Bulb to be Nationalised?

Ultrasonic

savers_united said:

With smart meters variable DD month to month is better longer term for a customer as they are less likely to fall into debt, it's Pay as you go so no big shock at end of winter when you realise your fixed monthly payments have not covered you, or having that new garden Spa added an extra £30 a month to your leccy bill that you had not accounted for. It allows you to keep on top of your spending. 

The risk though is somone gets a bill in say November that they can't afford to pay. Then what?

Ultrasonic

doodling said:

Energy has historically been paid for quarterly in arrears. It is only in the last few decades that the distortions introduced by "fixed" monthly direct debits have arisen.

That's an interesting point. I wonder how long ago we're actually talking?

Sea_Shell

Ultrasonic said:

doodling said:

Energy has historically been paid for quarterly in arrears. It is only in the last few decades that the distortions introduced by "fixed" monthly direct debits have arisen.

That's an interesting point. I wonder how long ago we're actually talking?

IIRC it was around the early 1990s when we started to transition from quarterly bills to monthly DD.

Gerry1

savers_united said:

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.

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.

Exactly. that's what I've advocated for years.  In fact that's how it always was: the Gas Board and the Electricity Board read your meter and you paid for the exact amount you'd used, simple as that.  If you didn't, you received a red warning letter and presumably a knock at the door if you still didn't pay.  No problems with decimal points, imperial / metric conversions, unrealistically low DDs, etc; if you left all the windows open, the heating turned up high, took long showers and lots of full baths then the monthly bill reminded you very quickly.  No massive catch-up bills a year or two down the line that were impossible to pay !

The problems only arose after privatisation, largely because of very poor regulation.  OK, it may not have been a golden age, no doubt there was some overmanning and inefficiency, but neither were consumers burdened by paying for all today's overheads such as advertising, sales teams, referral fees and the commission charges levied by the comparison sites.

No-one is suggesting simply turning back the clock, but it seems fairly obvious that privatisation merely made things different rather than better.  There's an interesting parallel with railways where once again a Southeastern franchise holder has been booted out for financial irregularities, resulting in about a quarter of the rail network effectively having been nationalised.  Choice and competition works well where there are unlimited suppliers, but when natural semi-monopolies are privatised it's imperative to have strong and effective regulation, and that's what's always been sadly lacking.

wittynamegoeshere

We could have free market competition, where companies compete against each other and customers pay whatever they charge without limit.  If this means that people starve then that's just tough.

The opposite alternative is that we have a government-run public service, in which case prices may be more controlled - e.g. they could bank a surplus when wholesale prices are low and use this to subsidise the price when prices are high.

The problem with the current system is that it's an akward fudge of the two models, which is really the worst of both worlds.  The result is that when the wholesale price is low, the companies make money and give this profit to their shareholders.  When the price is high they run away and leave everyone else to pay the losses that they would have made if they'd remiained in business.

There's currently no penalty for companies picking and choosing when they want to run a business.  I chose to pay a bit more per unit for the protection of having a fixed rate into the future.  My supplier took payment from me for what was effectively an insurance policy, which I paid to supposedly give peace of mind.  They've now kept this money and declared themselves bankrupt, and I'm now paying the higher variable tariff that I was supposedly protected from paying.  If I'd known that they could take my money and walk away so easily then I'd have paid a lower variable tariff instead of paying a premium for absolutely nothing.

Verdigris

In fact that's how it always was: the Gas Board and the Electricity Board read your meter and you paid for the exact amount you'd used, simple as that.

If only someone could invent a meter that automatically sent reading at regular intervals...

Thrugelmir

doodling said:

Energy has historically been paid for quarterly in arrears. It is only in the last few decades that the distortions introduced by "fixed" monthly direct debits have arisen.

Coal merchants were paid on delvery. 

savers_united

Ultrasonic said:

savers_united said:

With smart meters variable DD month to month is better longer term for a customer as they are less likely to fall into debt, it's Pay as you go so no big shock at end of winter when you realise your fixed monthly payments have not covered you, or having that new garden Spa added an extra £30 a month to your leccy bill that you had not accounted for. It allows you to keep on top of your spending. 

The risk though is somone gets a bill in say November that they can't afford to pay. Then what?

Why would they not be able to pay, instead of paying the fixed £100 per month during summer and built up a credit they would have paid alot less during those months so in theory should have more in their current / savings accounts to cover the increased winter DD. It people cannot manage their finances that is a different problem. All your doing is keeping the money in the summer you would of given to your energy supplier in your account ready for higher costs in winter. 

Or to cater for those, make it like a mobile phone tariff say your forecast to spend £1200 per annum duel fuel.
Supplier sets the fixed monthly amount at £70 per month (peak summer demand) and then anything over that is paid ad hoc via DD based on the monthly readings, so your always paying a set amount that will never cover your year's predicted usage with the understanding your going to need to top up when your demand increases. This would keep credit balance in check as well as debt.

With recent events just don't like the idea of energy companies (especially these very small ones) holding vast amounts of customers money, cause when they fail we all pay. 

alsa1

We don’t really need 70-80 suppliers as we had a few years ago. The market could work well with 15-20 suppliers. Privitisation hasn’t failed either, we have new companies like Octopus who look like they are in for the long term, so no more big 6.  A well capitalised company could weather the fluctuations we have seen recently, all it would take is for someone like Ofgem to set a minimum amount a company should hold, just like we have with banks post 2008. 

As for Bulb its still puzzling why they are struggling, I thought they only had one variable tariff? In their case they won’t have thousands of customers they have to honour at fixed tariffs signed up months ago. 

Ultrasonic

savers_united said:

Ultrasonic said:

savers_united said:

With smart meters variable DD month to month is better longer term for a customer as they are less likely to fall into debt, it's Pay as you go so no big shock at end of winter when you realise your fixed monthly payments have not covered you, or having that new garden Spa added an extra £30 a month to your leccy bill that you had not accounted for. It allows you to keep on top of your spending. 

The risk though is somone gets a bill in say November that they can't afford to pay. Then what?

Why would they not be able to pay, instead of paying the fixed £100 per month during summer and built up a credit they would have paid alot less during those months so in theory should have more in their current / savings accounts to cover the increased winter DD. It people cannot manage their finances that is a different problem. All your doing is keeping the money in the summer you would of given to your energy supplier in your account ready for higher costs in winter. 

The points in bold are a reality that I'm sure we both know exists, much as either of us could argue that it shouldn't. I would be surprised if transitioning to the historic system wouldn't lead to problems for many at least in the short term, and as I posted above I don't personally see an issue with the current approach.