So now OFGEM has said how much we are ALL paying for failed energy firms

ihatetrump

Free? Free with price caps?

Free? - yes just like the 'free' cash they used from Customer Advance Deposits - apparently used for all manner of things - paying themselves (via their own SPV) for 'marketing services', lending to a building company that the shareholders/directors just  happened to own and giving interest free to loans to directors. Free cash used for everything except successfully purchasing and hedging future energy supplies. Definitely Free

[Deleted User]

ihatetrump said:

Free? Free with price caps?

Free? - yes just like the 'free' cash they used from Customer Advance Deposits - apparently used for all manner of things - paying themselves (via their own SPV) for 'marketing services', lending to a building company that the shareholders/directors just  happened to own and giving interest free to loans to directors. Free cash used for everything except successfully purchasing and hedging future energy supplies. Definitely Free

If you are an advocate of better regulation; better energy supplier security; mandatory hedging etc then expect this to come at an additional cost to customers. For example, all airlines have to place an insolvency bond with their Regulator based on the total number of seats on their aircraft fleets. This money has to be raised from somewhere and I have no doubt that airline passengers are paying for all the costs associated with this bond. Even with this bonding in place, airlines fail because market conditions change. 

I believe that history will show that a large number of the supplier failures could have been avoided had Ofgem revised the Cap and allowed suppliers to charge more. This though would not have suited the Government narrative that it was protecting consumers. In truth, all the Government’s inaction has done is to push the costs into the future with additional supplier failure costs being added along the way. Remember, Ofgem is a Government Department that sits within BEIS.

ihatetrump

If you are an advocate of better regulation

What's so wrong with better regulation?

Using the analogy of the airline industry is one comparison - but this is generally for one off purchases. How about the banking industry as another comparison? - would you be prepared to have your salary going into an unregulated bank where there were no guarantees on getting your money back?

It seems perversely wrong to me that as an example, an 85 year pensioner living on the state pension as their only source of income and who has always had their utilities provided by (say) British Gas (many pensioners know nothing about switching, and wouldn't know how to start) is expected to pay an extra £68 just for the 6 months until October (who knows how much more after that) to pay for the reckless (and potentially illegal) practices of a company like AVRO.

The removal of the price cap and allowing companies such as AVRO to charge more would simply have delayed the inevitable and allowed them to suck even more out their customers through 'advance customer payments' 

So yes, IMO better regulation is clearly needed.

MattMattMattUK

ihatetrump said:

If you are an advocate of better regulation

What's so wrong with better regulation?

Using the analogy of the airline industry is one comparison - but this is generally for one off purchases. How about the banking industry as another comparison? - would you be prepared to have your salary going into an unregulated bank where there were no guarantees on getting your money back?

Better regulation is usually conflated with more regulation and more regulation is often not beneficial. Regulation does generally have a cost, more regulation generally costs more for no benefit, better/good regulation generally has more short term cost but less long term cost.

ihatetrump said:

It seems perversely wrong to me that as an example, an 85 year pensioner living on the state pension as their only source of income and who has always had their utilities provided by (say) British Gas (many pensioners know nothing about switching, and wouldn't know how to start) is expected to pay an extra £68 just for the 6 months until October (who knows how much more after that) to pay for the reckless (and potentially illegal) practices of a company like AVRO.

It would be entirely fair that energy should be charged at what it costs, without subsidy or market distortion. We may take the view that the state pension of £180 per week is not enough, for those on just a state pension they are likely to be in receipt of pension credits so they will be on more, if they do not own their own home or have a disability then they will likely get more on top. However the vast majority of people arrive at pension age not having made a net contribution, so they have not "paid in", they arrive at pensionable age having cost the country. So we then need to look at taxes, everyone needs to pay more, but especially the bottom two thirds of earners who have the lowest rate of income taxation in the EU (the top third have the fifth highest, higher than in Germany and Norway, 1% lower than France), people need to pay more tax to cover both the services they use throughout their life, as well as the cost of their pensions in retirement (or fund the costs of current pensioners, in the hope that they will get something when they retire themselves).

ihatetrump said:

The removal of the price cap and allowing companies such as AVRO to charge more would simply have delayed the inevitable and allowed them to suck even more out their customers through 'advance customer payments' 

The price cap makes no sense, forcing suppliers to sell below cost is both disastrous to the market and insane economically, the price cap should be scrapped.

ihatetrump said:

So yes, IMO better regulation is clearly needed.

I agree better regulation is needed, but not more, better. I also think better means not forcing suppliers to sell below cost,  the price cap in it's current incarnation is not fit for purpose, it should be scrapped.

QrizB

ihatetrump said:

It seems perversely wrong to me that as an example, an 85 year pensioner living on the state pension as their only source of income and who has always had their utilities provided by (say) British Gas (many pensioners know nothing about switching, and wouldn't know how to start) ...

What is it with "pensioners" being shorthand for the financially and technologically illiterate, anyway?

My parents are in their late 70s, regularly switch utilities and have been using the internet, email etc. since the 1990s.

On the other hand some of my workmates are in their 30s and neither know nor care what they're paying for electricity or gas, and have never looked at their occupational pension statements.

MattMattMattUK said:

However the vast majority of people arrive at pension age not having made a net contribution, so they have not "paid in", they arrive at pensionable age having cost the country.

Here's a rather elderly article on just that:
https://www.thisismoney.co.uk/money/news/article-2215070/Are-contributor-burden-nations-finances--Squeezed-middle-increasingly-dependent-state.html