Are OFGEM now agents of HMRC

BikingBud

Despite huge profits being realised by power generation companies the consumer is bailing out their apparent creditors and supplementing the debtors with a benefit payout. Why?

born_again

Power generation has noting to do with the company that bills you, who are not allowed large profits (somewhere in the less than 5% area)

masonic

The creditors of energy generators would tend to be banks, other financial firms, and institutional investors. Why would they need to be bailed out if the company they've lent to is realising huge profits?

Debtors would be energy suppliers, and there is one small supplier that looks like it is going to fail, but the rest of the market looks quite healthy. These firms tend not to get bailed out. Instead customers are transferred to a Supplier of Last Resort, who can claim some costs from consumers via the standing charge. The alternative would be for customers to have their supply disrupted through no fault of their own.

If you mean the consumer debt relief scheme, then I fail to see the connection with HMRC. The energy sector gets much more benefit from energy bills being paid than HMRC would.

singhini

born_again said:

Power generation has noting to do with the company that bills you, who are not allowed large profits (somewhere in the less than 5% area)

Your right  (i thought it was 2.5%) 

OP - Have a listen to the latest Martin Lewis Podcast on BBC Sounds dated 30th Oct 2025  (Martin v Ofgem boss: Why are energy bills so high (is it green levies?) | Scrap standing charges | Is the Price Cap a rip-off?

BikingBud

The fundamental issue is that the energy industry is making huge profits, and the consumer is bailing out customers who cannot pay their bills. You might wish to argue in the same manner that Starbucks apparently make nothing on coffee Octopus etc make nothing here. But money is being transferred from consumers to other parties and enabling great profits.

And worse yet is that the consumer is not only providing significant profits based on their own consumption, but additional funds are being taken to cover the inability of some to cover their own costs due to the excessive prices. Hence the comparison with HMRC recovering a tax to supplement the benefits system.

So the podcast was listened to, interesting points included:

• Industry should take responsibility!
  
• Regulators job is to set the rules
• Ofgem only regulate retailers 
• Are wholesalers regulated?
• 40% to wholesalers based upon buying gas, but they produce using things other than gas so why are we paying top price?
• Why 25% for networks and 8% for green levy
• We are paying for infra and networks and extra green levy on top yet we are still paying for wholly gas produced electricity 🧐 what are we getting for our 8%?
• Delivering greener routes to produce should be covered within the wholesalers 40%
• Do wholesalers contribute to the network costs?
• Why are they not covering all aspects of the distribution network within their 40% cut, it is their product to take to the market.
• Not setting rules for the whole market!
  
• They are driving different rules.
• Price cap is pants
• Services are to be funded fairly - how can this be so when all costs appear to fall to the consumer?
• Writing off energy debt %500 million. Debt that only exists because the market is allowed to charge too much for the product. 
• How is that possible? Why are we being creamed to cover other consumer energy debts whilst the "industry" continues to walk off with a larger bag of swag
  

Ergo OFGEM does nothing to protect the consumer from those that truly scam us and merely applies a "tax" to all other users. "Tax" that disappears into someone's swag bag.

With regards to cost neutral - If the retailers want to run a functional business they need to be more aggressive with the wholesalers to drive down their prices.

If people are suffering energy poverty due to pricing, then prices are too high - correct that pricing and inhibit the profits, don't scam other consumers. 

But the point in all of this is it is not like Tescos you need energy, you do not need everything that supermarkets sell and your shopping habits can be moderated according to what funds you have.

"Both sides" excludes the wholesalers, as the costs are baked in by the wholesale price including their vast profit, this model is inaccurate and misleading. 

• Industry to the man on the Clapham omnibus includes all aspects of energy delivery.

MattMattMattUK

BikingBud said:

The fundamental issue is that the energy industry is making huge profits, and the consumer is bailing out customers who cannot pay their bills. You might wish to argue in the same manner that Starbucks apparently make nothing on coffee Octopus etc make nothing here. But money is being transferred from consumers to other parties and enabling great profits.

The international energy sector, which extends from the fossil fuel extractors through to the end delivery point make fairly average profits, they just seem "huge" because of scale. This is the same as when people have a tantrum because Tesco make £1.6 billion in profit, ignoring that their net margin is less than three percent. Most of the profit on energy is outside the UK, it is made in the territories where gas is extracted, before being shipped to the UK, that price is set by international markets, if it is not bought then it will not be supplied, and the lights will go out.

BikingBud said:

And worse yet is that the consumer is not only providing significant profits based on their own consumption, but additional funds are being taken to cover the inability of some to cover their own costs due to the excessive prices. Hence the comparison with HMRC recovering a tax to supplement the benefits system.

Most of the issues are not caused because people cannot pay their energy bills, but because the will not pay their energy bills. This happens because energy suppliers are not allowed to take effective recovery action. Most non-payers just disappear, suppliers are not allowed to cut them off and have to continue supplying a property even when the occupier refuses to pay their bills. This is why there is a proposal that every property should start on a pre-pay tariff and only be able to move to credit once they have passed credit checks. 

BikingBud said:

So the podcast was listened to, interesting points included:

What it by anyone sensible, or was it a conspiracy theorist type, most seem to be the latter.

BikingBud said:

• Industry should take responsibility!
  
• Regulators job is to set the rules
• Ofgem only regulate retailers 
• Are wholesalers regulated?

It does, it does, correct, not by a regulator, they are by other legislation. It is not entirely clear what you mean by "wholesalers", energy is not sold wholesale, do you mean generators?

BikingBud said:

• 40% to wholesalers based upon buying gas, but they produce using things other than gas so why are we paying top price?

That is the way the energy market is set up, there are solid reasons to reform it, which are currently being reviewed by government. It does need some serious work though, because otherwise generators will hold out based on supply and demand, so the reason it is set up the way it is is so that suppliers cannot game the system by keeping generation offline to drive up prices. 

BikingBud said:

• Why 25% for networks and 8% for green levy
• We are paying for infra and networks and extra green levy on top yet we are still paying for wholly gas produced electricity 🧐 what are we getting for our 8%?

So the network can be maintained and upgraded, same for green, to decarbonise the network and make the adaptions needed to do that.

BikingBud said:

• Delivering greener routes to produce should be covered within the wholesalers 40%

Because the network is the network, the wholesale cost is the energy generation, they are separate things. 

BikingBud said:

• Do wholesalers contribute to the network costs?
• Why are they not covering all aspects of the distribution network within their 40% cut, it is their product to take to the market.

Again, unclear what you mean by "wholesalers", if you mean generators then yes, they have to pay for their connection, but they do not have to pay for the full connection cost, ultimately the cost would pass to consumers regardless of it being transparent like now, or hidden in the electricity cost. 

BikingBud said:

• Not setting rules for the whole market!

The regulator sets the rules for the regulated market, primary legislation sets the rules for generation, international markets set the prices for energy bought on the international markets. Ofgem cannot regulate international markets, neither can the UK government.

BikingBud said:

• They are driving different rules.

What does this even mean?

BikingBud said:

• Price cap is pants

The price cap is retrospective, it should probably just be abolished and left to the markets, which are highly competitive for domestic supply, but a lot of people do not like that idea.

BikingBud said:

• Services are to be funded fairly - how can this be so when all costs appear to fall to the consumer?

Are they, who defines "fair"? By "fair" do you mean someone else pays for your energy? Who else do you propose pays? 

BikingBud said:

• Writing off energy debt %500 million. Debt that only exists because the market is allowed to charge too much for the product. 

Energy debt is written off because the regulator, at the behest of the government, ties the hands of energy suppliers to stop them taking effective recovery action.

BikingBud said:

• How is that possible? Why are we being creamed to cover other consumer energy debts whilst the "industry" continues to walk off with a larger bag of swag

It does not, we are not being "creamed". The debt exist because energy suppliers are not allowed to take effective recovery action for unpaid debts. The debt largely exists because people know they can get away with not paying.

MattMattMattUK

BikingBud said:

Ergo OFGEM does nothing to protect the consumer from those that truly scam us and merely applies a "tax" to all other users. "Tax" that disappears into someone's swag bag.

I guess if you say "the world is flat, it is flat because it looks flat to me with a limited viewpoint and I am not prepared to educated myself" then it is very easy to blindly argue the world is flat.

BikingBud said:

With regards to cost neutral - If the retailers want to run a functional business they need to be more aggressive with the wholesalers to drive down their prices.

UK "wholesaler" (actually generator): Hello UAE, I don't want to pay £X for LNG, we want 25% off.
UAE: No, that is the market price, pay it or we will not sell it to you.
UK: But BikingBud says we can pay what we want.
UAE: Ok, no gas for you, we will sell it to someone else.
*lights go out.

BikingBud said:

If people are suffering energy poverty due to pricing, then prices are too high - correct that pricing and inhibit the profits, don't scam other consumers. 

That is not how pricing works, energy is sold as cost of supply, plus a margin, you seem to want to "correct" that price to sell below cost, that will result in the lights going out, not in reducing costs. The "scam" is that suppliers are not allowed to take effective debt recovery actions.

BikingBud said:

But the point in all of this is it is not like Tescos you need energy, you do not need everything that supermarkets sell and your shopping habits can be moderated according to what funds you have.

So can energy usage, both can be moderated, indeed there is a user on here who has an ongoing thread who uses very limited amounts of energy. Both food and energy can be moderated quite successfully. 

BikingBud said:

"Both sides" excludes the wholesalers, as the costs are baked in by the wholesale price including their vast profit, this model is inaccurate and misleading. 

The model is not accurate or misleading, it is international pricing and clear to everyone who takes the time to look at it.

BikingBud said:

• Industry to the man on the Clapham omnibus includes all aspects of energy delivery.

What does that even mean? It sounds like some vacuous tagline used by the typical uneducated podcaster (I know the man on the Clapham omnibus is used as a legal construct for a reasonable person, but it does not have any relevance here where the major issue seems to be lack of knowledge and understanding, not reasonableness).