Earlier:

The whole point of having competion rather than a monolopoly is that there is choice. The choice forces companies to innovate, find new cheaper and more efficient ways of doing thing (to get a competitive edge). Are you really saying that this is bad?

Just there^^

Yep, I have been on the PAYG elec and gas. It is expensive. I’m not saying this system is perfect …its not. It is however far better than a nationalised monopoloy.

1) So is it cheaper or not?

2) ‘Monopoloy’ implies making profits for shareholders. Like Tesco. Or Newscorp. That is not what other posters are suggesting by re-nationalisation. Nationalisation implies not-for-profit, or proceeds reinvested into services or reduced costs to consumers.

I wonder how many people have trotted out the renationalisation argument. So you trust our government with nothing, and you’ll quite happily add Utilities to that.

Even in a regulated market we are buying the raw materials for gas and power from out of the EU, so how you think it would help is beyond me.

Here is my responce on this forum to the SP rise last month

Its similar to retail petrol prices, every supplier is exposed to the same ‘spot’ market price. But some hedge forward longer than others.

To the point above about the price not falling there are 2 things, 1 is that sometimes they do and the other is that wholesale prices are generally trending up, and for some period of time energy is effectively sold at a loss until the time is right to make an increase so profits can be made for the rest of the year. So what you see at the retail end is the trend rather than the movement in spot prices.

It is not a cartel, but given the suppliers are broadly exposed to the same commodity cost then they are going to take broadly similar pricing decisions and take the lead from the first in the pack. If say Eon had raised their prices by 12% 4 months ago they would have spend 4 months haemorrhaging customers – doesn’t make sense does it.

Another thing to say is that the UK has one of the lowest retail prices in Europe for gas and power, I have a graph somewhere but can’t find it right now.

Next to take into account is that profits on UK production of Gas are taxed at 81%! Don’t forget suppliers have to invest in future generation, supply and infrastructure as well as several costly commitments mandated by government, namely roll out of smart meters and the green agenda.

Lastly despite big headline figures these businesses are single digit margin ones, look at your food shopping, your travel and your housing and ask yourself if the margains earned compared to the investment required in future and the tax burden make these prices ‘unfair?

Why do you need more than one tarif? simple question, look at your house, when you change energy supplier does a new wire get attached to your house, do they change the meter? No, what happens is you get a piece of paper from someone else they will charge you a figure that may or may not be cheaper than the last supplier, afterall the best tarrifs are only available via direct debit.

It doesn’t work like that. National Grid transport the gas/electricity to your house (rather like Network Rail).

Different tarrifs allow you to choose an arrangement that suits your needs. You can choose green energy, web saver tarrifs or traditional paper billing and retrospective payments. Why is direct debit cheaper – beacuse its more efficient!!

The whole point of having a more competitive tarif for DD is to incetivise people to purchase energy by the most efficient way. In effect they are passing on this efficienvy to you! Hence it really is no surprise that an internet only deal with direct debit payment is cheaper. Its cheaper because it costs the company less! Please tell me if you believe this to be morally reprehensible.

djglover, give or take the odd loyalty offer, diesel is not more expensive if you pay in cash, buy a few litres at a time, buy your peparami and newspaper or order it online. Yet it is bought wholesale in much the same way as gas according to your post.

The point is not just about cost to consumer vs profitability, but the unequal and unfiar way those cost savings are brought to different types of consumer.

2) ‘Monopoloy’ implies making profits for shareholders. Like Tesco. Or Newscorp. That is not what other posters are suggesting by re-nationalisation. Nationalisation implies not-for-profit, or proceeds reinvested into services or reduced costs to consumers.

mo·nop·o·ly
? ?[muh-nop-uh-lee] Show IPA
–noun, plural -lies.
1.
exclusive control of a commodity or service in a particular market, or a control that makes possible the manipulation of prices. Compare duopoly, oligopoly.
2.
an exclusive privilege to carry on a business, traffic, or service, granted by a government.
3.
the exclusive possession or control of something.

Ok, now we understand what a monopoly actually is. Where is the incentive for a monololy to innovate, find better ways of doing something, reducing prices or offering choice.

The point is not just about cost to consumer vs profitability, but the unequal and unfiar way those cost savings are brought to different types of consumer.

Its a fair point but ultimatley what is preferable. A competitive and efficient industry that can offer the choice and lower prices or a monoloply that will be more expensive and inefficient for all?

djglover, give or take the odd loyalty offer, diesel is not more expensive if you pay in cash, buy a few litres at a time, buy your peparami and newspaper or order it online. Yet it is bought wholesale in much the same way as gas according to your post.

Yes, but, its transported and invoiced in totally diffent way though – direct to your door and you get it on credit. If you pay by DD you pose less of a risk in terms of debt, better prospects in terms of cash flow and less overheads in terms of billing and reminders. Why isn’t that something that should be incentivised?

Also, one tariff is not possible, some customers want fixed prices, some want trackers, some don’t care etc etc.

If you think its complicated now, in 10 years time it could be mind boggling if we dont bring enough generation online. Time of use tariffs over 30 min time blocks that change intra day are not out of the question. Basically if we are at generation capacity we’ll shove the prices up or limit your load, much like in the industrial markets today.

heres a thought, why is it in the interest of a supplier to ensure adequate energy production in 10 or 20 years time. If you look at the time it takes to plan and build a power station that is the timescale.

Shareholders work to a shorter timescale, so what is in the interest of a consumer and what is in the interest of the company, which is afterall “to maximise the shareholder return”

Without regulation nothing gets done, and when you do the everyone whinges about interference and red tape.

Its a fair point but ultimatley what is preferable. A competitive and efficient industry that can offer the choice and lower prices or a monoloply that will be more expensive and inefficient for all?

I think it depends on what the service being provided by the industry was, for instance are you an advocate of say privatising the emergency services?

as for the moral issue, the poorest in society are the ones who are least likely to have a bank account and most likely to be paying on prepayment.

ie the poorer you are the more you pay for energy. Sounds fair doesn’t it.

ie the poorer you are the more you pay for energy. Sounds fair doesn’t it.

Yes they still pay less than under a privatised industry?

It doesn’t work like that. National Grid transport the gas/electricity to your house (rather like Network Rail)

No it doesn’t. National Grid only look after bulk transport, usually defined as those wires > 33kV. Below that the transport is done by the regional distribution companies. As a result if a person in, say, Aberdeen, was to pay for a tariff for somewhere south, e.g. E.On then a proportion of the charge would be for a theoretical transport of electricity. All the electricity companies have systems to pay each other for this and it can be quite sizeable, even though the electricity is still coming from down the road, the same generating station it did previously.

And yes, I have (until recently) worked in the electricity industry.

EDIT: And please don’t tell me the rubbish about ‘more efficient’. I have seen truly massive amounts of wonga wasted in the ‘efficient privatised companies’.

heres a thought, why is it in the interest of a supplier to ensure adequate energy production in 10 or 20 years time. If you look at the time it takes to plan and build a power station that is the timescale.

Quite simply its because they are suppliers and not generators. Ultimately this area is heavily regulated and controlled by the government. You can’t just rock up and build a power station. Given the chance I’m sure they would like to build more and sell to Europe.

Ultimately the next generation of power stations will largely be financed by the private sector.

Ultimately the next generation of power stations will largely be financed by the private sector.
Apart from the nuclear ones.. 🙂

Ultimately the next generation of power stations will largely be financed by the private sector.

Currently unlikely. The costs aren’t right and the power generators are looking to the governments to dip their hands in the taxpayers’ pockets. Or, in the case of nuclear, guarantee they won’t have to pay for clear-up costs at the end of the reactor’s life.

A competitive and efficient industry that can offer the choice and lower prices or a monoloply that will be more expensive and inefficient for all?

Yes they still pay less than under a privatised industry?

EVIDENCE you just cant say put your own opinion forward as true without actual evidence to support this.

I’m not against discounts for DD when people have DD as an OPTION. But I don’t think people should have to pay more if they are denied access to a bank account.

I’m not in favour of renationalisation, but given that power companies often demand guarantees of Govt before building new powerstations (i.e. they aren’t prepared to open themselves up to market forces) then I think in return they should be compelled to make their costs and charges more transparent, because at the moment they aren’t.

If you look at standard tariff across suppliers, I’m pretty sure you will find credit and prepayment unit rates are the same.

Also there are social tariffs for people on benefits which work out cheaper than the discounts given to DD customers.

You should go away and do some research mrmo, instead of spouting conjecture!

Although your point about investment vs time to bring on new generation is a good one. We have already invested in New Gas gen. and taken 25% of BE with the intent of getting new nuclear online… Probably didn’t do the short term share price much good at all with the rights issue and returns being in the 10 year time scale. However with uncertainty hanging over that, its an area of concern. We might need to expect brown outs from 2014….

Frodo, let’s see the examples of all the innovations the energy suppliers have given us since privatisation (other than the innovative ways they screw the poor).

Let me think…

I can manage my account online. Whizz bang.
I can pay by DD.
I can get a fancy doodah that’ll tell me how much energy I’m using on an LCD screen. **** amazing.

I just want an essential service, supplied at a fair price for everybody, with profits returned to the business to benefit the country, not a shareholder sitting in an office in Paris.

EVIDENCE you just cant say put your own opinion forward as true without actual evidence to support this.

Pot and kettle!

I can’t speak for the utility companies as its not my area of expertise. Ultimately what incentivices a monopoloy to innovate. If you want the government to join the fray and offer their own brand why not. The point is you need the choice of a free market.

I’ve always had an issue with privatised utilities.

I see the point of, say, privatising electricity generation where any company would pump power of the correct phase/quality into the grid. But they should not have privatised the infrastructure such as the wires, or in the case of gas, the pipes. There’s only one set of them so it is a monopoly by default.

I am dead against water privatisation. There is no market, I can’t buy water from anyone else.

Nationalised industries may not profiteer but they are incredibly inefficient, there are countless examples all over the world. Overall the consumer has beenfited from privatisation.

They don’t need to be by definition, that’s just poor management of them, and there’s no reason why a nationalised industry couldn’t be managed properly. While I’m no lefty, I do think that privatising public transport and fuel/water is an odd thing to do that can only harm the public in the end. By definition a single large buyer of a product would have more bartering power, no profit to pay and no reason to try to trick customers into using them over someone else by introducing rafts of tarrifs and options. All you have to do is then internally make sure it’s run properly and isn’t corrupt.

The point is you need the choice of a free market.

No, you don’t. Not where utilities are concerned.

Pot and kettle

it is not you have made some claims and you need to offer proof to support/prove your claim. All I have said is that you have not offered proof of your opinion 🙄

I can’t speak for the utility companies as its not my area of expertise

you have done quite well so far

Djglover, I have never said that prepay was more than standard, it is far more than the cheapest.tariff you can get if you can pay by direct debit. As for social tariffs they like most benefits catch those at the very bottom but miss those a fraction above leaving done worse off than if they had lower income.

I’ve offered my opions backed up by logic and reasoning. That is all.

I have not and will not produce figures I don’t have the time or inclination. One area of interest to me is the state of the infrastructure. The water industry was pretty much saved by privatisation and private investment.

http://www.ice.org.uk/getattachment/c198a95f-69bd-4c46-8110-51b057ec20f1/State-of-the-Nation–Infrastructure-2010.aspx

Its worth having a look at historical issues and see how the quality of infrastructure has changed over the years. Energy will be the next big issue, not the transmission of but the generation of.

The water industry was pretty much saved by privatisation and private investment.

I doubt that very much.

The infrastructure was allowed to fall into disrepair by successive governments (of all colours). Then the water industry got privatised (where’s the so-called ‘free market’ in this instance?) and our bills went up, the industry received subsidies and hey-presto! things started getting better. Stop the former, allow the bills to increase according to costs and put the money back into the infrastructure, avoiding profit fees.

EDIT: just thought. To be honest I haven’t seen any improvement in my water supplies or supplier since privatisation. It seems to be just, the same. Could be replacement of poorer infrastructure, I suppose. Still it is a monopoly, no free market allowed!

I’ve offered my opions backed up by logic and reasoning. That is all.

You are claiming that stating something is backing it up with logic and reason 🙄 that is quite poor tbh.

Yes they still pay less than under a privatised industry?

It is an assertion that is either true or flase depending on the evidence.
there is no [formal] logic or reasoning in this as you make a statement about facts [ it is cheaper] without any “proof”.

Its fair to say that pre-privatisation the asset condition was neglected. However it was easier for bills to rise as a private entity.

It was also neccessary to privatise the industry. The government simply could nit afford to modernise the infrastructure the sums invlolved were mind boggling and required long term private investment. I’m not aware that there is any direct subsidy from the governemnt for the water industry. There are cross subsidies to ensure that the cost of water in a region remains constant for all users but I belive that is part of the regulatory framework.

So I guess that having a free market isn’t the issue, it is just selling the industry to raise capital to pump into it is what you prefer? Once that initial capital has gone, however, I imagine that prices would naturally rise to support the infrastructure, allow upgrades and make a nice profit.

In this instance privatisation != free market.

You are claiming that stating something is backing it up with logic and reason that is quite poor tbh.

I’ve never claimed to have definitive proof. I’ve only tried to explain why I belive it to be true. Prove me wrong ..i’m game for it!

Having worked with and or /in private and public companies I undertsand that state run enterprises are just not cut out for innovation and taking the neccessary risks to drive improvement. Public jobs are for life (excepting times of economic hardship)/ Private companies sink or swim on the basis of their proucts/ services whatever the economic climate. You understand this, you understand taht if your company can’r compete you go bust and lose your job.

I’ve seen it far to often in public organisations that people use it as an easy life. Arrive 9am, leave 5pm …what you need me to get this report/job etc. finished? Sorry I have a date with the weakest link …. and don’t get me started on unions like the RMT. I’ve had train drivers walk off site when we needed them for only an additional 15 minutes!

The government simply could nit afford to modernise the infrastructure the sums invlolved were mind boggling and required long term private investment

they chose not to- if this is true. The governemnt would [probably] be richer than any private water company [ 800 bn turnover this year for example]and can probably borrow money easier etc.
here some facts

How big is the investment programme?
Since privatisation in 1990 the water industry in England and Wales has invested on average over £4.2 billion per annum – nearly £4.9bn in 2007-08 – and the total investment spending by 2010 will be around £80bn. The level of spending on new assets is around 50% of the industry’s turnover – a far greater proportion than in most
other industries.

oh where do they get the money from

financing costs amount to some 30% of the average
household bill.

so the companies are getting us to pay for it via our bills…why could the government not have done this?
given the current situation I dont think it is a mind boggling sum

Prove me wrong ..i’m game for it!

If you assert something it is your responsibility to prove it or offer evidence to support your view as you believe it to be true. You cant prove negatives is the main reason why you have to do this.

I’ve only tried to explain why I belive it to be true

no you have stated it without explaining it hence why we are having this “chat” about it.
I am off out now enjoy

my opions backed up by logic and reasoning

Sorry, can’t help but read that and think of this:

Burn the witch!

I thought the idea was to start with the logic and reasoning, then move on the opinions?

Private companies sink or swim on the basis of their proucts/ services whatever the economic climate.

Crap.

How many examples would you like?

Junkyard – You clearly don’t undertsand the industry.

Of course its financed by the bills – its a private business and its their only source of revenue. This would be the same whether the government owened it or not. The difference is that the government offloaded the infratsructure for a tidy proffit to pay off other debts and also offloaded the risk.

The water companies then borrow against the value of their assets (think home imrpovements).

Simples, anyway this is going to a tangent to the OP.

Of course its financed by the bills – its a private business and its their only source of revenue.

No it’s not, all large private businesses like utilities play markets too AFAIK.

The thing that’s being argued seems to be that private companies can get hold of large sums of money to invest easier than governments. I find that odd, with government borrowing in astronomical figures (and considering their lower interest rate and not having to market and advertise for customers (tax payers)).

Of course its financed by the bills – its a private business and its their only source of revenue. This would be the same whether the government owened it or not.

The government simply could nit afford to modernise the infrastructure the sums invlolved were mind boggling and required long term private investment

Which is it ? Could they or could they not you argue it both ways then claim i dont know the industry.
I dont to be fair but I can at least put fwd a cogent argument that does not contradict itself next post

EDIT: And please don’t tell me the rubbish about ‘more efficient’. I have seen truly massive amounts of wonga wasted in the ‘efficient privatised companies’.

Add to that the water companies. The management is woeful.

The water companies then borrow against the value of their assets (think home imrpovements).

Indeed they do, take Thames water for instance. They have been “improving” their facilities for a while…actually it should be defined as “adding value”. They have been keen to add more reservoirs and the like because it’s another asset and with another asset comes more value of the company when it comes to selling time.

All of this is because the last two owners of Thames water made 6bn and 9bn respectively when they sold it on. It’s not about providing better infrastructure to provide better service to customers or more profit to shareholders, it’s all about the resale value of the asset.

Of course they weren’t terribly keen on repairing water pipes. Not seen as adding value.

Privatisation of the utilities and the rail network has been a failure for consumers. There is simply not enough competition. Also there was too much de-regulation generally, after all the mergers we only have a few “big banks” for instance.

I find it ironic that EDF who is the nations largest energy provider is state owned by the French Government. Perhaps its showing us the way to go.

Wholesale up 30%

Retail up 18%

– stands to reason as wholesale < retail so £5/kw increase to both would be a higher % of wholesale.

Not passing on reductions in full so they can be used to buffer small increases is also valid.

BUT:

they look good when the decrease bills so hike up once and take the flack, then decrease a couple of times a year in smaller amounts to look good.

Also how much profit do they announce at the end of the year? hmm

The response is simple: vote with your wallet and switch to the cheapest and use as little energy as you can.