Energy regulator Ofgem has this morning announced the Energy Price Cap will rise by 5%

Scot_39

the_lunatic_is_in_my_head said:

MattMattMattUK said:

 British Gas's profits are still below their 2019 figures 

https://www.theguardian.com/business/2023/jul/27/british-gas-record-profit-price-cap-increase

Says highest ever?

The profit boom was largely thanks to a tweak to the regulator Ofgem’s energy price cap that allowed the supplier to recoup some of the costs of supplying its 10 million customers during the energy crisis.

So they enter a market as a business, don't do well when times are tough but get to claim extra money down the line due to previous tough times, few businesses get that luxury. 

I do agree most wouldn't notice if the profit element was taken off their energy bill but as I've said before all those companies going bust resulting in millions of customers being shipped off to the remaining bigger companies (with the price cap covering the cost of this process) and now they all have more customers earning them their 1.8% (which isn't really as simple as their profit being capped at an exact 1.8%) and greater economies of scales with which to trade. 

We need energy resellers to supply and bill us.  Many without the backing of much more profitable energy produces to subsidise them - failed over last 2 years - a cost we all paid for.

Ofgem exists to ensure the market operates - it is not a consumer champion or charity - its their to ensure a functioning market place - rightly or wrongly.

If you are referring to the Ofgem EBIT allowance in the cap - it is now afaik 2.4%.

And that is EBIT - its not final profit.

And for companies that were trading at a loss during the crisis - and have seen consumer debt rise - that I - interest charges - likely to be non trivial.

An EBIT of 2.4 % in a cyclical - at times debt heavy industry - like energy - is not an attractive investment margin.

And one that sees companies often vilified in the press to boot.

Ask yourself why Shell leaving domestic markets in UK, Germany and at least one other EU nation if such a great business to be in.

molerat

Scot_39 said:

Is it just me or does that That Ofgem table appear to have been updated since the first release.

It now looks accurate - but sure earlier today it was showing a sr ave price change from 24.x p not 27.35 as per the page link above that linked to it.

I actually looked at it - the difference wasn't even vat in my region - and went back to the raw period 11a and 11b industry tables - to work out my regional ave SR and MR price change of c1.35p/kWh.

I either badly misread it - or that table was showing 3-4p increases earlier.

Yes it has been updated.  My electric was showing just over 25p for Oct-Dec, now the correct 27.26p

pfpf

Scot_39 said:

t0rt0ise said:

pfpf said:

i know i should have links to most stuff by now but is it too early to see a regional breakdown of costs anywhere??

Scroll down a bit here for regional costs.. https://www.ofgem.gov.uk/information-consumers/energy-advice-households/get-energy-price-cap-standing-charges-and-unit-rates-region

Is it just me or does that That Ofgem table appear to have been updated since the first release.

It now looks accurate - but sure earlier today it was showing a sr ave price change from 24.x p not 27.35 as per the page link above that linked to it.

I actually looked at it - the difference wasn't even vat in my region - and went back to the raw period 11a and 11b industry tables - to work out my regional ave SR and MR price change of c1.35p/kWh.

I either badly misread it - or that table was showing 3-4p increases earlier.

it is now accurate. it should have been accurate from the start. they don't have much to do really.

the_lunatic_is_in_my_head

Scot_39 said:

If you are referring to the Ofgem EBIT allowance in the cap - it is now afaik 2.4%.

I'm referring to whatever the other poster was referring to  

But I understand it's principles and the increase.

Scot_39 said:

And for companies that were trading at a loss during the crisis - and have seen consumer debt rise - that I - interest charges - likely to be non trivial.

An EBIT of 2.4 % in a cyclical - at times debt heavy industry - like energy - is not an attractive investment margin.

I understand margins are slim but slim margins can benefit companies by starving off competition, companies are free to set their prices* and could increase them but doing so allows competition to enter the market on a short term slimmer margin until they too achieve economies of scales to widen the margin. Low margin = less competition. 

*I understand one aspect of the energy supply pricing is set by the cap but that doesn't affect the principle. 

I also understand customer debt is a problem, that enters into a realm of social and moral obligations for corporate businesses, ultimately nobody forced these people to set up businesses in an industry that many would deem "essential", they've only done so because they see a profit in it somewhere. If they all fold then a bunch of people stood up to be counted as the government and it'll be their job to sort out (not that this prospect is one that would necessarily go well). 

Scot_39 said:

Ofgem exists to ensure the market operates - it is not a consumer champion or charity - its their to ensure a functioning market place - rightly or wrongly.

I understand this too, the main point was acquiring customers is expensive, the supply companies had millions of customers handed to them and my understanding is the bill was paid through the price cap, there's also now less competition for those customers to go to, that's a fortunate position to be in. 

Scot_39 said:

Ask yourself why Shell leaving domestic markets in UK, Germany and at least one other EU nation if such a great business to be in.

I could make a flippant comment about there maybe being more profits to be had by exploiting the impoverished in less developed countries but it probably wouldn't be productive. 

debitcardmayhem

Ok let’s look at profits, I realise this an energy forum, and that energy suppliers are meant to have a capped 1.8 or 2.4 % profit but the anti-capitalist tendencies posters, we see them all the time grousing about BG (a subsidiary of Centrica) doubling profits just this year and ignore 2022/2021/2020/2019. Nobody mentions the foreign owners of other suppliers and their profits.

Don’t come on here and not shout at MoneySupermarket who made approx 262M gross profit on revenue of 387M or even 89M net , a bit more than the energy suppliers. 

This country is built on investment and innovation, and dare I say hard work, e.g. Octopus, ARM etc , jeez stick to the “news” papers/facebook/X etc , this is not an eastern bloc, if you think it’s what you deserve then Go East Young Man.

TMSG

molerat said:

Q1/24 cap Default tariff cap level: 1 January 2024 to 31 March 2024

Q3/23 cap Default tariff cap level: 1 October 2023 to 31 December 2023

Prices excluding vat

I just dloaded the file (again, as it seems to have changed since this morning?) and the title of the Q1/24 cap pdf is this (see titlebar and left tab):


These Ofgem guys are priceless.

badmemory

I think the reason people knock british gas being foreign owned is because they have the word british in their name.

debitcardmayhem

badmemory said:

I think the reason people knock british gas being foreign owned is because they have the word british in their name.

Sorry, when did British Gas I.e. Centrica become foreign owned, have I slept for a few years.

Gerry1

badmemory said:

I think the reason people knock british gas being foreign owned is because they have the word british in their name.

Are you living up to your name, perhaps you meant Scottish Spanish Power, owned by Iberdrola?

QrizB

badmemory said:

I think the reason people knock british gas being foreign owned is because they have the word british in their name.

I don't know about that, a bit of it is owned by me!