possible cheaper tarriff for the future

oogie1000

I am sorry but all the figures cannot be true based on current prices.  Having been told they can hike their prices and then again later this year, i dont feel sorry for energy firms intent on rewarding directors with huge bonuses and salaries, then issuing massive dividends on the back of peoples hardship. Is the 2% after dividends and bonuses, perhaps not, but it is after wages are paid out. 

If this was administered correctly,  it could work well,  but so long as people don’t get behind it and come up with such drivel that they could be on EDF’s payroll,  trying to convince others to not even try,  i dispare.  

 

markin

1.6% after tax on the Cap rate.

Mstty

If any of the domestic energy suppliers make any money on the current Apr2022 that would be a surprise due to the collapse of so many suppliers and the weight that puts on the ones left.

However with the October price cap very few seem to be able to come up with how Ofgem are reaching their headline grabbing £2800 with most coming in under that due to wholesale price trends.

So I suspect this builds in the return to 5% profitability.

[Deleted User]

There is a complete misunderstanding about not-for-profit organisations where people believe that staff are not paid and no profit is made. As others have correctly said, so called not-for-profit energy companies were amongst the many to fail even though they had substantial financial backing from local taxpayers. Dabbling in the energy market has proved to be an expensive lesson for some Councils and their taxpayers.

[Deleted User]

agentcain said:

Astria said:

Anyone can startup their own energy company as long as they have sufficient funds to do so (or appropriate backing/funding) They'd have to have sufficient customers to make it worthwhile though, so they'd probably be making a loss whilst they did that.

The end result wouldn't be much different to what we have already as they have to buy the energy from someone to sell it on.

The difference would be that you would make sure administration is competent enough to properly hedge energy
You know, like what these suppliers were supposed to?
Also, it could segregate customer credits, so that they are not affected by the companies debts (as opposed to what happened with all the companies that went bust)

Putting consumer credits into some form of escrow would lead to increased costs for consumers. Suppliers are required to pay their wholesalers in advance of supply in 30 minute settlements ( hence one of the reasons for smart metering). If they cannot use consumer credits as cashflow, then the money will have to be borrowed and I doubt, given the parlous state of the energy sector and our economy, that Banks will be lining up to lend money at a favourable interest rate to some of the smaller suppliers.

A better system, in my view, is that adopted by the CAA for airlines. As part of their Licence approval process, airlines are required to declare the maximum number of aircraft in their fleet and the maximum number of passenger seats. Based on the total number of seats, the airline pays a Bond into a central fund. The fund is used to cover airline collapses.

If an airline wants to increase the number of aircraft and seats, then it goes through the approvals process again and, if successful, it increases the size of its Bond.

There is no reason why a similar system would not work for energy companies. Suppliers would lodge a Bond based on a maximum customer limit. If a supplier wanted to increase its market share then it would need to go through some modified form of approvals’ process, and lodge a larger Bond. This process would also give Ofgem the chance to review the supplier’s financial situation and operation; eg, will they have enough CS staff for a larger customer base etc.

Ultrasonic

oogie1000 said:

I am sorry but all the figures cannot be true based on current prices.  Having been told they can hike their prices and then again later this year...

Domestic energy suppliers buy electricity and gas to sell on to consumers. The prices they have to pay have shot up over the last year which in turn has lead to increased prices to customers. Prices set by the price cap increasing is not an indication of energy supply companies making huge profits. 

peter_the_piper

British gas corp were privatised in 1972 to save the consumer money. I wonder if they would still have been dearer now.