Energy price cap to be reviewed at 3 months "to help consumer."

Astria

wittynamegoeshere said:

It would be much simpler to just get rid of the whole charade of "competition".  We're all lumbered with the supplier we had when the music stopped, or one that was thrown at us by Ofgem when our supplier went bust.  We can't switch, and the government decides what price they charge.  This is not a marketplace or competition of any kind.

What exactly is the point of these "supplier" companies (that don't actually "supply" anything).  They're energy agents, just a pointless middleman who takes a cut of our money.

The government decides the MAXIMUM they can charge, energy companies are free to undercut each other if they wish to. Unlikely to happen much at the moment however, but there has been some decent fixed tariffs around.

The "energy agents" are the same as in any market - they buy in bulk and sell on at a profit. Just like a super market or corner shop. Even subscription companies are the same, for example, you can pay Sky directly or you can pay a middle man and get it possibly cheaper.

agentcain

Astria said:

wittynamegoeshere said:

It would be much simpler to just get rid of the whole charade of "competition".  We're all lumbered with the supplier we had when the music stopped, or one that was thrown at us by Ofgem when our supplier went bust.  We can't switch, and the government decides what price they charge.  This is not a marketplace or competition of any kind.

What exactly is the point of these "supplier" companies (that don't actually "supply" anything).  They're energy agents, just a pointless middleman who takes a cut of our money.

The government decides the MAXIMUM they can charge, energy companies are free to undercut each other if they wish to. Unlikely to happen much at the moment however, but there has been some decent fixed tariffs around.

The "energy agents" are the same as in any market - they buy in bulk and sell on at a profit. Just like a super market or corner shop. Even subscription companies are the same, for example, you can pay Sky directly or you can pay a middle man and get it possibly cheaper.

THAT is the only benefit. The idea that energy companies gather energy demand from various consumers and accurately predict their requirements before buying energy in bulk in advance is the only reason they exist and the only benefit the consumer has. 

As the system runs currently, consumers are forced to pay increased unit prices, even though the wholesale price went down. They are forced to pay expenses that have nothing to do with their consumption; ie increased standing charges to cover SOLRs.

The failure of these companies and by extend of ofgem is that they couldn't provide the only functionality they can offer. They literally had one job and they failed at it.

pochase

diystarter7 said:

pochase said:

You got one point wrong here. Yes a supplier can decrease the rates whenever they want or not do so, but if the cap goes down they have to reduce their prices.

So yes, if the prices come down a three month cap review will help the consumer. And yes, if the prices increase and the cap rises it will not benefit the consumer, but who wants to see even more increased standing charges because more suppliers go bust. 

You really believe that.. I guess you have more faith in the competition between the supplies than I have.

Read again what I have written. They can decrease the price, or not if they don't want to do so. Why would that mean I think they will reduce it on their own in the current situation.

And that is exactly why the three month can be beneficial, with a cap they are not allowed to charge more than the cap.

diystarter7

pochase said:

diystarter7 said:

pochase said:

You got one point wrong here. Yes a supplier can decrease the rates whenever they want or not do so, but if the cap goes down they have to reduce their prices.

So yes, if the prices come down a three month cap review will help the consumer. And yes, if the prices increase and the cap rises it will not benefit the consumer, but who wants to see even more increased standing charges because more suppliers go bust. 

You really believe that.. I guess you have more faith in the competition between the supplies than I have.

Read again what I have written. They can decrease the price, or not if they don't want to do so. Why would that mean I think they will reduce it on their own in the current situation.

And that is exactly why the three month can be beneficial, with a cap they are not allowed to charge more than the cap.

Looks like you are i a miniority.

There is no reason, no reason whatsoever for the suppliers to lower prices asap but they dont. They use the price cap as some sort of minimum charge to hit customers hard. The suppliers are not making billions in profits by selling it cheap but you know that.

QrizB

diystarter7 said:

There is no reason, no reason whatsoever for the suppliers to lower prices asap but they dont. They use the price cap as some sort of minimum charge to hit customers hard. The suppliers are not making billions in profits by selling it cheap but you know that.

If by "the suppliers" you mean "the companies that domestic consumers buy energy from", they are not making billions in profit at all.

markin

wittynamegoeshere said:

They could be really "helpful" to consumers and review the cap monthly.  Then we wouldn't have a cap at all.

Reviewing it every 3 months is a big step towards just getting rid of it completely, as is probably the plan.

It was a temporary measure to protect the people that don't fix from extreme profiteering, it was meant to end next year i think, Would have to look it up. It was 6 months probably just to save them work and it was a steady price so it worked out fine.

Astria

diystarter7 said:

pochase said:

diystarter7 said:

pochase said:

You got one point wrong here. Yes a supplier can decrease the rates whenever they want or not do so, but if the cap goes down they have to reduce their prices.

So yes, if the prices come down a three month cap review will help the consumer. And yes, if the prices increase and the cap rises it will not benefit the consumer, but who wants to see even more increased standing charges because more suppliers go bust. 

You really believe that.. I guess you have more faith in the competition between the supplies than I have.

Read again what I have written. They can decrease the price, or not if they don't want to do so. Why would that mean I think they will reduce it on their own in the current situation.

And that is exactly why the three month can be beneficial, with a cap they are not allowed to charge more than the cap.

Looks like you are i a miniority.

There is no reason, no reason whatsoever for the suppliers to lower prices asap but they dont. They use the price cap as some sort of minimum charge to hit customers hard. The suppliers are not making billions in profits by selling it cheap but you know that.

Yes, and if the price cap was reviewed tomorrow and lowered, all the suppliers would be forced to reduce their prices.

Domestic energy suppliers are likely not making billions in profits, but the people who are selling them the energy might well be.

For example, the local garage are currently selling petrol for £1.75/litre. How much do you think they are buying it for?