How many Energy Suppliers Will Survive?

BUFF

t0rt0ise said:

And think of all the VAT the government is raking in! There's no mention of the extra they've already had when talking about how help is going to be paid for.

bear in mind that in countries like Germany domestic energy is subject to the full rate of VAT (or equivalent) rather than reduced VAT as in the UK. Although Germany has now said that they will drop the VAT on domestic energy from 19% to 7% to help people through the energy crisis.

Section62

wittynamegoeshere said:

Section62 said:

The idea of public-sector energy suppliers has been tried, and not worked out very well.

The idea of private-sector energy suppliers has also been tried, and also not worked out very well.

Which tends to suggest the problem isn't about whether the entity is public/private, but other factors.

If you want to solve a problem you need to identify and address the issues, not do something for ideological reasons.  "We should have a public energy supply company" won't solve the problems if energy supply being privatised isn't the issue.

wittynamegoeshere said:

If you dismiss every idea because it once failed at some point in history then you can only conclude that nothing will work.

It depends how you define "history".

Robin Hood Energy sank in September 2020.  Hardly ancient history.  Nothing much has happened since then to change the situation for the better.

macman

Mobtr said:

Mstty said:

All the big well established energy suppliers will survive. 

One reason is below

April 2022 £1971 price cap 2% profit = £39.42 per customer

Oct 2022 £3600 predicted price cap 2% profit £72 per customer

Where did you get this information from or is it just made up?

If you are disputing the 2%, then that is the official Ofgem margin in the price cap. I doubt many are even managing that now, because wholesale prices have exceeded all the estimates. 

pochase

I believe Octopus is slightly over £10 per customer. That would be more like 0.5% if we take the 1971 cap as the average customer bill.

michaels

njm123 said:

michaels said:

Surely almost all the energy companies are likely to become technically insolvent due to bad debt.  I know in theory the cap will then rise to allow recovery but that then just snowballs the problem as higher prices mean even more can't pay.  If 25% don't pay over the winter then those who do pay will each have to pay 33% extra to over the shortfall.

If you get non-payment at that level, the systems failed,   you have to put everyone on prepayment plans.

It's unsustainable to have a system where those that don't pay are subsidised by those that do - especially when it hit's a level where even if there are consequences it'll be hard to enforce them due to the volume of offenders.

Can't see how that could possibly happen at the required rate, the courts, the meter fitters etc simply don't have the capacity

savers_united

michaels said:

njm123 said:

michaels said:

Surely almost all the energy companies are likely to become technically insolvent due to bad debt.  I know in theory the cap will then rise to allow recovery but that then just snowballs the problem as higher prices mean even more can't pay.  If 25% don't pay over the winter then those who do pay will each have to pay 33% extra to over the shortfall.

If you get non-payment at that level, the systems failed,   you have to put everyone on prepayment plans.

It's unsustainable to have a system where those that don't pay are subsidised by those that do - especially when it hit's a level where even if there are consequences it'll be hard to enforce them due to the volume of offenders.

Can't see how that could possibly happen at the required rate, the courts, the meter fitters etc simply don't have the capacity

They could quickly pass new powers so that the rules are changed and pre pay meters installed quicker. I guess they could work a system where those with highest levels of debt are changed over first. Add to that those already on pre payment meters and those with smart meters that could be converted to pre pay and it could probably happen quicker than you think.

There is an army of trained fitters who currently part of the smart meter roll out. 

wittynamegoeshere

Section62 said:

Robin Hood Energy sank in September 2020.  Hardly ancient history.  Nothing much has happened since then to change the situation for the better.

Your example is of a not-for-profit that attempted to survive among the private companies.

That's like putting a goldfish in a shark tank then concluding that goldfish die for no reason.

Ideology doesn't help anyone.  Many seem to accept that the govt should maintain roads but not be the monopoly supplier of the heat and water you need to survive.  We've ended up with many people having some pretty weird and very contradictory principles.

At the other end of the spectrum, I don't think many that suggest that we should look at the state running the energy industry also want the state to run the supermarkets or the car factories, but these are the daft ideas that some like to pin on anyone daring to suggest it.

What's needed is what works best.  Personally, I'd say that anything with an absolute monopoly is best off as a public service.  Where competition can genuinely exist then it's best to leave the market to it.  The last time I looked, my house had just one power cable, all the competition that supposedly exists is a contrived construction that was dreamed up to try and excuse privatising it all in the first place.

Section62

wittynamegoeshere said:

Section62 said:

Robin Hood Energy sank in September 2020.  Hardly ancient history.  Nothing much has happened since then to change the situation for the better.

Your example is of a not-for-profit that attempted to survive among the private companies.

That's like putting a goldfish in a shark tank then concluding that goldfish die for no reason.

They were a public sector energy supplier owned by Nottingham City Council. This gave them advantages not available to private sector startup energy companies. They also partnered with other local authorities with white label contracts. Local authorities are themselves large users of energy, which in terms of buying gave them the opportunity to strike very good deals, compared to what a 'goldfish' might be able to negotiate.

Your shark/goldfish analogy isn't representative of what the situation was.

wittynamegoeshere said:

Ideology doesn't help anyone.  Many seem to accept that the govt should maintain roads but not be the monopoly supplier of the heat and water you need to survive.  We've ended up with many people having some pretty weird and very contradictory principles.

Almost everyone agrees the government should have ultimate responsibility for the roads, but the road system is far from a monopoly.  For a start, in any given area there could be three different highway authorities, each responsible for their own roads.  Furthermore, whilst the government (national and local) have responsibility for the roads, the day to day maintenance (and in some cases full management) is usually contracted out to the private sector.  So again, not a very good comparator.

wittynamegoeshere said:

At the other end of the spectrum, I don't think many that suggest that we should look at the state running the energy industry also want the state to run the supermarkets or the car factories, but these are the daft ideas that some like to pin on anyone daring to suggest it.

Has anyone done that here?

wittynamegoeshere said:

What's needed is what works best.  Personally, I'd say that anything with an absolute monopoly is best off as a public service.  Where competition can genuinely exist then it's best to leave the market to it.  The last time I looked, my house had just one power cable, all the competition that supposedly exists is a contrived construction that was dreamed up to try and excuse privatising it all in the first place.

Your house having one power cable isn't really relevant to whether or not a government monopoly should exist.

If we look at the pre-privatisation arrangements, we had the CEGB responsible for electricity generation and the national distribution grid, and regional boards responsible for local distribution and customer services/billing.  The division between national grid and regional board was arbitrary, but nobody complained about the industry being 'fragmented'.  If you accept responsibility for the national and regional systems can be split without the world coming to an end, then why is it unreasonable to split the distribution function and the customer-facing functions?

What are your views on the supply of broadband and landline phones?  I assume your house only has one broadband cable - do you believe as a result of that BT should be state run and have a monopoly on the supply of broadband and landline comms?

wittynamegoeshere

I don't think any of your responses really prove or disprove anything, it's just a bunch of unrelated statements made in an assertive sounding way.

Openreach is a monopoly.  Perhaps if it was state run then everyone's bills would be lower?  This is how it's done in lots of countries.

We all seem to accept that services are supplied by a mix of public and private companies.  But there's absolutely no science or principle to which are one or the other, it's largely an accident of history and/or the ones that happened to get flogged off while the govt of the time was flogging the family silver to balance the books for that year.

The mere existence of Ofgem is probably proof in itself that market forces do not provide sufficient control for the companies.  There isn't a regulator that dictates the price of a tin of beans in Tesco, there's no need because there's actual genuine competition and people do shop around.

The_Green_Hornet

wittynamegoeshere said:

Openreach is a monopoly.  Perhaps if it was state run then everyone's bills would be lower?  This is how it's done in lots of countries.

Openreach isn't a monopoly. Other companies such as City Fibre have installed their own broadband infrastructure in towns and cities across the UK.

As the state doesn't appear to be able to run the health and education services very well I have very little faith that they would do any better in telecommunications, energy, water etc.