Energy news in general

CSI_Yorkshire

wakeupalarm said:

The_Green_Hornet said:

Watchdog acts to make energy firms more secure

The new rules will come into force from 31 March, 2025.

https://www.bbc.co.uk/news/business-66310852

Why 2 years wait?
Are the energy companies going to hike up prices to build up this buffer?

Because it takes time to build up a financial buffer at any sensible sort of cost.

And no.

[Deleted User]

And no.

https://www.cityam.com/ofgem-stops-short-of-ringfencing-requirements-for-customer-balances/#

Not all energy suppliers agree with you. If money has to be borrowed to provide running capital then it is a business cost that will have to be paid for by consumers. Ofgem seems to have succumbed to pressure!

CSI_Yorkshire

[Deleted User] said:

And no.

https://www.cityam.com/ofgem-stops-short-of-ringfencing-requirements-for-customer-balances/#

Not all energy suppliers agree with you. If money has to be borrowed to provide running capital then it is a business that will have to be paid for by consumers. Ofgem seems to have succumbed to pressure!

Given the existence of the price cap, I consider it extremely unlikely that "energy companies will hike up prices".  Hiking up prices is commonly taken to refer to a sudden, large, and unilateral change.  An OFGEM modification to the allowable costs is none of these.

It will be an additional cost paid for by customers, certainly, but that is a different thing.

[Deleted User]

CSI_Yorkshire said:

[Deleted User] said:

And no.

https://www.cityam.com/ofgem-stops-short-of-ringfencing-requirements-for-customer-balances/#

Not all energy suppliers agree with you. If money has to be borrowed to provide running capital then it is a business that will have to be paid for by consumers. Ofgem seems to have succumbed to pressure!

Given the existence of the price cap, I consider it extremely unlikely that "energy companies will hike up prices".  Hiking up prices is commonly taken to refer to a sudden, large, and unilateral change.  An OFGEM modification to the allowable costs is none of these.

It will be an additional cost paid for by customers, certainly, but that is a different thing.

I think that we are in danger of splitting hairs. If Ofgem imposes a requirement for escrow of any consumer money which results in the need for more supplier borrowing, then the Cap formula will have to be changed to take these costs into consideration. Come what may, these costs will be passed onto consumers. Whether these measures will result in fewer supplier failures and reduce future SoLR costs is a separate discussion. Horses and stable doors comes to mind.

Scot_39

But Ofgem are already afaik increasing margins.

Like the change proposed from 1.9% EBIT allowance in default tariff cap to 2.4% from October.

And with commercial debt rates going higher - most will take that 0.5% profit allowance increase in full.

Which of course means slightly higher bills than otherwise on svt for millions.

The_Green_Hornet

Record British Gas profit after energy bill change

British Gas has reported record half-year profits of £969m after rule changes allowed it to make more money from household bills.

About half of the profit was due to the changes made by the energy regulator.

Ofgem had raised the allowance suppliers can claim from household bills to make up for costs incurred during the pandemic.

https://www.bbc.co.uk/news/business-66315117.amp

MattMattMattUK

The_Green_Hornet said:

Record British Gas profit after energy bill change

British Gas has reported record half-year profits of £969m after rule changes allowed it to make more money from household bills.

About half of the profit was due to the changes made by the energy regulator.

Ofgem had raised the allowance suppliers can claim from household bills to make up for costs incurred during the pandemic.

https://www.bbc.co.uk/news/business-66315117.amp

Before the usual culprits come along and rant about how they are robbing their customers, British Gas Retail currently has around 12.3 million customers, that means that they made around £78.78 profit over six months per customer, or £13.13 per month, so it is not as if them even making no profit would have significantly changed people's bills. Also note that BG Retail lost £2.6 billion due to the price cap previously, so even at the current rate it will take two and a half years before they have broken even from that. 

The_Green_Hornet

The BBC have since changed their article to read:

British Gas: Anger as energy bill change leads to record profits

There has been an angry reaction to British Gas reporting record half-year profits as millions of households continue to struggle to pay for energy costs.

British Gas reported profits of £969m after price cap rises allowed it to make more money from household bills.

Regulator Ofgem said the bumper profits were a "one-off" due to the changes.

But poverty campaigners said the profits "are a further sign of Britain's broken energy system".

MattMattMattUK

The_Green_Hornet said:

The BBC have since changed their article to read:

British Gas: Anger as energy bill change leads to record profits

There has been an angry reaction to British Gas reporting record half-year profits as millions of households continue to struggle to pay for energy costs.

British Gas reported profits of £969m after price cap rises allowed it to make more money from household bills.

Regulator Ofgem said the bumper profits were a "one-off" due to the changes.

The translation is some people had a tantrum and as seems usual now the BBC changed the headline to clickbait to chase the outrage. Ofgem realises that making businesses loss making generally is not good for anyone.

The_Green_Hornet said:

But poverty campaigners said the profits "are a further sign of Britain's broken energy system".

People with a vested interest in not being rational about energy supply and having a tantrum to keep themselves in employment, have a tantrum to keep themselves in employment. 

littleteapot

Yes tantrums do seem to be the order of the day in lobby groups 'championing' cost of living related issues, and the media reporting thereof!

Although energy companies that produce, as well as retail energy have been making eye-watering profits, it is certainly regressive to legislate retail profit margins to the point where they are no longer viable businesses and go bust, resulting in even less competition than we have now.

The only way to stop humongous producer profiteering is to have fully state-owned generation and supply. But that's another story and most of us over 40 know both the benefits and drawbacks of that model...