Bulb to be Nationalised?

MWT

The recent comments from Ofgem and the planned consultation should also be warning shot across the bows of any supplier trying the tricks that some have used to incentivise over payment and short term 'lending' to the provider in return for unsustainable rewards.

wittynamegoeshere

Deleted_User said:

Sea_Shell said:

Deleted_User said:

Sea_Shell said:

I agree.   A cap on protected balance, with more emphasis on the consumer taking charge of their usage/balance and be able to manage it more actively.

For too many, energy has been thought of as "fire and forget".  

Like you say £200 of store vouchers would be lost...why is paying for energy up front so different? 

Because you actively choose to buy store vouchers, but have to pay for energy by DD (or pay significantly higher prices), and then you don't control the amount of the DD, and many energy companies insist on setting (or raising) it too high, and/or are very very reluctant to repay excessive credit balances.

Ofgem are proposing to require repayment of excessive credit balances, which IMHO is a more sensible reform (though, as I've said before, my preference is not to reform the current system, but to get rid of it). Customer balances are only part of the costs of SoLRs, anyway.

That's why I said it would need to be with the customer having more active management of their accounts, and suppliers allowing (actively encouraging) such flexibility.

Surely any reform could incorporate that in some way?

OK, that's a bit different. Though I'm still not sure exactly how you're proposing to put customers in control of their balances.

But in any case why do it like that? For instance, suppose you were thinking of protecting balances up to a maximum of £250. Why not just require balances over £250 to be automatically repaid, instead?

What happens if a supplier just doesn't pay when required to?  Neon Reef currently owes over £300k, which they're intentionally not paying.

Anything that relies on cowboy companies behaving responsibly just won't work.

Ultrasonic

Sea_Shell said:

I agree.   A cap on protected balance, with more emphasis on the consumer taking charge of their usage/balance and be able to manage it more actively.

For too many, energy has been thought of as "fire and forget".  

Like you say £200 of store vouchers would be lost...why is paying for energy up front so different? 

Energy for things like heating is a basic necessity, and one for which it has been standard practice in the UK for people to deliberately overpay in the summer to cover higher bills in the winter. Also, consumers that bothered to check will have made the decision to 'risk' lesser known companies in the knowledge that they would be protected if the energy company did go bust.

tghe-retford

savers_united said:

Ofgem in their upcoming review of the cap have mentioned looking into the financial position of new entrants to the market. 
I also agree with comments that it's not fair that we all have to start picking up this cost on our bills for failed suppliers, credit with a failed supplier like shopping vouchers and gift cards with failed high Street stores get voided. The best a customer can do is keep on top of their credit & Ofgem ensure the suppliers do not hold excess amounts. As a compromise maybe they could protect the first £100 but after that your on your own.

And maybe in future it will make consumers think twice before opting for lesser known providers. (Albeit Bulb are more established then most of them who have already failed.)

In that case why bother having competition? Because if there is more than one company, there will always be a lesser known provider. You may as well go back to pre-privatisation regional electrical boards, abolish the cap and allow prices to go through the roof. It would make the energy companies profitable again but it would be devastating to low income households.

There are people who are seriously suggesting the idea of having customers become responsible for a share of the liabilities and debts should an energy provider fail. That would scare people away from ever switching again, great for the industry leader and those who packed their suitcases with wads of cash before scarpering, terrible for everyone else - particularly the low income individual for whom £1000's, even just £100's of liability and debt would be catastrophic.

The idea that this is the fault of customers and they need to be the ones punished sits uneasy with me. When all they have done is find the best price for their energy. It's like scalding shoppers of a discount chain of stores for not shopping at the high-end, high-price supermarket on the basis that paying the most benefits everyone bar the consumer.

PegasusPJ

dbks said:

MWT said:

A little strange, but the article has been revised in the last few mins, the liabilities are now lower...

So if each of Bulb's customers were to be billed approx. £300, that would cover all Bulb's debts.

Customers could fund that one off payment in part or in full from their £50 referrers/referral credit they received (oftem much more)

I don't see why we, the taxpayer, should pick up the bill for this inevitable fallen pyramid scheme.

I never got £50, I just joined them because they were the cheapest green supplier.

Why should I pay for the way the market is linked to gas/petrol prices even for energy generated without either of those? 

savers_united

tghe-retford said:

savers_united said:

Ofgem in their upcoming review of the cap have mentioned looking into the financial position of new entrants to the market. 
I also agree with comments that it's not fair that we all have to start picking up this cost on our bills for failed suppliers, credit with a failed supplier like shopping vouchers and gift cards with failed high Street stores get voided. The best a customer can do is keep on top of their credit & Ofgem ensure the suppliers do not hold excess amounts. As a compromise maybe they could protect the first £100 but after that your on your own.

And maybe in future it will make consumers think twice before opting for lesser known providers. (Albeit Bulb are more established then most of them who have already failed.)

In that case why bother having competition? Because if there is more than one company, there will always be a lesser known provider. You may as well go back to pre-privatisation regional electrical boards, abolish the cap and allow prices to go through the roof. It would make the energy companies profitable again but it would be devastating to low income households.

There are people who are seriously suggesting the idea of having customers become responsible for a share of the liabilities and debts should an energy provider fail. That would scare people away from ever switching again, great for the industry leader and those who packed their suitcases with wads of cash before scarpering, terrible for everyone else - particularly the low income individual for whom £1000's, even just £100's of liability and debt would be catastrophic.

The idea that this is the fault of customers and they need to be the ones punished sits uneasy with me. When all they have done is find the best price for their energy. It's like scalding shoppers of a discount chain of stores for not shopping at the high-end, high-price supermarket on the basis that paying the most benefits everyone bar the consumer.

I think you misread what I was trying to say. It's not about customers taking the hit if a provider folds, that is what is happening now as when a company like bulb go pop everyone's bill will increase as Ofgem add a certain amount to cover the costs of the failed supplier. 
So as example someone like you or me who may never of used bulb have to pay for their failure. 

Where else do customers of a company have to pay the costs when a rival fails.

One of the main costs that need to be covered is customer credit, so what I was suggesting is that customers take more responsibility for their accounts to ensure there is no excess amount of credit and Ofgem ensure providers monitor accounts to ensure they are not holding excess amounts.

Yes people like to build a pot for the winter months I get that, but no where else do you pay in advance for Broadband, Water, Council tax etc. Just stick it in a savings account ready for winter or something and keep maybe a buffer of £100 in the energy account.

I also suggested that Ofgem would then make it clear they will only cover the first £100 under their SOLR scheme,.

It's not difficult to.work out annual usage, if its £1200 per year then £50 per month in warmer months (say Mar to Sept) and £150 in the winter months should ensure credit is kept to a minimum. 

Ultrasonic

savers_united said:

Yes people like to build a pot for the winter months I get that, but no where else do you pay in advance for Broadband, Water, Council tax etc. Just stick it in a savings account ready for winter or something and keep maybe a buffer of £100 in the energy account.

The examples in bold are all pretty much constant monthly costs all year though, whereas energy use is very much not.

Sticking money in a savings account works well for those with the self-control to do so, but I think we all know that this is far from everyone. Also, at least historically many energy companies have simply not given customers any choice other than to overpay in summer to cover winter.

Also note my point above that consumers have made decisions to move to energy companies knowing that they would be protected if the companies failed. This protection can't just be removed without warning. We can discuss whether such protection should exist long term but it does right now and so there is zero debate to be had on customers not losing out when companies fail from my perspective.

prowla

if any of the companies are nationalised and continue to provide their preferential prices, then that won't be fair on customers of the ones which were allowed to go under.

QrizB

prowla said:

if any of the companies are nationalised and continue to provide their preferential prices, then that won't be fair on customers of the ones which were allowed to go under.

No-one has suggested that? And Bulb don't have any preferential prices, only their variable rate which is at the cap.

savers_united

Ultrasonic said

Also note my point above that consumers have made decisions to move to energy companies knowing that they would be protected if the companies failed. This protection can't just be removed without warning. We can discuss whether such protection should exist long term but it does right now and so there is zero debate to be had on customers not losing out when companies fail from my perspective.

Absolutely, I am talking longer term once the current crisis passes and we know what providers are still standing, in theory those left should be pretty resilient and well run / funded businesses. 


Ensuring that customer credit is not excessive it will also deter some of the practices we have seen where people's money was being used with no back up plan if the wholesale market soared. 

The other option is to do away with fixed DD and instead force all suppliers to accept as the default payment method variable DD based on each month's bill. So your getting charge each month for exactly what you use with no need for credit. 

Your point about people not being disciplined to use a savings account, these are adults. If they don't take care of their finances then again why should it be that we all have to pick up the pieces. I really don't see the issue in checking your account every now and then to keep an eye on the balance, if you can switch supplier surely you can keep your credit balance in check. 

It may sound cold, but it's not meant that way, it's the model I don't like and Ofgem have a big part to play here to ensure this crisis with companies falling like domino's is not repeated and whereby we all get loaded with the cost.