Energy news in general

superkoopauk

Debts have also risen as suppliers have not been allowed to install PPM meters this year.  Just another cost to bear then.

dealyboy

Whose responsibility are the bad debts? ... the suppliers? they took the risk ... were their credit checks robust enough? ... the regulator? for requiring suppliers to maintain supplies to debtors ... the Government? for requiring the regulator to administer social policy ... or we the people? who vote for the Government and pay for the Government.

It's alright I know the answer.

JSHarris

The issue of debts has as much to do with badly run suppliers as it does a few customers that default on their bills.  The reason so many energy suppliers have gone bust over the past 3 or 4 years is primarily because they were set up by chancers who had poor business models.

A good indication of this is to look at one of the new entrants to the market back when things were wild, Octopus, and note that many of the other new entrants went bust whereas Octopus has been massively successful.  That's not an accident, it's because Octopus is well-managed whereas the others weren't.

I don't see why customers should have to bail out incompetent businesses, this wouldn't be the case with any other market sector.  For example, if my local garage goes bust then I wouldn't expect other garages in the area to charge their customers more in order to donate money to the failed garage, yet that's pretty much what happens in the energy sector.

MattMattMattUK

dealyboy said:

Whose responsibility are the bad debts? ... the suppliers? they took the risk ... were their credit checks robust enough? ... the regulator? for requiring suppliers to maintain supplies to debtors ... the Government? for requiring the regulator to administer social policy ... or we the people? who vote for the Government and pay for the Government.

It's alright I know the answer.

The suppliers are not really responsible for the bad debts. They are largely unable to fit prepayment meters, their main line of defence against non-payers, they are also unable to take meaningful enforcement action to recover debts and they are required to keep supplying non-payers with energy. 

The regulator is the entity that has blocked meaningful debt recovery, though of course if the government was that unhappy with them they could remove the head of Ofgem and replace them with someone more rationally minded. Our electoral system does not give the people the results they generally want, David Cameron was the only PM since 1935 to lead a government (The Coalition) with more than 50% of the votes cast in it's favour and the only government that had the support of more than half the electorate was Ramsay MacDonald in 1931.

MattMattMattUK

JSHarris said:

The issue of debts has as much to do with badly run suppliers as it does a few customers that default on their bills.

No it does not, the bad debts Ofgem are allowing suppliers to recover by placing a charge on everyone else are customers who refuse to pay their bills, the suppliers are blocked from taking any meaningful recovery action against those people, hence the debts being bad.

JSHarris said:

The reason so many energy suppliers have gone bust over the past 3 or 4 years is primarily because they were set up by chancers who had poor business models.

They did, but that was to do with being forced by Ofgem to sell below cost, as well as inadequate hedging, nothing to do with bad debt, the two issues are not connected. 

JSHarris said:

A good indication of this is to look at one of the new entrants to the market back when things were wild, Octopus, and note that many of the other new entrants went bust whereas Octopus has been massively successful.  That's not an accident, it's because Octopus is well-managed whereas the others weren't.

Octopus have been very successful, they have a solid business model, they have strong financial backing and they have also developed and then licensed, for a fee, their technology platform (Kraken), as a secondary revenue stream. However even Octopus have issues with bad debt, as they are blocked from taking meaningful recovery action by Ofgem.

JSHarris said:

I don't see why customers should have to bail out incompetent businesses, this wouldn't be the case with any other market sector.  For example, if my local garage goes bust then I wouldn't expect other garages in the area to charge their customers more in order to donate money to the failed garage, yet that's pretty much what happens in the energy sector.

That is nothing like what happens in the energy sector and is a total misunderstanding of both SOLR and this current bad debt issue. Better examples would be:
SOLR: Garage A goes bust after customers have paid them, all the other Garages are then forced to do that work, for free on the customers cars, but told that they can add 1% to every other customer's garage bill to recover this cost.
Bad Debt: Garage does work for customer, customer refuses to pay, the Garage regulator forces that garage to continue to do ongoing services and repairs for the non-paying customer, blocks the garage from doing anything meaningful to get their invoices paid, then finally says that the other customers should be made to pay for the non-paying customers services and maintenance. 

the_lunatic_is_in_my_head

There was a BBC article the other day about Wales not giving free school dinners during holiday periods:

https://www.bbc.co.uk/news/uk-wales-67578085

I don't say this with any malice nor do I wish to be morally superior, when you have someone who is over weight complaining the government isn't handing out free food you do have to wonder about the mentality. 

I know some are genuinely struggling but sizable cost of living payments have been handed out to those on low incomes and it does make you wonder with things like energy debt how many sit there is the cold and dark with serious financial issues and how many spend on other stuff and just don't pay the energy bill because they can't cut you off.

I guess it's easier to just take £16 off everyone to treat the symptoms but it seems it would be more productive to address the cause with those behind with their bills to gain assistance in managing their finances and making better decisions. 

MattMattMattUK

the_lunatic_is_in_my_head said:

There was a BBC article the other day about Wales not giving free school dinners during holiday periods:

https://www.bbc.co.uk/news/uk-wales-67578085

I don't say this with any malice nor do I wish to be morally superior, when you have someone who is over weight complaining the government isn't handing out free food you do have to wonder about the mentality. 

I know some are genuinely struggling but sizable cost of living payments have been handed out to those on low incomes and it does make you wonder with things like energy debt how many sit there is the cold and dark with serious financial issues and how many spend on other stuff and just don't pay the energy bill because they can't cut you off.

I guess it's easier to just take £16 off everyone to treat the symptoms but it seems it would be more productive to address the cause with those behind with their bills to gain assistance in managing their finances and making better decisions. 

Whilst in general I agree, I actually think that financial education should be compulsory in schools (I think Wales already introduced a limited program) there are a few issues with this.

The first group is those who you mention in your post who just do not care that they are behind with their payments, they will just refuse to pay because they know no meaningful action can be taken against them. The second group are those you also identify, those who would rather sit in darkness and spend the money on non-essentials. I have no sympathy for those two groups.

The third group are those who lack capacity to manage their finances properly and the fourth group are those who could manage their finances properly with guidance and being shown how, those are the groups we need mechanisms in place to either take control of their finances, or to educate them.

The final group is the fifth group, often the severely disabled, who, no matter how much they cut back cannot make their budgets balance, that group needs direct financial assistance because nothing else will make a difference. 

Even worse is that instead of allowing proper debt recovery and offering genuine assistance to the disabled, the government (and Ofgem, as it is controlled by the government) have decided that the best solution to the first issue is to pass the burden onto everyone else, and for the second issues is to largely ignore it. So we are made to pay the bills of those who refuse to pay theirs and those in genuine need are left languishing. 

JSHarris

There has been a marked change in personal behaviour as a side effect of the introduction of the welfare state all those years ago, that I believe accounts for a part of the problem.  My parents grew up in a time when there was very little in the way of government assistance with anything, only private health care, far fewer social benefits and things were definitely bloody grim for anyone that was unable to work, for any reason.

Thankfully we're more enlightened now and have made massive changes aimed at addressing social and financial inequality.  In the main these have been overwhelmingly beneficial, but the downside is that this support has created a view by some that they are entitled to everything they want, whether they can afford it or not. Obviously there are a lot of genuine cases of hardship where the system doesn't provide the support it should, but equally there are some that play the system for all they can get.

I knew a chap many years ago that did this.  He had five children, was living in two terraced council houses that had been knocked into one to house his family and had never worked in his life.  He was proud of never having officially worked (although he did loads of cash jobs on the side).  He was no fool, I'd describe him as a likeable rogue.  He knew every trick in the book to avoid work and get as much out of the benefits system as he could.  He's not alone, talk with anyone working within the benefits sector and they will know of people doing this.  Not really a solution for this problem, either.  Either we, as a society, want to provide care and support for all, or we don't.  Just as we can never eradicate crime, we will never eradicate the small proportion of society that want to freeload.

As a final point, back when I was a student I lived in a bedsit with coin meters for gas and electricity.  There were many winter evenings when I sat in the dark with no heating, because I didn't have the money for the meter.  Often it was a decision between buying food or having heating, food usually won out.  I didn't die or get ill, but I do remember how grim some of those nights were.  I wouldn't wish that on anyone, TBH.

dealyboy

@JSHarris said:

There has been a marked change in personal behaviour as a side effect of the introduction of the welfare state all those years ago, that I believe accounts for a part of the problem.  My parents grew up in a time when there was very little in the way of government assistance with anything, only private health care, far fewer social benefits and things were definitely bloody grim for anyone that was unable to work, for any reason.

Thankfully we're more enlightened now and have made massive changes aimed at addressing social and financial inequality.  In the main these have been overwhelmingly beneficial, but the downside is that this support has created a view by some that they are entitled to everything they want, whether they can afford it or not. Obviously there are a lot of genuine cases of hardship where the system doesn't provide the support it should, but equally there are some that play the system for all they can get.

I knew a chap many years ago that did this.  He had five children, was living in two terraced council houses that had been knocked into one to house his family and had never worked in his life.  He was proud of never having officially worked (although he did loads of cash jobs on the side).  He was no fool, I'd describe him as a likeable rogue.  He knew every trick in the book to avoid work and get as much out of the benefits system as he could.  He's not alone, talk with anyone working within the benefits sector and they will know of people doing this.  Not really a solution for this problem, either.  Either we, as a society, want to provide care and support for all, or we don't.  Just as we can never eradicate crime, we will never eradicate the small proportion of society that want to freeload.

As a final point, back when I was a student I lived in a bedsit with coin meters for gas and electricity.  There were many winter evenings when I sat in the dark with no heating, because I didn't have the money for the meter.  Often it was a decision between buying food or having heating, food usually won out.  I didn't die or get ill, but I do remember how grim some of those nights were.  I wouldn't wish that on anyone, TBH.

I think it's a far wider question than 'abuse' of the welfare system, that is but one part of a malaise in society that has perhaps always existed in one form or another and pervades every class and culture.

We can all think of 'groups' that 'take advantage' or whose interest is self interest to the detriment of wider society and to consequentially impoverish individuals.

JSHarris

dealyboy said:

@JSHarris said:

There has been a marked change in personal behaviour as a side effect of the introduction of the welfare state all those years ago, that I believe accounts for a part of the problem.  My parents grew up in a time when there was very little in the way of government assistance with anything, only private health care, far fewer social benefits and things were definitely bloody grim for anyone that was unable to work, for any reason.

Thankfully we're more enlightened now and have made massive changes aimed at addressing social and financial inequality.  In the main these have been overwhelmingly beneficial, but the downside is that this support has created a view by some that they are entitled to everything they want, whether they can afford it or not. Obviously there are a lot of genuine cases of hardship where the system doesn't provide the support it should, but equally there are some that play the system for all they can get.

I knew a chap many years ago that did this.  He had five children, was living in two terraced council houses that had been knocked into one to house his family and had never worked in his life.  He was proud of never having officially worked (although he did loads of cash jobs on the side).  He was no fool, I'd describe him as a likeable rogue.  He knew every trick in the book to avoid work and get as much out of the benefits system as he could.  He's not alone, talk with anyone working within the benefits sector and they will know of people doing this.  Not really a solution for this problem, either.  Either we, as a society, want to provide care and support for all, or we don't.  Just as we can never eradicate crime, we will never eradicate the small proportion of society that want to freeload.

As a final point, back when I was a student I lived in a bedsit with coin meters for gas and electricity.  There were many winter evenings when I sat in the dark with no heating, because I didn't have the money for the meter.  Often it was a decision between buying food or having heating, food usually won out.  I didn't die or get ill, but I do remember how grim some of those nights were.  I wouldn't wish that on anyone, TBH.

I think it's a far wider question than 'abuse' of the welfare system, that is but one part of a malaise in society that has perhaps always existed in one form or another and pervades every class and culture.

We can all think of 'groups' that 'take advantage' or whose interest is self interest to the detriment of wider society and to consequentially impoverish individuals.

It is, but is also, in my view, a problem compounded by those making legislation not being that good at understanding human behaviour, and how changes in policies will impact that.  The old adage "When your up to your !!!!!! in alligators it's hard to remember that your objective was to drain the swamp" applies in part, as an illustration as to how ill thought-through plans have unintended consequences, and a LOT of government policy mirrors this problem.

We all adjust our behaviour to take advantage of anything and everything.  I'm as good an example as anyone else, I've optimised our energy usage to take (a perhaps unfair) advantage of cheap off-peak prices.  I've done this in a similar way to my old friend and his playing the benefits system.  The result is that about 99.5% of our energy usage is at the cheap rate, plus I'm still getting paid about £1,000/year for the electricity we generate from our solar system (which has long since paid for itself.  Without a doubt I'm gaming the system to my advantage.