Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • Former MSE Paloma
    • By Former MSE Paloma 10th Jun 14, 7:34 PM
    • 526Posts
    • 245Thanks
    Former MSE Paloma
    MSE News: Explain your prices, Ofgem tells big six energy giants
    • #1
    • 10th Jun 14, 7:34 PM
    MSE News: Explain your prices, Ofgem tells big six energy giants 10th Jun 14 at 7:34 PM
    Ofgem said suppliers' failure to engage with consumers on wholesale prices rises is undermining public confidence ...

    Read the full story:

    Explain your prices, Ofgem tells big six energy giants



    Click reply below to discuss. If you havenít already, join the forum to reply. If you arenít sure how it all works, read our New to Forum? Intro Guide.

Page 1
    • GooliesOfFire
    • By GooliesOfFire 10th Jun 14, 10:30 PM
    • 379 Posts
    • 103 Thanks
    GooliesOfFire
    • #2
    • 10th Jun 14, 10:30 PM
    • #2
    • 10th Jun 14, 10:30 PM
    Just nationalize the bloody thing. Privatized it just doesn't work :P
    • shadowspy24
    • By shadowspy24 10th Jun 14, 10:37 PM
    • 232 Posts
    • 118 Thanks
    shadowspy24
    • #3
    • 10th Jun 14, 10:37 PM
    • #3
    • 10th Jun 14, 10:37 PM
    It's actually pretty simple really, I'm surprised ofgem haven't figured out their business model:

    Wholesale prices increase => "We have to increase prices as wholesale costs have gone up and we can't absorb the price rises any more" => Prices go up by 10-20% 2 weeks later.

    Wholesale prices decrease => Nothing happens => 6 months later "Wholesale prices are only a small part of the cost of supplying gas/electricity and other factor have to be taken into account. Also we bought 6 years worth of gas/electricity at the high price to stabilise prices so we'll pass on the cuts once that has been used up" => Prices go down by 1% Six months later and only one utility.
    • Bluebirdman of Alcathays
    • By Bluebirdman of Alcathays 10th Jun 14, 11:04 PM
    • 2,748 Posts
    • 3,171 Thanks
    Bluebirdman of Alcathays
    • #4
    • 10th Jun 14, 11:04 PM
    • #4
    • 10th Jun 14, 11:04 PM
    It's actually pretty simple really, I'm surprised ofgem haven't figured out their business model:

    Wholesale prices increase => "We have to increase prices as wholesale costs have gone up and we can't absorb the price rises any more" => Prices go up by 10-20% 2 weeks later.

    Wholesale prices decrease => Nothing happens => 6 months later "Wholesale prices are only a small part of the cost of supplying gas/electricity and other factor have to be taken into account. Also we bought 6 years worth of gas/electricity at the high price to stabilise prices so we'll pass on the cuts once that has been used up" => Prices go down by 1% Six months later and only one utility.
    Originally posted by shadowspy24
    What are you blithering on about? Prices go down by 1%? Huh?
    • insanegloss
    • By insanegloss 11th Jun 14, 7:50 AM
    • 120 Posts
    • 69 Thanks
    insanegloss
    • #5
    • 11th Jun 14, 7:50 AM
    • #5
    • 11th Jun 14, 7:50 AM
    This is simply OFGEM wanting to look like they are doing something. Nothing more.

    They're own report actually broadly explains why bills haven't come down.

    https://www.ofgem.gov.uk/gas/retail-market/monitoring-data-and-statistics/understanding-energy-prices-great-britain/supply-market-indicator

    Essentially the huge figures reported in the media are next to meaningless. It refers to the spot price for next day delivery, whilst demand is low (it's summer!) And storage is already pretty much full. Hence no one can take advantage of such prices.
    Ex BG complaints veteran of 6 years!
    • minislim
    • By minislim 11th Jun 14, 8:50 AM
    • 345 Posts
    • 209 Thanks
    minislim
    • #6
    • 11th Jun 14, 8:50 AM
    • #6
    • 11th Jun 14, 8:50 AM
    the big six are clearly up to something.
    as whenever i do a price comparison of all the energy companies none of them ever are at the top of the lists.

    the regulator and government needs to something about them. and soon.
    • Pincher
    • By Pincher 11th Jun 14, 8:59 AM
    • 6,516 Posts
    • 2,491 Thanks
    Pincher
    • #7
    • 11th Jun 14, 8:59 AM
    • #7
    • 11th Jun 14, 8:59 AM
    We should have bought Russia for a song when they were going bankrupt, like America did with Alaska. They get a European passport and democracy, we get cheap gas. We could be selling the oil and gas to China now. Gordon Brown could have issued a special bond to raise the money. Use the Collateralised Debt Obligation model, sell them to banks, and let them sell these junk bonds to each other, and let them go bankrupt in 2008. Then buy the bonds back for pennies and cancel them. Instead of the oligarchs owning Russia, the British empire now owns it.
    • Andy_WSM
    • By Andy_WSM 11th Jun 14, 9:12 AM
    • 2,179 Posts
    • 4,603 Thanks
    Andy_WSM
    • #8
    • 11th Jun 14, 9:12 AM
    • #8
    • 11th Jun 14, 9:12 AM
    If that's the best OFGEM can come up with, then sack the lot of them!

    The last time they opened their traps they forced bills to go up, by meddling with the number of tariff's on offer and forcing suppliers to charge daily standing charges.

    Waste of space. The energy companies can do as they please, make their share holders and directors very happy and know that no one will stop them.

    • Former MSE Helen
    • By Former MSE Helen 11th Jun 14, 12:12 PM
    • 2,324 Posts
    • 971 Thanks
    Former MSE Helen
    • #9
    • 11th Jun 14, 12:12 PM
    Guest comment: 'You've got the right to buy energy at a fair price', Ofgem says
    • #9
    • 11th Jun 14, 12:12 PM
    Ofgem's CEO, Dermot Nolan, explains why energy providers need to be more transparent about their prices...

    Read the full story:

    Guest comment: 'You've got the right to buy energy at a fair price', Ofgem says



    Click reply below to discuss. If you havenít already, join the forum to reply. If you arenít sure how it all works, read our New to Forum? Intro Guide.

    • insanegloss
    • By insanegloss 11th Jun 14, 12:33 PM
    • 120 Posts
    • 69 Thanks
    insanegloss
    They need to get the story they put out to consumers straight, not with some populist nonsense.

    Give us a figure that's based on trends on forward pricing taken into account various hedging strategies (to give a realistic range of wholesale pricing) with the best forecast of costs they have to get a true sense of if the companies are increasing their margins significantly. Also remember to include margins of error, otherwise the whole thing is meaningless.

    Surely it's simply stuff?!
    Ex BG complaints veteran of 6 years!
    • JC_Derby
    • By JC_Derby 11th Jun 14, 12:35 PM
    • 684 Posts
    • 239 Thanks
    JC_Derby
    The big six will try and foist the blame onto the DNO's as they are currently an easy target, especially after the winter storms. Let's hope ofgem tell them, that doesn't wash.
    • Consumerist
    • By Consumerist 11th Jun 14, 1:00 PM
    • 5,298 Posts
    • 2,647 Thanks
    Consumerist
    Energy companies tell us they want to rebuild trust and that the energy market is competitive. If this is true, they need to put their words into action. One of the most important things they can do is to be clear on their prices.
    The energy companies will tell Ofgem whatever they think Ofgem wants to hear. The appalling failure of Ofgem is that it believes what it hears from the energy companies while they are laughing at Ofgem and their customers all the way to the bank.

    Ofgem is wholly ineffective for the consumer and the sooner they are replaced by a regulator who will actually regulate, the better.
    Warning: In the kingdom of the blind, the one-eyed man is king.
    • Uxb
    • By Uxb 11th Jun 14, 1:32 PM
    • 1,306 Posts
    • 1,533 Thanks
    Uxb
    Meanwhile this study by the EIA suggests existing prices need to go MUCH higher to pay for the replacement infrastructure required due to expiring lifetimes of existing kit.
    As reported in the DT

    http://www.telegraph.co.uk/finance/newsbysector/energy/10873477/Europe-at-risk-of-blackouts-warns-IEA.html
    Quote extract
    “Wholesale power prices are 20pc below recovery costs so there is no appetite to invest. Europe needs to look at the design of its energy market very closely,” he said.
    • Bluebirdman of Alcathays
    • By Bluebirdman of Alcathays 11th Jun 14, 7:56 PM
    • 2,748 Posts
    • 3,171 Thanks
    Bluebirdman of Alcathays
    the big six are clearly up to something.
    as whenever i do a price comparison of all the energy companies none of them ever are at the top of the lists.

    the regulator and government needs to something about them. and soon.
    Originally posted by minislim
    http://www.uswitch.com/gas-electricity/guides/switching-small-energy-supplier/

    Read this, educate yourself about why the big 6 will never appear at the top of your comparisons.

    Why not smash an extra 100 quid on your shopping bill if you darken the door of a big 4 supermarket?

    Or pay extra for your toothpaste if it happens to be made by Unilever or Procter & Gamble?

    People are being hammered by the state for exercising free choice. It's high time the playing field was leveled.
    • Trix3y
    • By Trix3y 18th Jun 14, 9:37 AM
    • 39 Posts
    • 39 Thanks
    Trix3y
    Rip off
    Ofgem is completely useless and in the back pockets of the big six.If they had any integrity or backbone the situation with the energy market would have been resolved years ago. What is the point of asking the big six to explain themselves? they will simply come up with some fairy story which Ofgem will accept. I believe Ofgem is staffed by ex employees of the big six so how can they be independent .Government need to stop talking and take some action and get a regulator who represents the consumer not the provider. It is sites like this and Which who have driven change.
    • Bluebirdman of Alcathays
    • By Bluebirdman of Alcathays 18th Jun 14, 9:58 AM
    • 2,748 Posts
    • 3,171 Thanks
    Bluebirdman of Alcathays
    Ofgem is completely useless and in the back pockets of the big six.If they had any integrity or backbone the situation with the energy market would have been resolved years ago. What is the point of asking the big six to explain themselves? they will simply come up with some fairy story which Ofgem will accept. I believe Ofgem is staffed by ex employees of the big six so how can they be independent .Government need to stop talking and take some action and get a regulator who represents the consumer not the provider. It is sites like this and Which who have driven change.
    Originally posted by Trix3y
    Government make smaller suppliers pay less tax than the big 6. They could level the playing field, that might be a start.
    • Consumerist
    • By Consumerist 18th Jun 14, 10:41 AM
    • 5,298 Posts
    • 2,647 Thanks
    Consumerist
    Government make smaller suppliers pay less tax than the big 6. They could level the playing field, that might be a start.
    Originally posted by Bluebirdman of Alcathays
    Well, of course, the government has already done that. When they reduced green taxes in energy bills, it was to the advantage of the big six because the smaller suppliers don't pay green taxes anyway.
    Warning: In the kingdom of the blind, the one-eyed man is king.
    • Bluebirdman of Alcathays
    • By Bluebirdman of Alcathays 18th Jun 14, 11:37 AM
    • 2,748 Posts
    • 3,171 Thanks
    Bluebirdman of Alcathays
    Well, of course, the government has already done that. When they reduced green taxes in energy bills, it was to the advantage of the big six because the smaller suppliers don't pay green taxes anyway.
    Originally posted by Consumerist
    Key word reduced. The big 6 still have to pay ECO and WHD. Remove these unfair levies, and the vast majority of the population would get a better deal.

    http://www.bbc.co.uk/news/business-24741541
    • Consumerist
    • By Consumerist 18th Jun 14, 12:22 PM
    • 5,298 Posts
    • 2,647 Thanks
    Consumerist
    . . . Remove these unfair levies, and the vast majority of the population would get a better deal.
    Originally posted by Bluebirdman of Alcathays
    It is not surprising that the big six want to stifle competition from the smaller suppliers.

    It does highlight the abject failure of the big six to take advantage of the economies of scale which they should have due to their size. The suspicion, of course, is that they are making economies of scale but they are hiding them so they don't have to pass them on to the consumer. The shareholders, however, do very nicely and I suspect that is your primary interest.
    Warning: In the kingdom of the blind, the one-eyed man is king.
    • Bluebirdman of Alcathays
    • By Bluebirdman of Alcathays 18th Jun 14, 1:01 PM
    • 2,748 Posts
    • 3,171 Thanks
    Bluebirdman of Alcathays
    It is not surprising that the big six want to stifle competition from the smaller suppliers.

    It does highlight the abject failure of the big six to take advantage of the economies of scale which they should have due to their size. The suspicion, of course, is that they are making economies of scale but they are hiding them so they don't have to pass them on to the consumer. The shareholders, however, do very nicely and I suspect that is your primary interest.
    Originally posted by Consumerist
    My primary interest is seeing the people of this country receiving lower prices (admittedly we do rather well on energy prices compared to our European neighbours).

    The economies of scale in the energy industry won't be particularly significant - everybody is selling the same product. The only differential is the billing procedure - it's hardly the same as Honda vs TVR.

    The majority of people in this country choose to be with the big 6 - if the government are real about lowering bills, perhaps they could take a look at the taxes they're foisting on us.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

110Posts Today

2,859Users online

Martin's Twitter