Cameron: "Cuts will change our way of life"

[Rico1304]

We've absorbed a lot of those increases, but what business plans a loss?

[Skidfingers McGonical]

But they are still going to be making a profit, just maybe as not as much as the year before.

[Rico1304]

But they are still going to be making a profit, just maybe as not as much as the year before.

It's a business, with shareholders.

[RedRazor]

At the risk of getting dragged into this again;

- network charges increase (£20 on average)

- environmental and social obligations (£50)

- wholesale price increases (£37)

 

If we didn't raise prices we'd make a loss in 2014.

I understand your point rico but:

- the distribution companies made nearly 40% profit on their activities so they should have pressure put on then to reduce considerably

- environmental costs hopefully should be absorbed by government

- Centrica made over 21% profit on their generation/wholesale activities so they could forego some of that

[Stu Monty]

It's a business, with shareholders.

 

The good thing is that, with it being a competitive business environment, someone will see the opportunity to come in, make 5% less profit and absolutely dominate market share...won't they...because it's competitive...and not a cabal.

 

An industry where nobody ever makes a loss - that's some intense competition.

[Rico1304]

Ok so it's a business that requires massive investment to start up, is heavily regulated, has massive risks and you are suggesting a plan to start one that operates on a lower profit margin than 5%. Yes, I wonder why no one else has tried your cunning plan.

[Stu Monty]

Ok so it's a business that requires massive investment to start up, is heavily regulated, has massive risks and you are suggesting a plan to start one that operates on a lower profit margin than 5%. Yes, I wonder why no one else has tried your cunning plan.

 

It doesn't require massive investment to start up if you're currently up already does it Rico? I'm not proposing Moody Pete from the garage has a go, I'm suggesting (crazily) that the big energy companies try to actually compete with each other, properly, on price.

 

If you could stop trying to patronise someone who has a pretty good business grounding then that would be appreciated. If you'd like to tell me how in an industry that is surely massively price sensitive (as there's no brand loyalty, the exact same product, very little difference in quality of service and no conspicuous consumption of any sort) someone undercutting the competition and sending them to the wall is a bad idea then I'm all ears.

 

You also don't seem to have a good explanation for why it's a risk to lower your price and pass on lower wholesale prices when you can (in the full knowledge you can put them up whenever you want). Wholesale prices fluctuate, retail prices pretty much inly go one way: up. 

 

If you could stop saying that an industry that never, ever makes a loss and always passes the cost onto it's customer has massive risks, that might also help people take you seriously.

 

"Ooooh we're in such a risky business sometimes the price of gas goes up!"

 

So what happens then, you make losses?

 

"Erm, no we all still make massive profits, every year".

[Rico1304]

I wasn't being patronising, I was responding to your post about someone coming in, undercutting the rest and making a killing. If it was easy it'd have been done right?

 

Your point about brand loyalty is rubbish too, we spend millions on brand development, so do the rest. If you think about it the brand is all we have, that and a list of customers. We don't own the meters, the pipes or anything else. Millions of customers stay with us because they like the brand, that's a fact.

 

Did you watch the programme on iTv just now?

[TheBitch]

Can someone get moody Pete to give me a price please. I'd use him just because I like his name.

[General Dryness]

Can someone get moody Pete to give me a price please. I'd use him just because I like his name.

 

I'll get him to send Mad Alan and Flat Top round for a chat. They know Jaffa, so they're definitly sound.

[Skidfingers McGonical]

It's a business, with shareholders.

Which is the whole problem.

[Strontium]

Ok so it's a business that requires massive investment to start up, is heavily regulated, has massive risks and you are suggesting a plan to start one that operates on a lower profit margin than 5%. Yes, I wonder why no one else has tried your cunning plan.

You have a point. Give me 20 quid, half an hour in Poundland and an eBay account and I'll make more than 5% profit in an afternoon.

 

Having said that, I do think there's room in the market for non-profit providers. It'd be interesting to see how they compete. I'd at least like to see people given the option, and I'm surprised nobody's done it yet.

[Rico1304]

You have a point. Give me 20 quid, half an hour in Poundland and an eBay account and I'll make more than 5% profit in an afternoon.Having said that, I do think there's room in the market for non-profit providers. It'd be interesting to see how they compete. I'd at least like to see people given the option, and I'm surprised nobody's done it yet.

IMO it's the risk that keeps charities and the likes out. Putting aside the cost of creating call centres, systems and the likes, the commodity costs are massive and they don't get a return for months. So, to get a decent price you have to make a

Commitment to buy energy in the long term markets, then say 12 months later you pay for it and the customer uses it in say January. You bill for it in March and the customers then have a month or so to make payment. All that risk to save someone 5% off their bill, you'd be better giving the money away.

 

I'm also not sure if a supplier can discriminate, so a non-profit company would not be able to turn down a millionaire with a pool if he wanted to sign up.

 

There will be a rise in the number of cooperatives buying energy for estates and such which will work for a while...until someone doesn't pay. Can you imagine having turning off your next door neighbours gas?

[Thomo123]

I wasn't being patronising, I was responding to your post about someone coming in, undercutting the rest and making a killing. If it was easy it'd have been done right?

 

Your point about brand loyalty is rubbish too, we spend millions on brand development, so do the rest. If you think about it the brand is all we have, that and a list of customers. We don't own the meters, the pipes or anything else. Millions of customers stay with us because they like the brand, that's a fact.

 

Did you watch the programme on iTv just now?

Brand loyalty??  From my own personal point of view thats not even a consideration. In our household we regularly switch energy suppliers. What do we base our decision on? Price is the answer, plus a minor consideration on customer service.

 

And you seem to have totally misunderstood what Stu was actually saying......none of the big energy companies massively undercut the rest, thats nothing to do with the fact it isn't easy but as Stu says because its an uncompetitive market. Its price fixing on a massive scale, yes they get to play around with a few quid here and there and people such as myself will take advantage of these small savings but for the uneducated/lazy masses its just not worth the hassle.

 

If one of these big energy companies wanted to corner the market they could. Offer big savings, decrease your profit margins but capture the market......bingo!! But that isn't going to happen is it. Your blinkered attitude towards this simple concept is pretty astounding to be honest mate.

[Spy Bee]

This 5% figure is such a red herring. Why don't they talk about the actual value in pounds sterling?

 

Or, put more eloquently...

 

http://www.youtube.com/watch?v=tHq24ShcyQo

[Rico1304]

Brand loyalty??  From my own personal point of view thats not even a consideration. In our household we regularly switch energy suppliers. What do we base our decision on? Price is the answer, plus a minor consideration on customer service.

 

And you seem to have totally misunderstood what Stu was actually saying......none of the big energy companies massively undercut the rest, thats nothing to do with the fact it isn't easy but as Stu says because its an uncompetitive market. Its price fixing on a massive scale, yes they get to play around with a few quid here and there and people such as myself will take advantage of these small savings but for the uneducated/lazy masses its just not worth the hassle.

 

If one of these big energy companies wanted to corner the market they could. Offer big savings, decrease your profit margins but capture the market......bingo!! But that isn't going to happen is it. Your blinkered attitude towards this simple concept is pretty astounding to be honest mate.

Here we go again...85% of the costs are outside of the energy companies control, 10% operating costs and 5% profit. So, for someone to come in and make a substantive difference they'd either have to cut costs to the absolute bones with all the risk that entails (poor customer service, systems failing over etc) or they cut profit. If they cut profit it makes the risk so high as being not worth it. Remember the cost of the energy paid out months before customers get a bill let alone pay for it. So you invest a few billion to get less than 5%, it'd be easier and less risky to invest it.

 

Your point about switching isn't valid either, you might switch but millions don't. Various reasons but most people don't bother.

 

So I'm not missing any point, it's just not a good point.

[Rico1304]

This 5% figure is such a red herring. Why don't they talk about the actual value in pounds sterling?

 

Or, put more eloquently...

 

http://www.youtube.com/watch?v=tHq24ShcyQo

It's a big number because of the number of customers, but it's a big investment because of the same reason. You can't have it both ways.

[Thomo123]

Here we go again...85% of the costs are outside of the energy companies control, 10% operating costs and 5% profit. So, for someone to come in and make a substantive difference they'd either have to cut costs to the absolute bones with all the risk that entails (poor customer service, systems failing over etc) or they cut profit. If they cut profit it makes the risk so high as being not worth it. Remember the cost of the energy paid out months before customers get a bill let alone pay for it. So you invest a few billion to get less than 5%, it'd be easier and less risky to invest it.

 

Your point about switching isn't valid either, you might switch but millions don't. Various reasons but most people don't bother.

 

So I'm not missing any point, it's just not a good point.

Did you even read my post properly? You certainly haven't understood it.

[Guest Numero Veinticinco]

Investment generally cones from profit in order to avoid tax. O don't have any issue with that, it's standard behavior. Still, talking about it as if a nan has forked out her pension for a measly five percent is daft. That is five percent after tax, btw. 19 percent return for shareholders last year.

[Rico1304]

Did you even read my post properly? You certainly haven't understood it.

You are right I didn't read the bit on switching properly. I stand by the rest though, a strategy of cutting profit to make less than 5% wouldn't get passed any decent board.

[Thomo123]

You are right I didn't read the bit on switching properly. I stand by the rest though, a strategy of cutting profit to make less than 5% wouldn't get passed any decent board.

Of course it won't. They are more than happy to keep the status quo.Its guaranteed profit with no real risk

[Rico1304]

Investment generally cones from profit in order to avoid tax. O don't have any issue with that, it's standard behavior. Still, talking about it as if a nan has forked out her pension for a measly five percent is daft. That is five percent after tax, btw. 19 percent return for shareholders last year.

I'm talking BG you are talking Centrica. BG makes 5% profit in residential energy, Centrica profits are made up of many more elements.

[Thomo123]

I'm talking BG you are talking Centrica. BG makes 5% profit in residential energy, Centrica profits are made up of many more elements.

 

Generation and distribution, if its the same company then its the same thing imo.

[Rico1304]

It's not generation and distribution it's generation and retail. Distribution is pipes and pylons which we aren't allowed to own (or at least weren't, might have changed recently).

[sh#t waffle]

Brand loyalty??

 

Yeah, I've always been an Eon man myself. I just really like the way they make my lights come on and (indirectly) help me cook things. I'd feel terrible about upsetting that nice Mr Eon (and his wife). But I have to confess, recently I've been finding myself casting envious glances at EDF. They just feel so now.