Energy news in general

agentcain

michaels said:

wakeupalarm said:

I don't get CornwallInsights calculation.  1 week of higher wholesale prices and the cap rises to 51% increase! 
Do they really think all the energy companies are buying every time the wholesale price peaks?

I think we are being played by the energy companies in cahoots with Ofgem.

We went from energy companies buying up to 2 years in advance, to the new energy companies buying on the day of usage with customers funds, to now making up the figures to what ever they feel like without any transparency.

Cos like every energy company has perfect foresight and buys forward at the dips....in which case why even bother with energy supply to customers, if you can call the markets perfectly you will already have more money than you could ever spend.

Or ofgem assumes purchases are made at 6 months out as a simplification and works out the average price over the period.  Would you rather go back to companies hoping they can buy on the day cheaply enough not to go bankrupt? - didn't think so.

That's their job. That's their only reason for existing. To make predictions and buy in bulk.
If they simply track the energy prices, we don't need them and they should stop existing. Remove middlemen. 

tghe-retford

StartledJesus said:

These are the consultation documents and blog published by Ofgem on 20/6/2022

<snip>

Sorry if the links are inelegant. I must dig out my 'elegant links' notes.

As a guide, you can delete the ? and anything to the right to it in a link. With one exception - links to YouTube videos have the link to the video as a query string.

https://www.ofgem.gov.uk/publications/policy-consultation-strengthening-financial-resilience

https://www.ofgem.gov.uk/publications/statutory-consultation-strengthening-fixed-direct-debit-rules

https://www.ofgem.gov.uk/publications/statutory-consultation-supplier-control-over-material-assets

https://www.ofgem.gov.uk/news-and-views/blog/blog-jonathan-brearley-ceo-ofgem-building-stronger-financially-stable-energy-suppliers-can-weather-gas-crisis

michaels

agentcain said:

michaels said:

wakeupalarm said:

I don't get CornwallInsights calculation.  1 week of higher wholesale prices and the cap rises to 51% increase! 
Do they really think all the energy companies are buying every time the wholesale price peaks?

I think we are being played by the energy companies in cahoots with Ofgem.

We went from energy companies buying up to 2 years in advance, to the new energy companies buying on the day of usage with customers funds, to now making up the figures to what ever they feel like without any transparency.

Cos like every energy company has perfect foresight and buys forward at the dips....in which case why even bother with energy supply to customers, if you can call the markets perfectly you will already have more money than you could ever spend.

Or ofgem assumes purchases are made at 6 months out as a simplification and works out the average price over the period.  Would you rather go back to companies hoping they can buy on the day cheaply enough not to go bankrupt? - didn't think so.

That's their job. That's their only reason for existing. To make predictions and buy in bulk.
If they simply track the energy prices, we don't need them and they should stop existing. Remove middlemen. 

But isn't that precisely what we expect them to do with the price cap, once they start being speculators when there is an equal chance of massive profits or spectacular bankruptcies.  There is already no competition when the price cap is the defacto price floor. 

Before the unanticipated market chaos the competition led to improved service and product innovation and lower prices, the opposite to what happens with a state controlled enterprise - see the NHS and railway track company for example - except things would be even worse than with the NHS as that is a political priority whereas investing in the energy supply business would not be.  And of course we would have another group of unionised public sector workers like the rail workers who would be holding the whole country to ransom every time efficiency savings or below inflation pay increases were proposed.

agentcain

michaels said:

agentcain said:

michaels said:

wakeupalarm said:

I don't get CornwallInsights calculation.  1 week of higher wholesale prices and the cap rises to 51% increase! 
Do they really think all the energy companies are buying every time the wholesale price peaks?

I think we are being played by the energy companies in cahoots with Ofgem.

We went from energy companies buying up to 2 years in advance, to the new energy companies buying on the day of usage with customers funds, to now making up the figures to what ever they feel like without any transparency.

Cos like every energy company has perfect foresight and buys forward at the dips....in which case why even bother with energy supply to customers, if you can call the markets perfectly you will already have more money than you could ever spend.

Or ofgem assumes purchases are made at 6 months out as a simplification and works out the average price over the period.  Would you rather go back to companies hoping they can buy on the day cheaply enough not to go bankrupt? - didn't think so.

That's their job. That's their only reason for existing. To make predictions and buy in bulk.
If they simply track the energy prices, we don't need them and they should stop existing. Remove middlemen. 

But isn't that precisely what we expect them to do with the price cap, once they start being speculators when there is an equal chance of massive profits or spectacular bankruptcies.  There is already no competition when the price cap is the defacto price floor. 

Before the unanticipated market chaos the competition led to improved service and product innovation and lower prices, the opposite to what happens with a state controlled enterprise - see the NHS and railway track company for example - except things would be even worse than with the NHS as that is a political priority whereas investing in the energy supply business would not be.  And of course we would have another group of unionised public sector workers like the rail workers who would be holding the whole country to ransom every time efficiency savings or below inflation pay increases were proposed.

They would be better businesses if they could absorb price hikes like any healthy business can. Instead they went bust during the least demanding period in terms of energy usage, when they had a wealthy amount of credit in their coffers, which all consumers had to subsidise when they declared bankruptcy. They didn't even go through winter to burn off the accumulated credit. All these pyramid schemes, with the refer a friend bonus nonsense. That's wrong, its a scam and those directors should face consequences. Otherwise, why pay them such increased salaries? With great power comes great responsibility, not just great salary.

molerat

Not strictly energy news but Scottish government looking at a one off £400 council tax levy on second and empty homes after pressure from Labour.

https://www.thescottishsun.co.uk/money/9052631/thousands-of-scots-forced-to-repay-energy-rebate/

One question is how will they identify those homes that actually receive the rebate as a Scottish government report said the rebate was unfair due to the large number of off grid homes in Scotland.

StartledJesus

Another wailing energy supplier...
https://www.cityam.com/exclusive-so-energy-criticises-ringfencing-proposals-amid-deepening-industry-row/

michaels

StartledJesus said:

Another wailing energy supplier...
https://www.cityam.com/exclusive-so-energy-criticises-ringfencing-proposals-amid-deepening-industry-row/

Energy companies also carry the debt when customers are behind without charging interest.  Stop them carrying positive balances too and the odds are they will be much quicker to call in even the slightest arrears and also look to bring in variable direct debits.  For some reason most people seem to find it easier to budget £100 per month rather than 25pm in summer and 175 per month in winter but if you want to stop energy companies carrying customer balances then that must be the way to go.  Simplest would be just to put everyone on prepayment meters....

QrizB

An article about Bulb, but also about hedging energy costs.

It seems that Bulb's 1.5M customers have paid a total of £1.2Bn in bills (£800 each) but Bulb spent £1.5Bn on wholesale energy to supply them (£1000 each) plus another £400 per customer on non-wholesale costs.

(Article shared on Twitter by a Times contributor, so I'm hoping they don't mind it being re-shared here. Mods feel free to remove the image file if this isn't OK with you.)

markin

Had bulb not hedged any its self before it went bust? Or was that the business model?

QrizB

markin said:

Had bulb not hedged any its self before it went bust? Or was that the business model?

From January, as reported in City AM:

Bulb Energy (Bulb) dropped into administration because it was unable to hedge effectively against surging wholesale energy prices.

In documents prepared by Interpath Advisory, the administrators of its parent company Simple Energy, it was revealed that Bulb had insufficient credit lines to deal with soaring gas costs.

The administrator’s report suggests the rising gas prices overpowered the energy firm’s six-month rolling hedge strategy.

More details at the link.

Edit to add:

From 2018, via Forbes, Hayden Wood the founder of Bulb:

“There aren't any macro forces in the market that would send businesses like ours, out of business,” he states.

Seems like he was mistaken.