Petition to regulate energy price rises

70ian

Terrylw1 wrote: »

Ofgem specifically regulates those businesses that cannot be opened up to competition, or where competition is not yet established, such as gas and electricity transmission systems and electricity distribution networks. To protect consumers from unfair pricing by these monopolies, Ofgem sets price controls. Over the past three years, price controls have reduced customers’ bills by over £1 billion per year.


http://www.berr.gov.uk/files/file32549.pdf


The government has specific targets to tackle fuel poverty so Suppliers cannot disadvantage that plan. So whilst it may not be direct, there are some controls that prevent them doing whatever they like.

There is a price control framework in place for the prices charged by monopoly companies and the cost of distributing gas or electricity accounts for between 15-20% of the annual gas or electricity bill.

The government's fuel poverty targets are separate from this price control framework and there are no legal responsibilities on energy suppliers to charge or set prices at a level that would prevent energy consumers from falling into fuel poverty. Suppliers can only be subject to informal political pressure on prices.

Anything the suppliers currently do to support the fuel poor is voluntary in nature - e.g. social tariffs, rebates for certain groups of qualifying customers, etc. It is also piecemeal and is highly unlikely to solve the problem of fuel poverty - the number of people in fuel poverty is rising, not decreasing at the moment, largely because of increasing fuel bills.

For more information here's a link about some new research in this area
http://www.which.co.uk/reports_and_campaigns/house_and_home/Reports/utilities_and_services/energywatch_poor_news_article_557_129355.jsp

Terrylw1

The point being made is that no Supplier is going to raise prices high enough to impact the governments targets in tackling fuel poverty. They wouldn't want the sudden attention and resulting investigation into how they can raise their prices.

Fuel poverty won't be tackled this way, of course not. Fuel poverty stems from too many factors to think a small bit of energy efficiency will help.

Fuel poverty efforts are also too new at this stage and mark the start of tackling the problem.

Suppliers are obliged to stick to the PSR commitments, anythig beyond that is not a legal responsibility...at this stage.

Mazio_2

I think in plain English what we are saying is there is no mechanism to control these companies and basically they are to powerful and greedy they are unjustifiably increasing their prices and causing the majority of people to suffer needlessly. Of course they need to make a profit the dispute is with how much at our expense and the argument they put up is just not being backed up by the huge profit gains they are making remember we have also had several mild winters and this would have distorted their profits and we are only seeing this now.

Cardew

Mazio wrote: »

I think in plain English what we are saying is there is no mechanism to control these companies and basically they are to powerful and greedy they are unjustifiably increasing their prices and causing the majority of people to suffer needlessly. Of course they need to make a profit the dispute is with how much at our expense and the argument they put up is just not being backed up by the huge profit gains they are making remember we have also had several mild winters and this would have distorted their profits and we are only seeing this now.

There are very few firms that have a social conscience, so if ‘ maximising profit on behalf of shareholders’ is defined as ‘greedy’, then that applies to the whole of Capitalist society.

The problem was the privatisation of an Industry supplying an essential commodity. Unless we take back the companies into Public ownership and start to subsidise gas and electricity prices then this situation will continue.

Nobody can deny that the profits the gas and electricity companies are making are huge, or obscene if you prefer, but that is on the back of world energy prices and not the distribution networks.

If it were the distribution networks making the fat profits, then an excellent non-profit making firm like Ebico would be able to be cheaper than the others – and they ain’t.

It is very much like the situation with Shell and their recently announced £13.9Billion profit; that is because the world price for oil has soared and not because their garages in UK are making loads of money – they are barely profitable.

The only way to substantially reduce our prices is to force firms to sell to GB ltd at below world prices; and while you are at it get Shell to do the same.

It is all very well using emotive words like ‘greedy & suffering’ and complaining about prices, but not so easy to come up with practical ideas to solve the situation.

Mazio_2

Sorry Cardew these profits from the utility companies are being contributed to in the UK not just worldwide (other wise [FONT=&quot]why would foreign utility companies buy in the UK) [/FONT] . There are always means of controlling them if the political will is there they are not emotive words just read your own answers in allot of these threads people are afriad and you are using emotive words like the end of capitalism what I am saying is they need regulating with a fair profit margin, and in a democratic society you have to accept not everyone agreeing. If we do nothing their profits will just keep going up and starting a petition is a practical way of showing our intentions.
What about if they make over a certain profit one year they rebate it back the following year?
By the way I do agree with allot of what you say.

Cardew

Mazio,
Anything I post here is, obviously, just my view of the situation and I am not expecting people to see things in the same light.

Of course the profits are being of these companies are derived from the UK, who said otherwise? What I am saying is that it is world energy prices(controlled largely by OPEC and Russia) that are the root cause. You cannot force companies to sell their assets to UK at below the market value - and that includes petrol from Shell, BP, ESSO etc.

Without taking them back into private ownership, they will simply refuse to sell their energy to UK and sell it on the world market.

Various Governments have sold off all manner of public assets to privatised companies who have made £billions in profit.

Ministry of Defence land and housing for instance was sold off for a pittance and, with the the huge increase in land and housing prices, the companies who bought those assets have made 'obscene' profits.

That really is no different to them selling off the energy industry, who likewise have seen their assets increase in value dramatically.

If we make the energy companies sell their energy below the market value, should we make the property companies who bought the MOD land and housing sell their assets at below market value?

You suggestion at the end of your post is in effect another windfall tax. Don't forget the Government took several £billion in a 'one off' windfall tax some years ago.

To advocate continual 'windfall taxes' is simply saying, in retrospect we sold the companies off too cheaply and so we are reneging on the deal.

Mazio_2

Cardew I totally agree with everything you have written but I still think that the government has a role here in coming up with something that is fair to both utility company (shareholders) and safe guards the consumer I feel at the moment the pendulum is far to much in the Utility or distributor company favor and we are a captive market with limited choices and like any business they will try to maximize their profit and see what they can get away with.
By the way my suggestion was just that thats why someone more skilled then me should come up with some formula or regulation and I believe thats what the government should be looking into.

Terrylw1

I would like to see a firm mapping principle applied between the energy they buy and what they bill you.

From experience of that side of the sector, these places don't even have mechanisms to compare the 2.

So, they charge based on an overall on their portfolio as opposed to looking at why they have spikes one month and lulls the next.

It is a very complex area with tons of factors but it's more out of lack of will than anything from them.

I know a PM who had come up with a suggestion to save them 10's of millions a year by pro-actively resolving some of these bill-to-settlement link issues for a low yearly cost. The answer he got was "nice idea, but it's not on our list of priorities".

I've seen many ideas like that get disgarded. Why? They can just raise their prices so why should they work harder for your £££'s?

Ken68

Unbelievable, Terry, Ofgem failure again. Heads should roll, pensions threatened.
Not so long ago, the guvment found there was not enough storage capac ity for imported gas for when our own ran out.
Time for an enquiry.

loz86

I've signed the petition