When will competition resume?

wittynamegoeshere

Given that the energy industry got the rise it wanted, so in theory should now be profitable, shouldn't they now start actually competing against each other for our custom?

The cap was only ever intended to be a maximum.  It was previously too low in relation to the wholesale price but no longer is.

Or is it all a nice cosy cartel of the remaining big companies and Ofgem?  Old chums back together again, now they've got rid of those pesky upstarts.

QrizB

wittynamegoeshere said:

Given that the energy industry got the rise it wanted, so in theory should now be profitable, shouldn't they now start actually competing against each other for our custom?

Competition will resume when suppliers are able to sell energy for less than the cap and make a profit.

Currently, they can't (you can check the gas and electricity wholesale prices if you're interested).

As of April, they might be able to (although that isn't a given). I'm not expecting to see below-the-cap tariffs on general offer until mid-March.

[Deleted User]

wittynamegoeshere said:

Or is it all a nice cosy cartel of the remaining big companies and Ofgem?  Old chums back together again, now they've got rid of those pesky upstarts.

Energy suppliers, like all businesses, are subject to Competition and Markets Authority regulations. Cartels are illegal and any company or persons that indulge in such practices are opening themselves up to significant fines. As suggested, competition will return but the days of suppliers undercutting each other to gain market share may not be as marked as they were. 

Astria

The cap was only ever intended to be a maximum.  It was previously too low in relation to the wholesale price but no longer is.

are you saying that I can start a new energy company, buy wholesale gas and electric, sell it for less than the cap, and still make a profit? If so, please explain your figures as I don't see how yet.

brewerdave

The way the wholesale market is, and with OFGEM looking to make setting up a utility supplier more financially stringent, 'm afraid true competition won't return ....until Hell freezes over !!!

DiseasedBunny

I’m hoping for zogs return to be honest, they did nothing wrong other than their supplier going bust

Thrugelmir

wittynamegoeshere said:

Given that the energy industry got the rise it wanted, so in theory should now be profitable, shouldn't they now start actually competing against each other for our custom?

Energy is a global commodity in short supply. The real issues lie outside of these shores. If the UK is to switch to other forms of renewable energy generation then profits will need to be made to pay for this. There's no free lunches in this world. Everything comes at a cost. 

wittynamegoeshere

Obviously I'm referring to the market post-April.  You'd think some of them would be starting to wake up and pull some customers in now that they know they'll be profitable shortly.  OK, they might be a loss-leader for a month, but they've always paid referral and cashback fees to get new customers so this concept would be nothing new.

If the energy market as a whole makes trading profitably unlikely then isn't there a case for having something other than a marketplace system?  If there's no competition then why even bother with the concept of a "supplier"?  They don't actually produce anything, we could all just buy power from National Grid and not bother with having what's basically a sales agent.

It's a bit weird that we're all basically stuck with a supplier that many of us didn't even choose, who receives government subsidy and loans to keep paying its staff to basically do nothing all day.  Presumably these companies have staff who would normally advertise, assist with signups and sell its products - what are they currently doing, other than getting a salary that gets shoved onto our bill?

I'm suggesting that there's been some kind of step-change - the upstarts have been successfully removed, perhaps they're hoping to get back to the good old days where they didn't really compete at all and all raised prices in unison.  Yes, a cartel, but an unspoken one, just as we had previously.

If they don't start competing then we need to start asking what is the point of the system?

QrizB

wittynamegoeshere said:

It's a bit weird that we're all basically stuck with a supplier that many of us didn't even choose, who receives government subsidy and loans to keep paying its staff to basically do nothing all day.

What makes you think that this is happening? Citations, please.

Presumably these companies have staff who would normally advertise, assist with signups and sell its products - what are they currently doing, other than getting a salary that gets shoved onto our bill?

I suspect these staff have been roped into other CS roles and are helping with the SoLR transfers.

MWT

wittynamegoeshere said:

If they don't start competing then we need to start asking what is the point of the system?

... or we remove the mechanism that is preventing competition... the Ofgem cap...

No idea where you get the idea that the remaining suppliers are getting 'government subsidies and loans', the only supplier in that position is Bulb, which is in the special administration process...

wittynamegoeshere

Who's lending me £200 to pay my bill?  This is an interest-free state bailout loan.  The only reason it's being made to individual consumers is so that it doesn't feature as a debt on the supplier's balance sheets, in which case many would be insolvent.  In theory we'll be asked to repay it, in practice we'll see.

We need either free competition (without a cap) or state control.  What we currently have is no competition or benefit to the consumer and lots of cost, all giving no added value over the situation that would exist if we just bought our power from Ofgem, National Grid or whoever.