Do we really have competition in the energy markets?
wanoennogs
Forumite 11 Posts
in Energy
One thing about the energy markets puzzles me. All the energy companies use the same electrical grid and the same gas pipelines.
When I switch gas or electricity supplier I stay on the same electrical grid. For example, if I switch electricity supplier they don't come out to my home and switch me to their electricity grid. The same with gas, if I switch supplier they don't come to my home and switch me to their gas pipes.
Bearing in mind what I have said, do we really have competition in our energy markets?
When I switch gas or electricity supplier I stay on the same electrical grid. For example, if I switch electricity supplier they don't come out to my home and switch me to their electricity grid. The same with gas, if I switch supplier they don't come to my home and switch me to their gas pipes.
Bearing in mind what I have said, do we really have competition in our energy markets?
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competition comes mostly from fixes. energy companies can buy energy ahead on the wholesale market and gamble that the price will go up by the time they have to pay for it (called hedging) so they can sell it to variable rate customers on the ofgem cap for more than they paid. so they offer fixes for customers to reduce their risk of loss because they can balance their hedged gas with the guarenteed price payed for the fix.
normally if you do a comparison there would be 20 or so different companies all with different balances of rate and standing charge and time of day. you could shop around for the best fix for your usage patterns. now not so much because no company could offer a fix lower than the government cap given wholesale prices. maybe in a couple of years if things start to stabilise.
It's amazing how those with a can-do attitude and willingness to 'pitch in and work' get all the luck, isn't it?
Please consider buying some pet food and giving it to your local food bank collection or animal charity. Animals aren't to blame for the cost of living crisis.
How much has changed since then dont know as went into the dark world of financial services afterwards. If you look at https://www.energynetworks.org/customers/find-my-network-operator you can see who your distributor is which will be fixed irrespective of which retailer you are dealing with.
So yes, there is competition between retailers who are the people you contract with. What their scope is to negotiate with the other three elements given transmission and distribution are fixed may limit the realistic level of competition and dont know if the controls for the likes of SSE who have generation, distribution and retail arms still exists.
It's amazing how those with a can-do attitude and willingness to 'pitch in and work' get all the luck, isn't it?
Please consider buying some pet food and giving it to your local food bank collection or animal charity. Animals aren't to blame for the cost of living crisis.
There is no competition between the owners of the grid - that’s why the amount they are allowed to charge, spend, invest, etc is so heavily regulated.
The suppliers, on the other hand, are free to compete on price, service, clever tariffs, other incentives (free gas on Fridays or whatever) and are likely to do so again.
It has nothing to do with the pipes, it comes down to a company being granted the right to bill you for what is shown on your meter and them being able to buy gas on wholesale market, which is done by taking options on futures. It is a form of gambling, as each futures market trades more contracts that can ever be delivered and when they expire one takes the loss or makes a profit.
We had a form of competition up until 2021, around August, in that smaller operators offered substantial discounted rates, not as good as previous years but tolerable.
For me that was the first sign of what was to come, a few companies went to the wall and it was harder to find new rates at competitive rates because these companies all buy a mix of futures and current price. The futures are called hedges. One defunct company CEO was 96% hedged but the company still went bust.
Since then 32 energy companies have stopped trading, some execs admitted they were going to be fine because they personally held the option on valuable futures but the company and staff would go to the wall. Despite this the customers get taken on by the likes of Shell Energy and others where they are paid to take each customers on. The balance of the customer remains the same and any debt is underwritten by the hike on your Electricity Standing Charge.
The energy companies have been pulling the wool over the eyes of consumers and OFGEM alike for many years. They hid their profits by buying through companies they controlled and of course they sucked £15 BILLION from us for so called smart meters. Only now they are being flipped into pre-payment mode, 320,000 in 2022!
People have been warning about the smart meter scam for years, how there was paltry benefit to the consumer, out of date SMET1 meters were being installed which became bricks if you changed supplier and how the only real benefit was to the energy companies who were spending other peoples money and would never waste so much money if it was their own. I heard a guy on radio the other day who was cattle prodded into getting a smart meter and it was still a SMET1. Such is the disdain they have for their customers.
Now we have underwritten them again as all this relief to every household will need to be repaid by us, our children and our children's children. Meanwhile the shareholders have got away without paying a penny despite billions in dividends over the years.
Meanwhile checkout the BBC video on the undercover British Gas subcontractor who relishes the excitement of forcing vulnerable customers onto a pre-payment meter whilst admitting he knew the person who was out and had asthmatic child would be cut off and unable to get a top up card for 10 days.