entire process is automated and at no point, it is looked at by a human being? As anyone with an intellect above that of a cucumber and with an ounce of customer service would surely have contacted the customer to discuss the need to increase payments rather than wait to demand double the agreed-upon payments six months down the line?
What I'm trying to say is shouldn't it be a bare minimum of customer service for the company which you pay to manage your energy to actually check the amount you use each month vs the amount being paid? Surely there are even automated services that could do this and red flag it to a human being when required?

While I can understand what the energy companies do and where the money goes, how do you explain this level of customer service to someone from, dare I say it, a better generation than ourselves?

Once again, thank you in advance to all those taking the time to participate in this discussion.

Anyanka1

Gosh, sir or madam, and many apologies if I caused any offence; none was intended, I assure you.  I sympathise absolutely with your frustration, having today wasted hours trying to extract anything approaching customer service from my supplier, whom I could cheerfully kill right now.

Having wasted at least an hour trying to call them, I have resorted to email and set out exactly why my direct debit amount should not be increased and should, probably, be reduced despite rising prices since my account is over £200 in credit in late Spring.  I look for no response that makes any sense for several weeks, given my experience of them.

Why do I stay?  They are cheap; were they not, they would be out of business in a heartbeat.  Unfortunately, you really do get what you pay for.  More unfortunately, you can pay more to be with a big firm and still receive the same appallingly bad level of customer service (e.on, I am looking at you) so really, why pay more?

I am sure you can find articles/adverts online or on this website from Martin Lewis asking why energy companies can get away with estimating bills.  Really, what else are they supposed to do in the absence of any information as to usage?  Hence my defence of them having said which their customer service, in the main, is appalling.  The onus is on the customer to provide accurate and regular readings; that is just fact.

Meter readers' visits cost a fortune; customers' readings submitted online are free; we all pay for the difference.  It really is like choosing to shop at Fortnum and Mason's or your local bargain supermarket:  Do you want cheap or do you want service?  Pick one.

I hope that is not too harsh but you really do get what you pay for and what you pay for seems to be deteriorating all the time, whichever supplier you choose.  Most of them insist on your having a smart meter whether that is physically possible or not (they have to be within a certain distance of each other) and penalise you if you cannot have them.

I think you need to lower your expectations of all energy companies because, in my opinion, they all have a great deal to answer for.