Do we really have competition in the energy markets?

Spoonie_Turtle

BUFF said:

to be fair he did post that last October ...

Yep, not quite a necro thread but it was at least sleeping deeply!

MikeJXE

wanoennogs said:

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?  

It seems like we do.

Not quite the same as it was.

According to the amount of posts on here regarding DD increases 

They are all in competition to get as much of OUR money into THEIR banks 

Mstty

Fair enough a sleeping post but come this October or before I do expect some foxes to hit the market.

DD increases are normally sorted out with facts and figures present to your supplier. If you know your usage, can demonstrate it and talk kWh you can prove it. If they don't agree raise a complaint and bobs your uncle all sorted. Most people can't be bothered though working it out they just want to pay (£x) and don't have any justification.

ProDave

Mstty said:

ariarnia said:

right now not really. but that's because of the government intervention. 

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. 

Both Cornwall insights predictions for Q3 and Q4 are below the current £2500 EPG let alone the £3000 EPG from April. Are you sure it will be two years before some enterprising company brings a fix to the table in 2023?

The skeptic in me says nobody will want to be the first to drop their price below the energy cap and will want to pocket extra profit hiding behind the energy cap.

Lets hope when prices do drop lower than the energy cap it gets a lot of media attention so customers start demanding a drop in consumer prices of energy.

EdwardB

ProDave said:

Mstty said:

ariarnia said:

right now not really. but that's because of the government intervention. 

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. 

Both Cornwall insights predictions for Q3 and Q4 are below the current £2500 EPG let alone the £3000 EPG from April. Are you sure it will be two years before some enterprising company brings a fix to the table in 2023?

The skeptic in me says nobody will want to be the first to drop their price below the energy cap and will want to pocket extra profit hiding behind the energy cap.

Lets hope when prices do drop lower than the energy cap it gets a lot of media attention so customers start demanding a drop in consumer prices of energy.

Funny you mention that because Martin Lewis was on R4 Today programme this morning with a warning about the £500 increase in Government cap from April and begging the Government to do a rethink.

He said that the OFGEM cap will automatically reduce in July because wholesale prices have been back to pre Russian Invasion prices.  He urged them to maintain current cap as we will already see the drop of £67 a month.  It makes sense because the OFGEM cap does not require Government subsidy, they had budgeted the increase when forecasts were £6100, but they are way lower. 

Gov is not expected to extend the £67 or replace it until October, there is a question whether every household needs it if gas prices are coming down but gas prices will increase in Winter if the Russian War is still on.  The trick will be for EU to maintain and increase their reserves.

In my opinion it is better to provide to those on benefits, low pensions and the squeezed middle on fixed incomes, HMRC and DWP can be used to identify these.

The £650 direct payment is being replaced by £900 but the £650 was paid six months apart of one year (covering 12 months) while the £900 is being paid in 3 x 300 payments extending to April 2024 so it is actually less than the £650.  If we give Ukraine all the weapons it needs to kick Russia out this crisis will be over. 

If you ask me the Energy Companies have had far too easy a ride on this and we are paying for their mistakes in the Electricity Standing Charge.

BUFF

Mstty said:

Fair enough a sleeping post but come this October or before I do expect some foxes to hit the market.

Outfox the market perhaps? 

[Deleted User]

EdwardB said:

ProDave said:

Mstty said:

ariarnia said:

right now not really. but that's because of the government intervention. 

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. 

Both Cornwall insights predictions for Q3 and Q4 are below the current £2500 EPG let alone the £3000 EPG from April. Are you sure it will be two years before some enterprising company brings a fix to the table in 2023?

The skeptic in me says nobody will want to be the first to drop their price below the energy cap and will want to pocket extra profit hiding behind the energy cap.

Lets hope when prices do drop lower than the energy cap it gets a lot of media attention so customers start demanding a drop in consumer prices of energy.

Funny you mention that because Martin Lewis was on R4 Today programme this morning with a warning about the £500 increase in Government cap from April and begging the Government to do a rethink.

He said that the OFGEM cap will automatically reduce in July because wholesale prices have been back to pre Russian Invasion prices.  He urged them to maintain current cap as we will already see the drop of £67 a month.  It makes sense because the OFGEM cap does not require Government subsidy, they had budgeted the increase when forecasts were £6100, but they are way lower. 

Gov is not expected to extend the £67 or replace it until October, there is a question whether every household needs it if gas prices are coming down but gas prices will increase in Winter if the Russian War is still on.  The trick will be for EU to maintain and increase their reserves.

In my opinion it is better to provide to those on benefits, low pensions and the squeezed middle on fixed incomes, HMRC and DWP can be used to identify these.

The £650 direct payment is being replaced by £900 but the £650 was paid six months apart of one year (covering 12 months) while the £900 is being paid in 3 x 300 payments extending to April 2024 so it is actually less than the £650.  If we give Ukraine all the weapons it needs to kick Russia out this crisis will be over. 

If you ask me the Energy Companies have had far too easy a ride on this and we are paying for their mistakes in the Electricity Standing Charge.

I am not sure that I would describe Shell Energy’s £121M (2020) and £96M (2021)  losses as a ‘far too easy ride’. Similarly, Octopus Energy made a loss of £1.5M in the year ending 30 April 2021 which increased to a £161.6M loss in the year ending 30 April 2022. (Source: Companies House)

How much more pain would you like Ofgem to impose on suppliers? The large number of supplier failures 14 months or so ago was in part due to the Ofgem Cap that forced suppliers to sell on energy at a loss. Ofgem has recognised this by changing the Cap to a quarterly change which now includes adding unforeseen costs accrued in the previous quarter. Why are we not seeing new entrants coming to the market?

diystarter7

EdwardB said:

ProDave said:

Mstty said:

ariarnia said:

right now not really. but that's because of the government intervention. 

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. 

Both Cornwall insights predictions for Q3 and Q4 are below the current £2500 EPG let alone the £3000 EPG from April. Are you sure it will be two years before some enterprising company brings a fix to the table in 2023?

The skeptic in me says nobody will want to be the first to drop their price below the energy cap and will want to pocket extra profit hiding behind the energy cap.

Lets hope when prices do drop lower than the energy cap it gets a lot of media attention so customers start demanding a drop in consumer prices of energy.

Funny you mention that because Martin Lewis was on R4 Today programme this morning with a warning about the £500 increase in Government cap from April and begging the Government to do a rethink.


If you ask me the Energy Companies have had far too easy a ride on this and we are paying for their mistakes in the Electricity Standing Charge.

Hi

I completely agree.

All governments often help those right at the top  a lot, lot more than those with their own property, working and paying taxes via PAYE.

If anyone thinks any gov really cares about them more than their own ambitions, then I'm lost for words

Credit to Martin Lewis for stance against profiteering.

There is supposed to be competition just like supermarkets but most of us are aware of the reality.

Thanks

BUFF

diystarter7 said:

EdwardB said:

ProDave said:

Mstty said:

ariarnia said:

right now not really. but that's because of the government intervention. 

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. 

Both Cornwall insights predictions for Q3 and Q4 are below the current £2500 EPG let alone the £3000 EPG from April. Are you sure it will be two years before some enterprising company brings a fix to the table in 2023?

The skeptic in me says nobody will want to be the first to drop their price below the energy cap and will want to pocket extra profit hiding behind the energy cap.

Lets hope when prices do drop lower than the energy cap it gets a lot of media attention so customers start demanding a drop in consumer prices of energy.

Funny you mention that because Martin Lewis was on R4 Today programme this morning with a warning about the £500 increase in Government cap from April and begging the Government to do a rethink.


If you ask me the Energy Companies have had far too easy a ride on this and we are paying for their mistakes in the Electricity Standing Charge.

Hi

I completely agree.

All governments often help those right at the top  a lot, lot more than those with their own property, working and paying taxes via PAYE.

If anyone thinks any gov really cares about them more than their own ambitions, then I'm lost for words

Credit to Martin Lewis for stance against profiteering.

There is supposed to be competition just like supermarkets but most of us are aware of the reality.

Thanks

How is losing money on domestic supply profiteering (which is not what Martin Lewis' stance is about anyway)?

There is not competition atm on domestic supply because they are supplying at below cost (subsidised by the government/Treasury).

EdwardB

[Deleted User] said:

EdwardB said:

ProDave said:

Mstty said:

ariarnia said:

right now not really. but that's because of the government intervention. 

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. 

Both Cornwall insights predictions for Q3 and Q4 are below the current £2500 EPG let alone the £3000 EPG from April. Are you sure it will be two years before some enterprising company brings a fix to the table in 2023?

The skeptic in me says nobody will want to be the first to drop their price below the energy cap and will want to pocket extra profit hiding behind the energy cap.

Lets hope when prices do drop lower than the energy cap it gets a lot of media attention so customers start demanding a drop in consumer prices of energy.

Funny you mention that because Martin Lewis was on R4 Today programme this morning with a warning about the £500 increase in Government cap from April and begging the Government to do a rethink.

He said that the OFGEM cap will automatically reduce in July because wholesale prices have been back to pre Russian Invasion prices.  He urged them to maintain current cap as we will already see the drop of £67 a month.  It makes sense because the OFGEM cap does not require Government subsidy, they had budgeted the increase when forecasts were £6100, but they are way lower. 

Gov is not expected to extend the £67 or replace it until October, there is a question whether every household needs it if gas prices are coming down but gas prices will increase in Winter if the Russian War is still on.  The trick will be for EU to maintain and increase their reserves.

In my opinion it is better to provide to those on benefits, low pensions and the squeezed middle on fixed incomes, HMRC and DWP can be used to identify these.

The £650 direct payment is being replaced by £900 but the £650 was paid six months apart of one year (covering 12 months) while the £900 is being paid in 3 x 300 payments extending to April 2024 so it is actually less than the £650.  If we give Ukraine all the weapons it needs to kick Russia out this crisis will be over. 

If you ask me the Energy Companies have had far too easy a ride on this and we are paying for their mistakes in the Electricity Standing Charge.

I am not sure that I would describe Shell Energy’s £121M (2020) and £96M (2021)  losses as a ‘far too easy ride’. Similarly, Octopus Energy made a loss of £1.5M in the year ending 30 April 2021 which increased to a £161.6M loss in the year ending 30 April 2022. (Source: Companies House)

How much more pain would you like Ofgem to impose on suppliers? The large number of supplier failures 14 months or so ago was in part due to the Ofgem Cap that forced suppliers to sell on energy at a loss. Ofgem has recognised this by changing the Cap to a quarterly change which now includes adding unforeseen costs accrued in the previous quarter. Why are we not seeing new entrants coming to the market?

Something tells me that Shell's £8.9 BILLION per quarter and £32 BILLION will somehow comfort them.

Anyone who has worked for a corporate knows you can make any accounts look like a loss.  The structure of these companies allows them to move where the profits are.  Some will create reserves, others will buy from companies they control, others charge for using their own brand.