Energy news in general

bristolleedsfan

victor2 said:

MattMattMattUK said:

Great, another cost that the rest of us will have to pick up, it really is about time that balances stopped being protected. 

Didn't OFGEM change the licensing to require suppliers to ringfence customer credit balances? 

I think Octopus objections caused OFGEM not to ........

https://www.current-news.co.uk/octopus-energy-criticises-crude-ringfencing-calls-as-it-pushes-for-rigorous-market-reform/#:~:text=According to Octopus Energy – the,the net cost £5.

Scot_39

victor2 said:

MattMattMattUK said:

Great, another cost that the rest of us will have to pick up, it really is about time that balances stopped being protected. 

Didn't OFGEM change the licensing to require suppliers to ringfence customer credit balances? 

Not AFAIK the new nomral.

Ofgem have repeatedly resisited doing so - as would increase suppliers capital operating costs.

Part of the reason annualised DD cap is cheaper than standard credit cap - is a presumption on credit balances (not applicable to MVDD accounts of course) - and so positive cash flow - with an inherent better operational cash flow.  Essentially not having to finance a month or 3 months loan to consumers after energy supplied.

The last I read they had invented a new financial health metric for suppliers.

And stated they would insist on those failing holding 20% or more of their gross CCBs on cash balance sheets.

I initially thought that might mean 20% the norm - but having another quick scan - I dont have time to read the doc right now - as seems to be two triggers - they could direct a higher holding.

https://www.ofgem.gov.uk/sites/default/files/2023-07/FRC Decision doc - July 2023.pdf

Ironically the system was meant to go live yesterday / today.

It may of course have been replaced by another system - but this was the exercise I got that 20% figure from

debitcardmayhem

Are we talking about the same OFGEM, who mandated the suppliers to make sure that consumers don’t go into debit, hence the weird and wonderful array of methods of determining the monthly DD and making CCBs larger.….surely it’s not the same chocolate teapot.

Scot_39

CCBs acording to Ofgem have been falling.

To around £220 iirc from £250 the year before - in the last data output I rewad - from last autumn iirc.

Chrysalis

MattMattMattUK said:

Great, another cost that the rest of us will have to pick up, it really is about time that balances stopped being protected. 

No balances to protect if everyone is either pre pay or variable DD?

Scot_39

For those who have run or worked in business finance - they quickly learn importance of business cashflow and to price in  financing costs of getting it going negative.

Ofgem - as yet another supplier goes to the wall under their regulatory framework - were certainly roundly attacked for weaknesses in past SoLR failure analysis.

The collapse announced here on the day their new market resilience plan was to - perhaps did - kick in - designed in part to avoid a repeat of SoLR costs - coincidence ?

But at least they realise it exists when calculating cap differentials and the negative cost implications of ring fenced CCBs.

Ax to whether it would be better to pay those costs built into rates - rather than everyone suffering SoLR costs despite not gaining from cheap suppliers rates - a mute point as Ofgem not minded to do so.

Annualised DD rate discounts will I hope shift to reflect the year round credit model being adopted by many.
But only if - so users CCB cash flow savings not subsidising others - exclude those paying in debit by MVDD

Only 1 of the 3 Ofgem caps is based on paying consistently after consumption. And that - the standard credit payment method - currently carries a £120 cap premium.

wrf12345

I doubt if the energy companies themselves are paying up front for the energy they sell on, so cashflow depends on both money in and money out. Some of the older companies are still on three/six month paper billing cycles which seems silly for all concerned (customers don't really keep track of consumption etc) and crazy DD estimates are also a horror show for customers. The whole system is over-complex and ridden with electronic gremlins, these energy retail companies are potentially obsolete as more tech rolls out but I think they are hoping no-one will notice that.

Scot_39

It is still less in cash accounts when someone pays after consumption than before.

Regardless of when they themselves pay for the fuel.

People on standard credit as above pay £120 for the privilige of paying in arrears - many of them being moved to billing every 30 days. No doubt to reduce the credit costs / risks.  I would hope the uplift on cap would reduce over time to reflect that.

But Ofgem does need to do more when suppliers go rogue on annualised plan DD levels.

But their averages suggest the levels on averare are fairly low - around £220-230 iirc the last data set - down about £20 on year before - I'm happy to sacrifice the interest on that sort of credit - to save the £120 pro rata on rates vs standard credit.

And it doesn't really matter whether EOn the parent - or EOn Next the retail - or  Centrica / British Gas etc etc - bill you - it still needs to employ the staff and be registered and authorised / regulated in the UK to do so.

And it would probably be if anything worse if they did - based on my experience having worked for smaller operations gobbled up by big corporates.

Ildhund

Scot_39 said:

... the levels on averare are fairly low - around £220-230 iirc the last data set ...

... coincidentally released yesterday: https://www.ofgem.gov.uk/publications/debt-and-arrears-indicators

TroubledTarts

Ildhund said:

Scot_39 said:

... the levels on averare are fairly low - around £220-230 iirc the last data set ...

... coincidentally released yesterday: https://www.ofgem.gov.uk/publications/debt-and-arrears-indicators

I particularly like the fact that the rise in smart meters (which apparently are very easy to disconnect energy domestically) have actually meant fewer disconnections due to dent.....practically none