Puzzled by Profits

jimjames

nheather said:

One thing that has been puzzling me is the massive profit increases being enjoyed by the energy providers.

It's great news that the providers are making so much money as it means that Bulb which is now owned by the taxpayer is making a massive contribution to the coffers.

Oh wait - it's not. It's actually costing us around £2billion rather than generating any money.

wittynamegoeshere

pochase said:

Only a few minutes old, the BG first half year profit is £ 98 Million

https://www.bbc.co.uk/news/business-62666221

Customer numbers are a bit confusing, they claim over 9 million homes, but only 7.26 customers.

In other words they are earning just over £2 per month per customer. 

That may be what they are publishing as their profit, but that is not the amount that they are costing each customer.

Their profits are what's left of the money after paying all their salaries, bonuses, company cars, palatial offices, etc etc etc.

They are costing each of their customers a lot more than this amount.

Besides which, as pointed out above, it's all smoke and mirrors anyway, as the other parts of their business are making a killing by selling highly profitable energy at very high prices to BG, neatly shifting the profits away from the customer-facing division.

wittynamegoeshere

Astria said:

QrizB said:

nheather said:

One thing that has been puzzling me is the massive profit increases being enjoyed by the energy providers

...

what I’m talking about is the energy providers - the likes of Octopus

It's been reported by others on this forum that Octopus made a profit of £11 per customer last year.

£11 on an average bill of £1971 is 0.56%.

Yes, the reason Octopus actually make a half-decent profit half the time is because of their other business activities, such as their Kraken platform, which every supplier should use IMO.

That would be extremely unhealthy.  In all markets there should be competition, give one company a stranglehold then they'll quickly take advantage of it.

pochase

wittynamegoeshere said:

pochase said:

Only a few minutes old, the BG first half year profit is £ 98 Million

https://www.bbc.co.uk/news/business-62666221

Customer numbers are a bit confusing, they claim over 9 million homes, but only 7.26 customers.

In other words they are earning just over £2 per month per customer. 

That may be what they are publishing as their profit, but that is not the amount that they are costing each customer.

Their profits are what's left of the money after paying all their salaries, bonuses, company cars, palatial offices, etc etc etc.

They are costing each of their customers a lot more than this amount.

Besides which, as pointed out above, it's all smoke and mirrors anyway, as the other parts of their business are making a killing by selling highly profitable energy at very high prices to BG, neatly shifting the profits away from the customer-facing division.

There is even a name for this - "cost".

And the cost is also regulated by Ofgem in the cap.

Xbigman

British Gas homecare made most of BG's profits. BG's retail energy division appears to have made a loss. 

And Shells average over charge of customers that needed correcting is about £10.


Darren 

wittynamegoeshere

pochase said:

wittynamegoeshere said:

pochase said:

Only a few minutes old, the BG first half year profit is £ 98 Million

https://www.bbc.co.uk/news/business-62666221

Customer numbers are a bit confusing, they claim over 9 million homes, but only 7.26 customers.

In other words they are earning just over £2 per month per customer. 

That may be what they are publishing as their profit, but that is not the amount that they are costing each customer.

Their profits are what's left of the money after paying all their salaries, bonuses, company cars, palatial offices, etc etc etc.

They are costing each of their customers a lot more than this amount.

Besides which, as pointed out above, it's all smoke and mirrors anyway, as the other parts of their business are making a killing by selling highly profitable energy at very high prices to BG, neatly shifting the profits away from the customer-facing division.

There is even a name for this - "cost".

And the cost is also regulated by Ofgem in the cap.

How much is it at the supplier you work at?

jj_43

Simply profits are up, because bills are up. The % profit margin allowed on £2000, is double the £1000 bill. Energy supplier make huge profits. That's why they can give huge dividends to the owners. Customers finance their various failed strategies such as £1bn in failed investments into boiler controls, or paying for their various trading activities, or energy sourcing so they can ship cheap energy produced here abroad for a higher price.

[Deleted User]

jj_43 said:

Simply profits are up, because bills are up. The % profit margin allowed on £2000, is double the £1000 bill. Energy supplier make huge profits. That's why they can give huge dividends to the owners. Customers finance their various failed strategies such as £1bn in failed investments into boiler controls, or paying for their various trading activities, or energy sourcing so they can ship cheap energy produced here abroad for a higher price.

No, the % margin allowed is exactly the same - in fact it might get slightly reduced in tomorrow's announcement.

The actual £ profit per customer might increase, up to a huge £20 per year in some cases!  Not sure a £1.50 per month reduction is going to make a huge difference.

Supplier is not distributor.  Distributor is not generator.  Generator is not fuel supplier.  All are different companies.  This price cap and profit calculation applies only to the first of those.  The distributor has something similar.  Generators and fuel suppliers are not regulated by OFGEM in the same way (or at all), and are mainly overseas companies working on the global market.

jj_43

Xbigman said:

British Gas homecare made most of BG's profits. BG's retail energy division appears to have made a loss. 

And Shells average over charge of customers that needed correcting is about £10.


Darren 

Not correct. BG homecare profits fell 88% from £60m to £7, retail energy profits fell to £98m from £172m.
source: Interim results for the period ended 30 June 2022

jj_43

supplier, distributors, generators, midstream, upstream - all designed to extract optionality and profits at the expense of customers, who finance all this.