MSE News: British Gas owner posts £1.3bn profit, so why the price hikes?

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  • magyar
    magyar Posts: 18,909 Forumite
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    backfoot wrote: »
    Because such threads are dominated by employees screaming foul play.

    Try to avoid. Never gets anywhere.;)

    Shame, we could just have a discussion based upon facts rather than shoddy journalism, in which case it wouldn't matter how biases someone might be.

    I am no supporter of the big six, I think they have appalling practices in certain areas, but I know bad presentation of facts when I see them.
    Says James, in my opinion, there's nothing in this world
    Beats a '52 Vincent and a red headed girl
  • MillicentBystander
    MillicentBystander Posts: 3,518 Forumite
    backfoot wrote: »
    Because such threads are dominated by employees screaming foul play.

    Try to avoid. Never gets anywhere.;)


    I sincerely hope they aren't posting whilst at work.
  • Cardew
    Cardew Posts: 29,036 Forumite
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    I really fail to see the point of reporting a story in such a manner. The Daily Star would be proud, and sought the opinion of Jordan!!!

    So BG made £16 per account on their latest 6 month profits - how much profit do we think Sainsbury/Tesco/Asda make per customer? Tesco made £3.8 Billion profit last year(£2.5 Billion from UK)
  • VT82
    VT82 Posts: 1,079 Forumite
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    A mature private company that represents a defensive share needs to make profits. While the tone of the article attempts to be stir people up to think otherwise, It's simply not an option for them to keep prices at the point where they break even.

    They need to make profits to build up distributable reserves, because they need distributable reserves to pay dividends. Because if the dividend goes down, their share price goes down. And if their share price goes down, their cost of capital (debt or equity) soon goes up. Then prices would go up anyway.

    So shareholders would be worse off, existing bond holders would be worse off (holding a riskier share due to the increased leverage of the company, for the same return as before), and the customers would be left exactly as they were.

    I'm glad the people with brains got the comments in before the 'string 'em up brigade' joined the party at least.
  • magyar
    magyar Posts: 18,909 Forumite
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    Cardew wrote: »
    So BG made £16 per account on their latest 6 month profits - how much profit do we think Sainsbury/Tesco/Asda make per customer? Tesco made £3.8 Billion profit last year(£2.5 Billion from UK)

    And how many big supermarkets do we have? Ofgem keep complaining that we only have six big energy companies. The truth is you only need two companies actually competing to have competition.

    Not that I believe there is collusion, although I do think the big six do their best to avoid truly competing and very much stay out of each other's areas.
    Says James, in my opinion, there's nothing in this world
    Beats a '52 Vincent and a red headed girl
  • backfoot
    backfoot Posts: 2,700 Forumite
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    smidgey wrote: »
    Yet you persist in posting drivel rather than avoid ;)

    Just an observation based on reading lots of similar threads.

    I can accept,as you are an employee, you feel upset about the MSE article, but what did I say, other than agree with Milliscent that the BG employees are only focussing on the Supply Business and ignoring the full reported profit.

    It seems that the BG hard men are out in force this week......:rotfl:
  • magyar
    magyar Posts: 18,909 Forumite
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    VT82 wrote: »
    AThey need to make profits to build up distributable reserves, because they need distributable reserves to pay dividends. Because if the dividend goes down, their share price goes down. And if their share price goes down, their cost of capital (debt or equity) soon goes up. Then prices would go up anyway.

    And don't forget that new infrastructure has to come from somewhere. Whilst this will eventually come out of customers' bills, companies like Centrica have to spend their own money first - then recoup it.

    If they had no profits to do that with, then we'd never get new infrastructure.
    Says James, in my opinion, there's nothing in this world
    Beats a '52 Vincent and a red headed girl
  • MillicentBystander
    MillicentBystander Posts: 3,518 Forumite
    VT82 wrote: »
    A mature private company that represents a defensive share needs to make profits. While the tone of the article attempts to be stir people up to think otherwise, It's simply not an option for them to keep prices at the point where they break even.

    They need to make profits to build up distributable reserves, because they need distributable reserves to pay dividends. Because if the dividend goes down, their share price goes down. And if their share price goes down, their cost of capital (debt or equity) soon goes up. Then prices would go up anyway.

    So shareholders would be worse off, existing bond holders would be worse off (holding a riskier share due to the increased leverage of the company, for the same return as before), and the customers would be left exactly as they were.

    I'm glad the people with brains got the comments in before the 'string 'em up brigade' joined the party at least.


    I'm sure you weren't intending such a thing but this post just illustrates the absolute folly of selling off the industry in the first place. We've been left with a farcical situation where an industry which supplies a product that the human race relies on for its very existence can only talk about shareholders, bondholders, share prices, leverages blah blah blah, affiliate commission, door knockers offering their WORST deals etc etc. Maybe I'm just an idealist but IMO an industry which supplies a basic human need should never ever be entrusted to people who think in these terms.
  • magyar
    magyar Posts: 18,909 Forumite
    First Post First Anniversary Combo Breaker
    backfoot wrote: »
    Just an observation based on reading lots of similar threads.

    I can accept,as you are an employee, you feel upset about the MSE article, but what did I say, other than agree with Milliscent that the BG employees are only focussing on the Supply Business and ignoring the full reported profit.

    It seems that the BG hard men are out in force this week......:rotfl:

    I don't work for Centrica, am a big critic of the big six and I can promise you this is rubbish - for exactly the reasons stated in this thread.
    Says James, in my opinion, there's nothing in this world
    Beats a '52 Vincent and a red headed girl
  • magyar
    magyar Posts: 18,909 Forumite
    First Post First Anniversary Combo Breaker
    MillicentBystander wrote: »
    Maybe I'm just an idealist but IMO an industry which supplies a basic human need should never ever be entrusted to people who think in these terms.

    Isn't food a basic human need? Do you want to nationalise Tesco's?
    Says James, in my opinion, there's nothing in this world
    Beats a '52 Vincent and a red headed girl
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