Peoples Energy: any experiences and/or knowledge of this supplier please?

[TimC]

On almost every other thread on YACF we complain about things the Government has/hasn't/might have/is rumoured to have done. In almost none of them do we compliment the government on its sane and sensible management of, well, anything. But you all want them to start running the power distribution system (and railways)? Explain your working.

[Pingu]

Not this gubbinsment, thobut.

[ian]

On almost every other thread on YACF we complain about things the Government has/hasn't/might have/is rumoured to have done. In almost none of them do we compliment the government on its sane and sensible management of, well, anything. But you all want them to start running the power distribution system (and railways)? Explain your working.

Personally, I'm not sure the government should – political dabbling and target setting is often worse than the alternatives of market imperatives. I have no issues with a business making money out of supplying services, but they should take the risks and be able and willing to invest.

My gripe is that we built a system that wasn't really a market (as such, since markets involve both risk and reward) with an inbuilt moral hazard (there is no risk). The bars to entry were bizarrely low (presumably to get as many suppliers as possible) and the liabilities effectively elided. So they profited while things were good, and then stepped out and left the bills when they weren't.

Some people got cheap bills for the while. Now I'm (and everyone else) is paying the difference. Obviously, if these were real businesses that had to manage risk, invest etc. they might not view being an energy supplier as an appealing option, but that should be a worthwhile consideration.

[felstedrider]

Prices have dropped off a cliff the last 2 days, just before we get to delivery of the Jan and Q1 contracts.   It’s almost as if the fundamentals didn’t support pricing there.

It has become a game of who can hang on the longest.

[MikeFromLFE]

I've just finished a book called Last Trains by Charles Lofts (not recommended, it was a dense read) about the railway industry leading upto the Beeching / Marples era and to a lesser extent on the aftermath.

The main thrust of the book is that up until it was realised what damage wholesale railway closures had done to communities the nationalised railway had to 'balance the books'. Some routes would never, ever be able to break even, or make a profit, but were closed anyway. The author quotes a few examples, the one that stood out for me was the line to Wells-Next-The-Sea which carried huge numbers of pilgrims to Walsingham.

Since then it's been recognised that railways wiil always need to be run with a government subsidy of some sort if we want a national rail network. The argument has become about how big that subsidy should be.

Back to power.
I know next to nothing about the industry, but it seems to me that if we want to provide grid electricity to every corner of the country then it needs to be a public service, and subsidised as such by the tax payer.
Of course, it's a socialist idea, that the city dweller subsidises the country family that provides the food on the table.
I struggle to find the excuse for the profit motive but I'm an unreformed dinosaur (and not signed up to POBI).

[grams]

The government already regulates the parameters of electricity supply to such narrow boundaries that the “market” is mostly a work of fiction.

The demand isn’t that government take over but that they stop pretending they don’t run it already.

(It was even worse with trains, although Covid has essentially ended the franchise system)

[robgul]

I've just finished a book called Last Trains by Charles Lofts (not recommended, it was a dense read) about the railway industry leading upto the Beeching / Marples era and to a lesser extent on the aftermath.

The main thrust of the book is that up until it was realised what damage wholesale railway closures had done to communities the nationalised railway had to 'balance the books'. Some routes would never, ever be able to break even, or make a profit, but were closed anyway. The author quotes a few examples, the one that stood out for me was the line to Wells-Next-The-Sea which carried huge numbers of pilgrims to Walsingham.

Since then it's been recognised that railways wiil always need to be run with a government subsidy of some sort if we want a national rail network. The argument has become about how big that subsidy should be.

Back to power.
I know next to nothing about the industry, but it seems to me that if we want to provide grid electricity to every corner of the country then it needs to be a public service, and subsidised as such by the tax payer.
Of course, it's a socialist idea, that the city dweller subsidises the country family that provides the food on the table.
I struggle to find the excuse for the profit motive but I'm an unreformed dinosaur (and not signed up to POBI).

Absolutely, and to include water and gas - the latter obviously within the spread of the pipe distribution network.    There is also perhaps an argument that relates to the dwellings off the gas grid and their need for alternative fuel(s) - usually oil - for a fairly regulated price structure.

[Jaded]

Throw in the postal and telephone services, while you are at it.

[hatler]

And telecomms ?

[Cudzoziemiec]

I've just been reading a history of Victorian cities. One of the biggest problems faced by booming cities in the 19th century was provision of safe water, sewerage and also gas. In most cities these things existed but with limited coverage and run by a variety of fragmented private companies in each city. So there was demand from medics, engineers and others for these to be taken over by municipal corporations so that they could be expanded to cover the whole city, and to a lesser extent to ensure water quality. There was also profit for corporations in running the gas services. But in every city, the municipal corporations resisted the pressure to buy out the private suppliers, while admitting that lack of safe water and absence of sewers were causing disease which spread and affected also those in the affluent districts with sewers etc. The obstacle was reluctance to raise the rates to cover the capital costs of buying them out, and this came from Liberal and 'Radical' councils as much as Tories.  Things change but sometimes not so fundamentally.

[rogerzilla]

I've just given Eon a meter reading and apparently my account remains a smidgen in credit.  They'd better not increase the direct debit in anticipation of April price rises.

[felstedrider]

My Mum was with one of the suppliers that folded.  The account has just transferred to Centrica and I have just set the Direct Debit up.   She still has a credit of almost £300 with the old supplier but it hasn’t transferred.  Under the SoLR process deposits are protected so I expect this to transfer at some point.

Centrica’s website is pants.   There is no ‘contact us’ section anywhere.   They just don’t want to talk to you but send you to the Q&A page which doesn’t help.

[rogerzilla]

When Tonik went bust I refused to pay Scottish Power anything on the basis that the credit would cover the short time I was with them.  They sent me lots of threatening letters, including one that arrived after they'd received the credit and wiped out the debit. I am still owed about a tenner in surplus but they've never paid me.

[felstedrider]

When Tonik went bust I refused to pay Scottish Power anything on the basis that the credit would cover the short time I was with them.  They sent me lots of threatening letters, including one that arrived after they'd received the credit and wiped out the debit. I am still owed about a tenner in surplus but they've never paid me.

In normal times I would have already moved her to another supplier but everyone is pricing at the cap so I figured I would stay where we are.  Centrica took over in Nov and this is the first time they had asked for any money.  Their back office is notoriously crap, though.

[rogerzilla]

https://www.bbc.co.uk/news/business-58090533

If this breakdown is correct, there is massive scope for cuts.  Billing and metering are almost 1/6 of the cost, and the various green schemes add a huge wedge too. Then there's VAT, which is a poor show on an essential good, even if it is 5%.  Of course, other taxation would need to go up if the green levies and VAT were abolished, but that wouldn't be as brutally regressive.  Tories love regressive taxes, so don't hold your breath.

The other thing no-one breaks out properly is the balance between standing charges and unit rates.  My electricity unit rate has barely increased on moving to the cap, but my standing charge has gone up more than three times what it was.  That's gouging.  No amount of energy saving can make one iota of difference to that.  Similarly, the standing charge is 1/3 of my gas bill.

[grams]

If you abolish billing and metering the average amount each customer pays will definitely go down.

[felstedrider]

https://www.bbc.co.uk/news/business-58090533

If this breakdown is correct, there is massive scope for cuts.  Billing and metering are almost 1/6 of the cost, and the various green schemes add a huge wedge too. Then there's VAT, which is a poor show on an essential good, even if it is 5%.  Of course, other taxation would need to go up if the green levies and VAT were abolished, but that wouldn't be as brutally regressive.  Tories love regressive taxes, so don't hold your breath.

The other thing no-one breaks out properly is the balance between standing charges and unit rates.  My electricity unit rate has barely increased on moving to the cap, but my standing charge has gone up more than three times what it was.  That's gouging.  No amount of energy saving can make one iota of difference to that.  Similarly, the standing charge is 1/3 of my gas bill.

Gross margins in the sector are estimated to be low single digits.  Ofgem published their analysis a couple of months ago.  The big players have legacy systems which are cumbersome and expensive.  The one thing Octopus have done is to design their own billing and CRM system which, if you believe the hype, is very efficient and create a low cost to serve.  They have now licensed this and started to sell it to their competitors.

The end user pays Renewable Obligation, Carbon support, UK emissions trading costs, warm home discount, FiT levies and CFD levies.   A lot of these are paid back to renewable generators so it does go back into the industry.  Carbon support just goes into the tax coffers.  As you say, you pay 5% VAT on top of all this.

There’s not many industry charges that are billed as a standing cost so I’m wondering if suppliers have started to charge their costs a bit more appropriately.

[Jaded]

Comment in The Times today.

Stephen Fitzpatrick, Founder OVO Energy

As 2021 comes to an end, Britain finds itself at the start of an energy crisis. Politicians and the industry regulator have failed to grasp just how serious the situation is. From April, household bills will rise to nearly £2,000, almost doubling from last year. At this point, the crisis will be impossible to ignore.

Later today the leaders of the largest energy companies will be meeting the government and Ofgem to try to hammer out a solution. We have lost three valuable months since the problems began and I lament the fact that up until now so little has been done.

If a doubling of prices had happened at the petrol pump there would have been swift outcry and action. Instead, because this crisis has built over months, and mostly the public have not yet felt the impact, there has been a shocking lack of urgency. It is not too late but we need to take action immediately. Working together across government and industry, there is still a lot we can do to protect consumers and strengthen our energy system. There are three immediate priorities.

First, vulnerability. Millions of households already struggle to heat their homes in winter. The near doubling of bills will push millions more over the edge. The government urgently needs to support those families who need help the most.

Second, volatility. It may be that we are entering a period of permanently higher energy prices, something households will have to adjust to. But it is simply not reasonable to expect consumers to bear the brunt of a geopolitical standoff between Russia and the West. In broader economic terms, if unchecked, the £25 billion hit to consumer spending will present a significant headwind for the economy and add more inflationary pressures to an already troubled outlook. Other countries have found ways to smooth out these price shocks for consumers and Britain should too.

Third, viability. Thirty energy companies have gone bankrupt in 12 months, costing consumers nearly £4 billion. Collectively, the energy retail sector has been losing money for years under pressure from unsustainable competition, poor regulation and rising policy costs. With only a handful of energy companies surviving, and with this crises putting even well-run ones under extreme pressure, the sector needs urgent and meaningful reform if more failures are to be avoided.

I really do hope that after a slow start today’s meeting will prove to be the turning point. The effects of the global financial crisis played out over a decade at enormous costs. Early action might help us avoid a great energy crisis.

[Polar Bear]

Only two problems that I can see there Jaded:

1:  you need a government and regulator competent and capable enough of understanding the issues, and

2: they need to actually care about those issue and the consequences of them.

Problem for the tories is that this is yet more proof that a free market doesn't work and they are loathe to admit this from an ideological perspective.  They are largely insulated from this as individuals so a few poor, old, weak and vulnerable falling by the wayside is acceptable collateral to them in exactly the same way as covid deaths seem to be.

I hold no hope for this government to do other than window dressing and showboating on the issue.

[Wowbagger]

Polar Bear has the measure of the pile of ordure that masquerades as our current government.

[felstedrider]

Except that when industry started to struggle, see CF fertilisers, they were suddenly willing to do something.

Industries that can pass increased costs on will be OK but the end consumer will also be hit by these increased costs.  A lot of large business consumers only buy energy in the spot market.

[Mrs Pingu]

Quelle surprise, nothing much happened in the talks
https://www.theguardian.com/business/2021/dec/27/energy-bosses-to-meet-kwasi-kwarteng-in-attempt-to-avert-enormous-crisis

[robgul]

Polar Bear has the measure of the pile of ordure that masquerades as our current government.

. . .  but one does have to wonder how the other lot would have got on with both the energy and Covid situations . . .

[ian]

I think at this point we can be sure that they couldn’t have done worse.

[MikeFromLFE]

I think at this point we can be sure that they couldn’t have done worse.

And this strays into POBI territory, but, yes this is the thing.

I get the strong impression that the current lot* have a huge proportion of self-serving, in-it-for-themselves very wealthy individuals. The other lot(s) do not /seem/ to be so afflicted.

*I'm not convinced that the lot in power share any Conservative genes with the tories of the pre-Thatcher clan, who, although misguided, were at least honorable.