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Are energy consumers being ripped off?

Robert Peston | 09:44 UK time, Monday, 21 March 2011

Anyone who has recently tried to switch energy supplier knows how difficult it is to compare what is on offer, even though there are only six big players offering gas and electricity.


Gas bill in front of cooker

There's the rate you pay for the first chunk of power you use and then the rate for everything else. Some tariffs are quoted with VAT included, some without. There are the discounts offered for different payment methods. There are deals for managing bills online or for having certain kinds of meter. And then there's the option of fixing prices for a period.

It can be bewildering enough comparing what a single company is offering. Very few of us have the time or intellectual capacity to assess the 300 odd different packages on offer (up from 180 in 2008) from the sextet - British Gas, EDF Energy, E.ON, RWE Npower, Scottish Power and SSE - who supply more than 99% of British customers.

Although you can delegate the analysis to one of the online price-comparison websites, not everyone is comfortable doing that (and indeed there are still large numbers of people without access to the internet). That said, there has never been (to my knowledge) unambiguous evidence that these de facto brokers steer consumers in the wrong direction.

So Ofgem has concluded that pricing practices are "complex and unfair".

But what is the detriment to all of us from that complexity?

Well it could mean that the intensity of competition between energy suppliers isn't what it should be, so that prices in general are higher than would be the case if more of us shopped around.

And there is some support for that conclusion from the data. Ofgem has found that this autumn, for the first time, retail prices were probably raised by the big six faster when wholesale prices went up than they have typically been cut after falls in the wholesale market.

Or to put it another way, at a time when the economy has been pretty weak, the energy companies found it easier to widen their profit margins than is necessarily consistent with a competitive market.

Second, Ofgem produces a striking chart of what has been happening to the profit margin for suppliers since 2004. And this clearly shows a dramatic improvement in the profitability of the retail energy market over the past couple of years, during which there has been this striking increase in the number and complexity of tariffs.

So there are two sources of harm that Ofgem may have identified: first that gas and electricity prices may be higher than they should be; second that individual consumers, especially poorer ones with no online access or those with literacy and numeracy problems, are at an unfair disadvantage.

Its proposed reforms are that the power companies should be forced to auction energy to smaller suppliers, to stimulate competition. And that there should be a radical standardisation and simplification of tariffs for standard energy deals (so-called evergreen products that aren't time limited).

But here's what I find slightly odd. Why haven't any of the energy companies turned themselves into the equivalent of an Easyjet or Ryanair? Why have none of them offered a limited range of low-cost packages that massively undercut their rivals? There must be something in the intrinsic risks of trying to be the no-frills, lowest cost supplier that is a major deterrent.

Also, it is probably worth pointing out that Ofgem's finding that between 40% and 60% of energy customers are "sticky", that these tend to stay with their suppliers rather than shopping around, may be evidence of inertia for that regulator - but it looks like a bubbling, thriving market with lots of bargain hunting and switching compared to another market that is important to us, the retail banking market.

If, for example, future proposals from the Banking Commission set up by the government were to encourage up to 50% of bank customers to switch banks, that would transform competitive conditions in retail banking.

A couple of final points.

First, you can expect the energy companies to complain that any squeeze in their margins will erode their ability to make the investments necessary to deliver security of energy supply - and low-carbon supply to boot - that is a priority for the coming decade.

Second, it is striking that no one credible seems to be arguing the caveat emptor point any longer, that if consumers are too thick to notice when energy suppliers are bamboozling them than they deserve to be ripped off. In that sense, in energy at least, there has apparently been a triumph of the nanny state.

Comments

Page 1 of 3

  • Comment number 1.

    Yes

  • Comment number 2.

    All part of Maggie's "bargain bin" sale in the 1980's. It's pretty obscene that we should have to pay through the nose to some foreign-owned faceless corporation for our energy (and water, come to that). Now that rant is over everyone should be comparing their prices regularly - I thought I had a good deal from EDF only to be trumped by British Gas (yes, I was surprised too) saving me over £150 a year through various discounts, pricing schemes etc. There is no customer loyalty any more - that's a 2 way thing and when the energy companies announce mega-profits (and dividends) then they shouldn't be surprised that the consumer feels ever so slightly disloyal. If you see Sid - tell him.

  • Comment number 3.

    Robert,

    You missed off another complex layer of utility charging complexity - that most of these offers have prices which vary according to where the consumer lives. If OFGEM was really serious about reform there would be six national prices for electricity and gas from six suppliers and we'd simply be able to pick the cheapest. It would be obvious, you wouldn't need a computer, more of us would switch and overheads and prices would be lower.

  • Comment number 4.

    You seem a little bemused Robert as to why energy suppliers are not under cutting one another.Well,how about the concept that they[energy companies]are just one great big happy cartel,colluding with each other fixing prices.And then,they roll out the useless/toothless,part of the cartel,regulator,offgem ,to do abit of condesending to the victims i.e the British people,who in effect cannot do rock-all about the situation, and will have to put up with being generally ripped-off. At present the price difference between all of these companies is around £30,hardley competition is it.

  • Comment number 5.

    I don't know whether we are paying too much for energy. Our prices seem to be below our continental friends. My objection is that competition in this country only shows itself in how devious and obfuscatory the charges or tariffs can be. And this is understandable, after all there is only one price for gas so to compete you have to appear to offer a superb deal but get your profit back in the small print. There are only six companies to choose from. Competition does not work because there is only one product. This happens with banks, supermarkets, telecoms (how does BT get away with increasing prices every 6 months at rates way above inflation? A deal with government methinks) We now have all our major providers of essential services forming an oligopoly. As long as their service and price is not significantly worse than any other, they don't need to do anything. Vince Cable was right, the market is not working.

  • Comment number 6.

    Another issue that has to be tackled by Ofgem is the unit cost of energy depending on how little or how much you use.

    Meaning, the more energy you use the unit cost goes down. So, if you use less energy you pay the highest cost per unit. This is the worst kind of retail billing on an already expensive and precious resource - use more, save money on this affects the poorest.

  • Comment number 7.

    Surely the best measure of weather or not we are being ripped off, is comparing the charges throughout the EU.

    As far as I know, we pay amongst the lowest prices in Europe before tax, so the extra money we are paying is either going to the government or going to the Middle East - not the energy companies.

  • Comment number 8.

    This is baffling - it seems to me that a 99% dominance over an essential market, by 6 companies which appears to be completely lacking in genuine competition suggests passive collusion. The companies are clearly more than happy to persist in a) confusing customers with over 300 hundred packages (for what is effectively just straight forward energy supply?), b) the large profit margins they are generating, and c) their respective market shares. The comparison with retail banking is not accurate as in that respect the products banks offer - loans, savings, ISAs, mortgages etc - are largely invariable beyond a few 0.1 percentage points and are comparitively dictated by the BoE base rate. This is not the case with energy companies, and there is no argument as to why any of the energy companies don't undercut their 'competitors' in an easyjet/ryanair style as Peston points out, other than by some sort of tacet agreement - with the profit margins of say British Gas for example, they could easily cut the cost of their packages by say 20% and even without their market share increasing would still clear a significant profit. However we all know that they would take a sizeable chunk more of the market if they did so, which leaves the question - why don't they?

    One final point:
    "First, you can expect the energy companies to complain that any squeeze in their margins will erode their ability to make the investments necessary to deliver security of energy supply - and low-carbon supply to boot - that is a priority for the coming decade."

    This is not about 'securing profit margins for investment' because genuine competition would be entirely profitable for the best provider offering the best deal - Easyjet offer one of the cheapest services and generate one of the largets profit margins. That's even if we assume that the vast profits the energy companies are generating are actually being ploughed into investment and energy research rather than lining shareholders' pockets.

  • Comment number 9.

    The energy and personal banking markets share exactly the same problems of complexity of tariffs that you describe. If I buy something by credit card from, say, the USA I look to loose around 3% of my purchase to the credit card company in its choice of currency rates - that's £300 for a simple electronic funds transfer on a £10,000 purchase. Yet go the credit card companies publicise this? Can I go to a low cost supplier?

    And the reason why the same is not true of the airline industry is that every time I book a ticket I have to look at the market for air travel from A to B afresh. And it is easy for me to compare the results of either my own online search or my use of a comparison website. Every potential supplier has to publish its price. So, it is in the commercial interest of an airline to offer me a single 'best price' for its particular offering from A to B and it has to react to demand (or lack of demand) if it gets its price wrong and looks to be about to fly with empty aircraft.

    Conversely, the increasing complexity of financial services and power supply company pricing structures looks to be designed to trap and confuse, rather than to simplify. Forcing such suppliers to publish simple - and easily comparable - price structures is not an indicator of the 'nanny state', rather it is a desire to make consumer capitalism work in the manner it is supposed to , ie to the benefit of the consumer, rather than to the benefit of the supplier.

    So full marks to OFGEM. And when are the financial indstry regulators going to pick up the same baton on behalf of their industry's customers?

  • Comment number 10.

    Don't worry, with RWE & EON pulling out of the UK market, up 50% of our Electricity and Gas supply could soon be owned by Russian energy companies.

    I think if that happens, a few confusing tariffs will be the least of our worries.

  • Comment number 11.

    Ofgem once again waiting until their trousers are on fire before they move. Energy suppliers have been inspired by the equally poorly regulated telecoms industry.

    Ofgems existence is to the sole benefit of those employed and pensioned by them; and at great expense to the tax payer - It's time to end the gravy train and establish a new, pro-active regulator instead of this reactive mob of self-serving overheads - GOOD RIDDANCE

  • Comment number 12.

    Robert, I'm not sure the Ryanair/Easyjet comparison is a fair one. The big six have no incentive to provide such an offering given they have managed to increase margins at a rate greater than their operating costs have increased. The no frills airlines were successful, as new entrants undercutting the competition partly through having a very tailored value proposition AND by running a very low cost back office/supply chain.

    New entrants into the energy market have come and gone trying to replicate this business model, however the amount of red tape to become a registered supplier, along with the amount of cash you have to have in the bank means you need to have serious money to even get a seat at the table.

    Basically you need a huge amount of cash to guarantee you can pay for your wholesale energy, you need to commit to a long term arrangement having modeled all of the events and variables that could affect energy prices. So imagine buying wholesale at 5p a unit for one year, and adding 2p on to cover margin and costs. If the energy price decreases and your competitors undercut you, you only have 2p to play with otherwise you're running at a loss. The big players have such huge amounts of cash they can manage their risk across a portfolio of contracts, some long term and and some short, as well as spot pricing. Add to this the fact that as a new player you have to set aside an amount of money on the day a new customer registers to cover the industry's costs should you go bankrupt and your customer base has to be migrated to an alternative supplier means you make little or no margin on every customer you win.

    It's hardly surprising there are no new entrants. Before privatisation there were 13 electricity boards for England and Wales. We now have 6 privatised companies. OfGem need to take a much deeper look at this, and look at how this ties in with renewables via the FiT tariffs if they're really going to make a difference, otherwise this mornings release is just sabre rattling.

  • Comment number 13.

    It must be that time of year again! Noises off from OFGEM! At the risk of sounding like the proverbial old ****, I've worked in the energy business for more years than I will admit to and I've also been through the repeated OFGEM investigations of the upstream, downstream and midstream energy supply industry, searching out "cartel" like behaviour.

    This is how it works. Every three years or so OFGEM, under pressure from various consumer groups concludes that energy prices are high because of manipulation of the energy market (that they created...the market itself then by definition cannot be flawed)) by the various producers and suppliers. Threats are followed by protests of innocence. An investigation is announced and tens of thousands of man hours are sunk in producing detailed figures for the auditors. Some months later, some of the energy companies ask politely what is happening. OFGEM concludes that it needs more time to complete its investigation. Six months pass, another request for conclusions. OFGEM announces that the investigation is being suspended. Occasionally some minor questionable behaviour is uncovered for forms sake but usually it's silence because...there was nothing to find!!! It's important to note here that OFGEM simply stops its investigation, it never declares anyone innocent! You then wait for the next investigation.

    It's funny that nobody ever thinks of investigating the value for money provided by OFGEM. They are funded by direct levy on the energy companies and have grown to a size out of all proportion with their remit. My own experience was one of dozens of comparatively junior economists, full of dogma but with little practical experience, trying to make a name for themselves...and you do that by launching yet another investigation against the "evil energy companies". When your department may be facing cuts, this need becomes doubly pressing...survival rather than promotion is at stake!

    Like most conspiracy theories, it's not a question of "not being able to handle the truth". Rather, the "truth" is altogether far too mundane to excite the wider public. Here are some really boring truths

    - UK retail energy prices are not subsidised and fluctuate according to supply and demand. (Any energy subsidy scheme around the world ends in wild distortions by the way)
    - The primary fuel used in the bulk of power generation, be it coal or gas, is always indexed against other commodity prices, usually Brent Crude. This is specifically to protect the individual investing in the production facilities against making an unexpected loss. Without this type of guarantee the initial investment, which may run to billions of dollars simply would not take place. When oil prices rise, the price of power rises, even though they may not be physically linked.
    - Energy has to be transmitted to end users down pipes or cables, involving huge amounts of steel or copper. Companies investing in and operating this infrastructure have a right to earn a return...in the UK this return is regulated by OFGEM and is pitifully low compared to other activities.
    - Production sources have to be constantly developed and transmission systems require constant reinvestment.

    The overall return in energy supply is quite low and, in some circumstances, quite risky! The seemingly vast profits of the companies are a reflection of the amount of capital sunk in the business, not the underlying profitability. The companies engaged in this work are also not charities.

    We have all evolved into comfortable, energy intensive lifestyles. To believe though that this should also be free is yet another example of the dumb hypocrisies that underpin modern British society!

  • Comment number 14.

    All this user's posts have been removed.Why?

  • Comment number 15.

    I work for one of the big 6 (Not in any sort of position of responsibility - more as a keyboard monkey) however I know for a fact that at least 4 of the big 6 operate at below profitability levels and it is only British Gas who are 3 times the size of the others that are making money hand over fist, perhaps as most of the companies are tied to other groups the actual profitability gets lost but it is not the high times Ofgem like to suggest.

  • Comment number 16.

    The very complexity of the price offers mitigate against consumers changing provider. If you can't fathom out what the price is then you won't change for fear of making your situation worse.

    Then there is the bonus driven behaviour of the sales teams aggressively button-holing consumers in the supermarket or the shopping mall. I choose to remind such folk as to the glorious name of a victorious Soviet general of the Great Patriotic War. I think a lot of those who change their provider have no idea of the actual tariff they are paying: they have just been told it is cheaper for now.

    It is quite apparent to the simplest observer that deregulation has now failed to help the consumer as it just confuses and frightens. The power supply companies now use oligopoly and subterfuge to undermine a supposedly free market.

    So it is time for simple tariffs that we can all understand our bills. This hopefully will reintroduce some real competition.

    My question is where has the regulator been all these years? Were they given time off by the last government? Sent on holiday with the bank regulators? I do get that feeling.

  • Comment number 17.

    From my experience, the major competition is between a companies own sales force and its on-line presence. I was recently prompted to change by a local rep making actual house calls. I took my time and got data from comparison sites, and picked the best deal for me that I could find. This was not at all easy. I called the rep and he came round, and we examined the options and confirmed this was the best offering. We then had the shock that this tariff was only available on-line. So this poor guy has done all the hard work, given far better advice than all the poorly designed websites, but he gets no credit for the sale, no commission, and probably his job is under increased threat because he cannot meet sales targets. He freely admits that the majority of his work is in winning customers back, after they have gone for some apparently cheap deal, only to be let down by poor customer services or non-existent savings. If there is increased pressure on a knowledgeable sales force, then all we will get is increased churn, just like in the mobile phone market. The customers suffer and those in the supply companies who know what they are talking about will be out of a job.

  • Comment number 18.

    Ogem report demonstrates that this privatisation has comprehensively failed the consumer and the state and produced a position where the effects are diametrically opposite to those intended. Not just the energy industry but all oligopolistic markets where the marketing objective (rational it its own terms) is to obfuscate on pricing and product differentiation - i.e. to eliminate clear competitive pressures.

    Back to energy - has no one questioned the tariffs all of which are structured to ensure low usage customers pay a higher average unit cost than those who consume lots?

  • Comment number 19.

    Power companies cannot massively undercut. It's the same reason that you never see a petrol station selling fuel for much less than competitors. Regardless of competition to the end user they are all buying thier raw materials from a single source, they all have similar operating costs so there are no massive savings to be made.

    I do object to them signing you up for a year (with penalties for ending before this time) then 2 months in ramping up the costs. if I sign for a year they should honour prices for a year.

  • Comment number 20.

    I feel there's no point to consumers moving to another provider after some guy on the doorstep undercuts someone else, only to raise the price when the consumers move. Some months ago I had a dodgy energy salesman on my doorstep, spouting claims that when I looked the firm up on the net there'd been trouble with before, and the firm had previously to apologise to OfGem. Yet there they were still doing it. I'd like to see providers being given licences to operate specific areas in a specific time period, with prices exactly the same, decided by the regulator - just like independent television used to be. If the service is poor they lose their licence. I don't see why Robert Peston says there's only six big providers - the interests of the consumer should be the main issue here, and we shouldn't have to subsidise the operating requirements of tiny, useless firms involved in a government backed scam on the public.

    I also don't think it's fair that a consumer that gets gas and electricity from the same provider has to pay two sets of standing charge. Standing charges are a ripoff and rather dishonest - let's just put the prices up and pay an economic price for what we use.

  • Comment number 21.

    There is virtually no competition in the gas and electricity markets. No companies are trying to expand market share by cutting prices. Nobody really seems to care if they retain customers or not.

    For example, I have switched gas and electricity provider four times. Never has any company attempted to keep me as a customer by making a more attractive offer. In contrast, last week I called my telephone and broaband provider to tell them I was leaving and they fell over themselves to beat their rival's offer.

    Compeition is moribund. This can be seen in the fact that the geographical footprint of all of the big six utilities almost exactly matches that of of the state-owned companies that preceded them. They are just lucrative local monopolies.

  • Comment number 22.

    i am with npower and my latest price increase was £15.
    i looked on uswitch, entered my details and the response indicated i would be £180 per year better off with , surprise, npower.
    i rang them and was informed i should change my tariff which i did.
    lo and behold i am now £14 per month better off.
    why are these tariff variances made known?
    graham hughes, a penshioner.

  • Comment number 23.

    It's not just energy customers is it?

    If you don't continually move your savings you find interest rates drop from say 2% to a fraction of 1% after the sweetener period, along with insurance and almost anything else you can name.

    This always was going to be the result of "choice". There aren't enough hours in the day for people to keep across this, and what a meaninglessly tedious way to spend it anyway.

    However, I want the choice for my kids to be able to market their skills to a public-sector employer with proper pension provision, but that's been removed.

  • Comment number 24.

    Do you really want to follow the EasyJet model - where the power is delivered somewhere vaguely in the target region and gets cut off completely if there's any snow about?

  • Comment number 25.

    once you have fought your way through changing supplier.... get prepared for a hike in prices across the board. Our National utilites are predominantly now owned by overseas companies... add to that fact that the last UK manufacturer of Bushings 'Trench UK' (a Bushing is a key electrical components in power stations) is about to be closed by its parent company Siemens, and production taken back to Germany and we will all be at the mercy of thier prices. UK PLc.....??

  • Comment number 26.

    Well i for one am all in favour of simplification of the tariffs, so fair play to the regulator for trying, but i will be shocked if it happens.....

    I dont think they will be losing any sleep over what the outcome will be they have a captive audience and will use that advantage to the full.

  • Comment number 27.

    The point people often overlook is that if a tariff, interest rate, charge for any service is too transparent then it is too easy for everyone to go for the cheapest. In a mature, low growth market like ours the only way for companies to grow and compete is in the small print, the difficulty of comparison and a resignation on the part of the public that its all too much hassle. If large numbers of people switched gas electricty, phones, bank accounts telecoms providers regularly, think of all the waste of time, manpower, resources and money (the companies must employ any army of switchers and we end up paying for them). Is that what the government wants? Doesn't seem like a modern economy to me. And regarding security of supply of our essential services where government appears to continue to turn a blin eye to our suppliers being foreign owned, how would they have reacted if the part of the National Grid that Eon sold off went to an Iranian company?

  • Comment number 28.

    It's not just the confusing method of tariffs though is it? At a time when consumers are holding back on the niceties, trying to save a little, utility bills are rising. Energy suppliers are aware that consumers are doing this and a campaign to extract these savings is clearly their aim. BT are about to do the same, yet again, safe in the knowledge that there is little customers can do about it. Despite business leaders saying that 'competition' is a good thing, they actually despise it it. The cartel is alive and well with the premise that if there's competition a price agreement is arrived at to suit.

  • Comment number 29.

    The government should acquire and maintain a controlling interest in one domestic energy supplier (and one high-street bank) and use its ownership to influence market prices (and interest rates) whilst leaving other suppliers free to compete as circumstances allow.
    A left-leaning government could use its influence to help the more vulnerable sectors of society whilst a right-leaning one would be prevented from raising prices too high by the threat of competition.

  • Comment number 30.

    Forget all the complex spin.

    Just institute these reforms, and the market will become fair:

    1) Prevent energy firms offering lower tariffs to new customers only (existing customers need to be able to access the same tariffs as new customers, which they are prevented from at the moment)

    2) Prevent discount-for-loyalty rates - ie you sign a very expensive deal with a 20% discount for remaining with the supplier for 18 months, giving you a good deal (Expensive rates less 20% = decent rates), but the small print states that the energy firm can put up your rates after six months (which they do, believe me). So confused consumers are locked in for the last 12 months of a contract at high rates (Expensive rates less 20% plus high price increases from month six = expensive rates), or they can exercise their freedom and leave early, but then they lose the loyalty discount and were paying high rates from the start (Expensive rates from day 1 not less 20% = expensive rates).

    It is that easy.

  • Comment number 31.

    "Are energy consumers being ripped off?"

    Yes - we all knew it, the energy companies knew it - only the regulator didn't - next question.

    (for all those calling for regulation of the banks as some sort of 'fix' for the chronic problems of capitalism please take note. Regulation does very little but create the need for more regulation - as OFGEM are demonstrating)

    I'm glad to see that MOST people have worked out that switching suppliers changes very little and only serves to waste the valuable free time we have as workers.....and it's the same for all utilities.

    Not-for-profit nationalised energy supply is the only solution that can ever work - otherwise we will always be ripped off by the private sector who's aim is to fill their boots rather than ensure the most efficient provision of energy to consumers.

  • Comment number 32.

    All this user's posts have been removed.Why?

  • Comment number 33.

    As has been said, we must suspect a cartel in energy provision. I live in the sticks on bottled gas, electricity and oil for heating, so cannot benefit from single supplier discounts. (And the winter heating allowance doesn't go very far these days). Competition is a nonsense, a chimera and these large firms do their utmost to eliminate it, usually by buying up the smaller firms - job done. Why do you think the firms were nationalised in the first place, before we were invited to buy what we already owned? Shurely shome mishtake etc....

  • Comment number 34.

    If inertia in banking is even greater then might we think that the banking sector is uncompetitive?

  • Comment number 35.

    ..oh and where do you think they got the idea about making so many tarrifs and making them so convoluted comparison is nigh impossible?

    The mobile phone market - the biggest rip off in society today.

    The problem is that when people start to get wise to the trickery then the result is always rising prices as the existing prices we pay are based on the 'fool factor' where people who are fools pay more for their utility thereby subsidising the 'non-foolish' consumer.

    ...and don't think being a fool is an absolute state of the consumer - for a consumer may be a fool in the energy market and a non-fool in another market.

    This is because (as opposed to perfect competition theory) the consumer cannot be an expert (or have the correct information to make an informed decision) in all the markets in which they participate.

    The FREE market then fails as the idea that there will always be winners and losers, that there will always be fools. However this starts to fail as the people wise up to the trickery of these suppliers and all that is created are giant waves of people who move in sync from one supplier to the next.

    Imagine that - 80% of your customers move away from you in one fell swoop as the prices rise - what happens? - companies go bust.

    This then allows the remaining suppliers to operate a cartel - don't be thinking for a moment a new supplier will emerge from the wreckage - the free market melons have been saying that will happen in banking for years now - and in the last 20 years there really only is one new entrant into the banking market - Metro bank - and that was only on the back of a clear cartel being operated by the major banks.

    I mean you would have to be REALLY STUPID to believe free market economics when all around us is evidence of it failing.

    ....and as an aside - for the regular capitalists who love to come on here and waffle about communism 'not working' - they should read this.

    http://www.bbc.co.uk/news/world-12785695

    ...now why would a freedom loving democracy (i.e. Britain) try and assasinate the head of state of a fledgling communist system?

    Funny isn't it? - this was long before Stalin and long before any accusations or evidence of anything other than a workers revolution - so you can't even use the 'Saddam clause' and claim we were trying to do good.

    Once again the truth of history is covered up by the people who wish to keep you enslaved.
    I shall be interested to hear how the capitalists explain this one - I'm sure there was a very good reason to try to stop a democratically run centralised state in Russia in 1918.

    Who are the fascists and who are the non-fascists in this conundrum?

  • Comment number 36.

    Anglophone (13) - I too have worked in the energy industry for many years and couldn't agree more with you.

  • Comment number 37.

    And I note BT are increasing their prices by 10%, despite decent profits last year. And the fact they own the network means that all service providers will be hit. So once again getting fleeced by capitalism. same old same old

  • Comment number 38.

    The main problem i have is the companies always put prices up when their costs go up , but never reduce prices when wholesale costs go down. They always bring up the old excuse that they paid for the fuel in advance so they cant pass on reductions straight away , but seem to put prices up as soon as they can ( never quoting the fact that they are using fuel paid for at the old price )

  • Comment number 39.

    I completely disagree with Robert's caveat emptor that "...if consumers are too thick to notice when energy suppliers are bamboozling them than they deserve to be ripped off...". There is this pervasive myth that you only need to give consumers choice and a free market and market efficiency will deliver the best deal to consumers. Consumers simply don't have time to shop around for the best deal - especially when the energy suppliers (and the financial services providers, for that matter) flood the market with a plethora of incomprehensible products. If I spent all of my time being a "good consumer" and "rationally" shopping around for the best deal, that's all I'd be. There's more to life than that, Robert, and you don't seem to get it. People aren't "too thick to notice". They're too busy.

  • Comment number 40.

    I am in the position of looking to perhaps change as my current tarriff has been withdrawn.. even with web access I found the range and complexity just too confusing. It may be cheaper, it may not I honestly can't work it out so in the end just stayed with my current provider on a different scheme. So yes I vote simplify!

  • Comment number 41.

    > no one credible seems to be arguing the caveat emptor point

    So only unconvincing people are still going on about caveat emptor?

  • Comment number 42.

    A little, teeny bit of bamboozling is OK. We expect that - it's a nuisance, and those that do it get a kick up the backside. But those chumps in the energy industry took it to new levels. And now they are stomped - about time, too.

    Now do the phone companies.

  • Comment number 43.

    OFGEM has been so off the pace it might be better simply to close it down. How many does it employ and what does it cost? We can see that the benefit is pretty much zero...

  • Comment number 44.

    28. At 11:26am on 21st Mar 2011, Brianofthecam wrote:

    "BT are about to do the same, yet again, safe in the knowledge that there is little customers can do about it"

    ...but Brian - how can this be? - according to the Capitalists you have a 'choice' of supplier so this screwing of the consumer simply cannot exist as all the customers would move away!

    Are you saying teh theory of free markets and the practice of free markets are different?

    Someone shoudl warn these capitalists - they're so convinced they're going to march about it this saturday.....oh no wait a minute - that's not them is it - I forgot THEY DON'T MARCH - they assume that everyone who doesn't march endorses Captialism.

    What a shame, because that means that everyone who doesn't regularly attend another football team match must be a Wolves supporter - which makes them the 'best supported club in the world'.

    Capitalist logic - would make Mr Spocks head spin.

    http://marchforthealternative.org.uk/

    Want fair energy prices? - well complaining on this blog won't help you need to be out making your point or otherwise the capitalists will count you as one of them - i.e. all is fair in the love of money.

  • Comment number 45.

    35. At 11:45am on 21st Mar 2011, writingsonthewall wrote:

    now why would a freedom loving democracy (i.e. Britain) try and assasinate the head of state of a fledgling communist system?

    ==========================================================

    well it does say that they were trying to get the russians back into the war so that the allied forces on the western front would have a better chance of defeating the russians.

    not entirely sure why this was directed at the capitalists as it didnt seem to mention anything particularly economics based.

  • Comment number 46.

    Given the evidence is there not ample evidence of a potential / apparent criminal commercial conspiracy between the regulators and the industries regulated against the customer?

    This is how it works: you make the tariffs so complex no-one can understand them - even if a customer does get to the bottom of the tariff and wants to change there will always be minimum term penalties.

    It is not rocket science to stop this market abuse - simply ban tariffs that cannot be understood and make the penalty be that the vendor is responsible for ensuring that the customer understand the tariff.

    The whole aspect of marketing is 'taught' in business schools under the heading of 'confusion marketing' so we should not be surprised that business takes advantage of the customers. Yet evey year regulators throw up their hand in surprised horror that business should do such things. I can think that it is only reasonable to conclude that the regulators are either incompetent, duplicitous or deliberately conspiring against the customer. It is the complexity of tariffs that must be stopped - so just stop it: any commodity should have a price per unit and that is what the customer should pay.

    The trouble is that there natural monopolies in utility supply are just that and no matter how much of them or how they are privatised they remain natural monopolies - except bankers and speculators steal the assets from the original owners.

  • Comment number 47.

    I'm a Commercial Analyst - I've been the sole analyst on 5 year, $100m deals that encompassed multiple workstreams on 3 continents. It took me two hours to model the deals offered to me by my then supplier.

    At that point I changed to EBICO. One price per unit, regardless of useage. Someone reads my meter, they send me a bill, I pay a monthly direct debit. Job's a good 'un. I probably pay a few pound more over a year, but the flip side is everyone who uses them gets the same price - so your at least you aren't saving money at the expense of some little old lady who can't use internet billing.

  • Comment number 48.

    34. At 11:43am on 21st Mar 2011, room271 wrote:

    "If inertia in banking is even greater then might we think that the banking sector is uncompetitive?"

    The BBC reported that the energy supplier market is the 'least trusted' by consumers in the UK.

    Clearly the BEEB had an off day as surely the snake oil salemen of finance are the least trusted now.

    ...and has anyone seen a black swan before? - let alone a flock of them!

    http://www.allvoices.com/contributed-news/8530617-coast-guard-investigating-reports-of-new-oil-spill-in-gulf

    Apparantly a 'Sheen' was seen - but this might just be Charlie - however I am prepared for the next report which will be.

    "New evidence shows that bathing and drinking oil polluted water is not damaging to human health"

  • Comment number 49.

    "Ogem report demonstrates that this privatisation has comprehensively failed the consumer and the state "

    Er no it is does not.

    Remove the various subsidies that other countries provide their consumers and ask a simply question - are UK consumer prices higher or lower than the unsubsidised price in rest of Europe.

    If the answer is we pay the same or less than Europe then privitisation has worked. If we are paying significantly more and there is no justification for this, than it has not worked.

    As the meerkat says "simples"

  • Comment number 50.

    Good article, Robert. Just a point about the second of your 'final points'.

    The problem with caveat emptor is that with the privatised utilities, it doesn't exist. We are a captive market. We have to get our gas and electricity from somewhere, we can't simply exercise our right not to buy from our supplier. We can, of course, change supplier but, as the BBC has frequently pointed out all the energy companies tend to alter their prices at roughly the same time, the only advantage one can get by switching is to switch to the last company to raise its prices, and this advantage will only be for a very short time. The problem is that the energy market is being run like a cartel at the moment. Energy prices are fixed and vary little from supplier to supplier.

    The principle of Caveat Emptor can only apply if the buyer has a true choice when buying the product and is therefore capable of making a mistake when buying (in other words, has something to beware of). In the case of the energy companies, the buyer doesn't have that choice. We simply have to put up with whatever is thrown at us!

  • Comment number 51.

    8. At 10:45am on 21st Mar 2011, Turbulent_Times wrote:
    This is not about 'securing profit margins for investment' because genuine competition would be entirely profitable for the best provider offering the best deal - Easyjet offer one of the cheapest services and generate one of the largets profit margins. That's even if we assume that the vast profits the energy companies are generating are actually being ploughed into investment and energy research rather than lining shareholders' pockets.
    -----------

    You beat me to it! My suspicion has always been that it's going to be the consumers who have to pay for the investment (which they will pay for again as consumers eventually as well), but I always thought that it was "the Company", i.e., the shareholders, who should pay for the investment so that they then ultimately benefit from their dividends increasing and their capital increasing. Instead, the consumer pays whilst the Directors and Shareholders receive higher remuneration. This is what Ofgem should be looking at! Where is the profit going?

  • Comment number 52.

    Well, what do you expect from the way it has evolved into private companies selling a product? There are 6 companies selling the same thing, of course there are going to be incentives for paperless billing, higher consumption, DD, internet only etc etc.
    Dividends need to be high to attract investment and profits need to fund the energy for years ahead. Companies like Centrica make about £30 profit per customer, not a great deal on the average bill of arouund £1100 a year. They are forced already to supply the poorest with low cost power and supply insulation, high efficiency boilers at a great cost.
    What more do you want?

  • Comment number 53.

    I find 1 of the biggest hindrences in shopping around is the fact that you are tied in again to a 12-18month contract they are as bad as mobile phones.

  • Comment number 54.

    39. At 11:56am on 21st Mar 2011, Anonymous wrote:

    "If I spent all of my time being a "good consumer" and "rationally" shopping around for the best deal, that's all I'd be."

    Hear hear - but then that's what they want you to do - waste your time so you don't have time to organise yourselves and rise up against the slavery of capitalism.

    We have to do it in our 'spare' time.

    http://marchforthealternative.org.uk/

    --------------------------------------------------------------------------------

    41. At 12:08pm on 21st Mar 2011, Jacques Cartier wrote:

    "So only unconvincing people are still going on about caveat emptor? "

    Nobody credible ever mentioned Caveat Emptor in the first place. The idea that there was 'choice within a selective set' was all a charade.

    Yeah - we've got choice - pay the electric bill or freeze during winter, because it won't be long before people find their frozen wages are not going to cover the rising bills and general price increases.

  • Comment number 55.

    A timely reminder in a previous post about heating oil and bottled gas. If you are out of town you only have mains electricity (OK there are some exceptions). If Ofgem are calling for a review of tariffs, they have to include all energy providers, and, since broadband is ridiculously slow or unavailable, there must be no discrimination in favour of on-line customers.

  • Comment number 56.

    The only reason for confusion marketing, which is exactly what the energy , mobile phone suppliers and banks indulge in, is to hide the fact that you will be ripped off.

  • Comment number 57.

    45. At 12:22pm on 21st Mar 2011, avalanche-jersey wrote:

    "well it does say that they were trying to get the russians back into the war so that the allied forces on the western front would have a better chance of defeating the russians."

    If you think that is acceptable then we can see where you morality lies.

    "not entirely sure why this was directed at the capitalists as it didnt seem to mention anything particularly economics based."

    Errrr - because as you well know one of the common arguments FOR capitalism seems to be that 'other systems (i.e. communism) don't work'

    Considering the capitalist west (yes, we were capitalists then too you know) actively tried to undermine 'other systems' this means that the premise on which this claim is made is flawed.

    That's what it has to do with Capitalism - the belief that "this is the best system tried" does not hold water as there MAY have been a better system (communism) but we will never know as the capitalists did their best to undermine it at every level.

    Maybe you need to reconsider your arguments about the alternatives and just exactly what you are comparing capitalism to.

  • Comment number 58.

    52. At 12:37pm on 21st Mar 2011, 335BMW wrote:

    please supply a source for your assertion that "Companies like Centrica make about £30 profit per customer, not a great deal on the average bill of arouund £1100 a year"

    Does that cost include the cost of customer acquisitions?

  • Comment number 59.

    One could spend an inordinate amount of time and effort hunting down the best energy deal and maybe save a couple of hundred quid over his or her neighbour who would rather stay with one supplier and use the time saved by not being glued to computer monitor to live his or her life. I know which I'd choose!

  • Comment number 60.

    I'm tired of people attempting to interrogate me at my door as to my supply arrangements too.

    "I do not answer questions at my door" is what I'm now forced to say to people who are only trying to earn a living.

  • Comment number 61.

    There is no question that we are being 'taken for a ride'. My father lives in France and a comparison of his total costs for electricity from EDF with my own EDF bills make interesting reading. Remember EDF stands for 'Electricité de France'

    We are paying nearly twice as much for our power when a transparent comparison is made. The irony is that surplus UK electricity is sold to the French who then mark it up by nearly 100% and sell it back....

  • Comment number 62.

    49. At 12:30pm on 21st Mar 2011, Justin150 wrote:

    "Ogem report demonstrates that this privatisation has comprehensively failed the consumer and the state "

    Er no it is does not.

    Remove the various subsidies that other countries provide their consumers and ask a simply question - are UK consumer prices higher or lower than the unsubsidised price in rest of Europe.

    If the answer is we pay the same or less than Europe then privitisation has worked. If we are paying significantly more and there is no justification for this, than it has not worked."

    Classic capitalist flawed thinking - even if we did have cheaper electricity - would this mean we're ina better position?

    I think the rising cost of energy (and how that is produced) would disagree. I mean why do you think the Government has been forced to introduce a levy to pay for the development of alternative energy?

    Surely the market could have sorted it out - EEEEEEEEEEEEEEEEE wrong - the market would wait until it was too late before addressing the problem.

    "As the meerkat says "simples""

    yes - like your basis for the comparison of energy prices around the world - knowing the price of everything and the value of nothing.

    Short termism all over I'm afraid.

    P.s. How is that UK no fly zone coming along? I hear the UK had a 3000 mile wasted round trip last night because they don't have a convenient aircraft carrier in the Med.

    Good thing the french and US were there to help out - otherwise this would have been rather an intermittent no-fly zone.

  • Comment number 63.

    52. At 12:37pm on 21st Mar 2011, 335BMW wrote:

    "Well, what do you expect from the way it has evolved into private companies selling a product? There are 6 companies selling the same thing, of course there are going to be incentives for paperless billing, higher consumption, DD, internet only etc etc.
    Dividends need to be high to attract investment and profits need to fund the energy for years ahead. Companies like Centrica make about £30 profit per customer, not a great deal on the average bill of arouund £1100 a year. They are forced already to supply the poorest with low cost power and supply insulation, high efficiency boilers at a great cost.
    What more do you want?"

    How about getting the bills right so I don't have to collect my refund from the post office following the revelation (by ofgem) that suppliers actually mis-charged customers for several years.

    Whilst I'm grateful for the refund - I am all too aware that I paid for the investigation to find this out - and some poor consumers and taxpayers paid for it and weren't entitled to a refund!

    Now please get back to work electricity stooge - it's hardly a sign of efficiency when energy supplier staff are spending time on blogs defending their masters is it?

  • Comment number 64.

    Can anyone point to a SINGLE benefit, I, as a consumer, have benefited from Maggie Thatchers sell off of the State Owned crown jewels of Telecom, energy, & water.

    I can't see any.

    As a previous poster points out, we are now at the mercy of foreign owned companies extracting massive profits at our expense - whilst their home governments have much stricter controls on prices.

    I doubt "Son-of-Maggie" will do anything other than permit it's continuance

  • Comment number 65.

    57. At 12:47pm on 21st Mar 2011, writingsonthewall wrote:

    "If you think that is acceptable then we can see where you morality lies."

    At no point did i even imply that i thought that assisination was acceptable, i was merely pointing out the reasons stated in the article that you provided.

    "Errrr - because as you well know one of the common arguments FOR capitalism seems to be that 'other systems (i.e. communism) don't work'"

    Errr - But as you well know one of the common arguments AGAINST capitalism seems to be that 'other systems (i.e. communism) do work..... of course surely if they were better and did work then we would have them already, i mean its not as though we are unable to get those systems to work. werent there a load of communists around a while ago.....i wonder what happened to them, maybe they are all living in some kind of paradise somewhere???

    "That's what it has to do with Capitalism - the belief that "this is the best system tried" does not hold water as there MAY have been a better system (communism) but we will never know as the capitalists did their best to undermine it at every level."

    But lenin DID go on to set up his Communist system and over the next 60-70 years that communist system and its leaders were responsible for some of the worst atrocities in recent history.

    The capitalists west failed to stop a communist system rising up in Russia and eventually other eastern european countries so the idea that we would never know wether or not it would have worked is a load of rubbish.




  • Comment number 66.

    62. At 12:53pm on 21st Mar 2011, writingsonthewall wrote:
    49. At 12:30pm on 21st Mar 2011, Justin150 wrote:

    "P.s. How is that UK no fly zone coming along? I hear the UK had a 3000 mile wasted round trip last night because they don't have a convenient aircraft carrier in the Med.

    Good thing the french and US were there to help out - otherwise this would have been rather an intermittent no-fly zone."

    -----------

    Really? Where did you hear this from? I wasn't aware that the UK aircraft in theatre could use an aircraft carrier (Typhoons and Tornados having been designed without the little hook at the back to prevent them skidding off the carrier into the sea, you see), so not sure what point you're trying to make?

    Added to which, not all of the sorties flown have been from RAF Marham - bases in Cyprus and Italy have been utilised too.

    Off point on this blog's debate, I know, but as a good friend of mine is currently in theatre, I get annoyed by some misinformation flying around (if you'll pardon the unintentional pun!!).



  • Comment number 67.

    When I moved house I was on a standard tariff. After about a year my supplier informed me about a price increase and recommended another tariff to me. I went online and found that they had another cheaper tariff which they had conveniently forgotten to tell me about. Do your own research.

  • Comment number 68.

    writingsonthewall #54 "....rise up against the slavery of capitalism" What? Are we back in 1917? Capitalism or Communism or any other ism for that matter, we'd still all be pawns in a system. I quite fancy antidisestablishmentarianism meself....

  • Comment number 69.

    35. At 11:45am on 21st Mar 2011, writingsonthewall wrote:

    "I mean you would have to be REALLY STUPID to believe free market economics when all around us is evidence of it failing."

    Just to simply paraphrase that - you would have to be REALLY STUPID to believe centrally planned economies work when all around us is evidence of them ALWAYS failing...

    And

    "...now why would a freedom loving democracy (i.e. Britain) try and assasinate the head of state of a fledgling communist system?

    Funny isn't it? - this was long before Stalin and long before any accusations or evidence of anything other than a workers revolution "

    Are you referring to the fledgling "democratically run centralised state" that butchered the czar (long after the abdication and living in complete isolation anyway) and his entire family (!) without trial? Even Charles I and Louis XVI were put on trial in that "rotten" early-capitalist system. That fledgling democratic state that instituted Red Terror in...1918, that killed many innocent civilians? That one - or are we talking about Das Kapital fantasies again?

    Yet again, your selective reading of history is letting you down, WOTW.

  • Comment number 70.

    Well, others have covered the ground, but - "Choice" is being used in the fuel market, as in many others, to give the illusion of market forces working for the consumer. As we spend most of our available free time struggling to compare ever changing options in every part of our lives, others are busy keeping the targets moving. We are paying them to do that too, the ultimate Catch 22 - or is someone offering a Catch 21 now?

  • Comment number 71.

    35. At 11:45am on 21st Mar 2011, writingsonthewall wrote:

    "now why would a freedom loving democracy (i.e. Britain) try and assasinate the head of state of a fledgling communist system?"

    Is that the same fledgling communist system that then started assinating its own people? Maybe, if the speculation in the article is true, the Russian people would not have had to endure 70 years under totalitarian rule.

    44. At 12:14pm on 21st Mar 2011, writingsonthewall wrote:
    "- how can this be? - according to the Capitalists you have a 'choice' of supplier so this screwing of the consumer simply cannot exist as all the customers would move away!"

    regarding phones, there is Virgin, Sky, talk talk, T-mobil, O2 etc etc, so there is quite a bit of choice there

    62. At 12:53pm on 21st Mar 2011, writingsonthewall wrote:
    "I think the rising cost of energy (and how that is produced) would disagree. I mean why do you think the Government has been forced to introduce a levy to pay for the development of alternative energy?"

    Err, perhaps because they have seen a great way to make mney out of "green taxes". I would hazard a guess that most of the "green" taxes are use for anything but how they are marketed


    Caveat Emptor protects the buyer as well as the seller. It should make the buyer think am I getting what I ask for, am I paying a fair price? By removing that from the equation, and relying on regulation alone, it will make it easier to confuse customers.

    Finally, it is governments that have put restrictions on free entry and exit into markets such as telecoms, energy and finance, so perhaps once again regulation is causing the problems and not solving them

  • Comment number 72.

    Customers who don't shop around are thick and should be ripped off. What a vile, ugly person you've become. Disgraceful.

  • Comment number 73.

    'Choice' : The Great Lie. Under a pretence of choice, the consumer is instead mercilessly exploited in a pretend market. A market that is rigged with impossible complexity, and constantly moving goal-posts. It cynically exploits the inevitable inertia of normal human beings. Life is literally to short, there is not enough time in the day to keep track of the mania that is supposed 'choice'. It is a farce and always has been. The same principles are exploited by both utility and financial services. How on earth has it has taken supposed regulators this long to wake up to this fact. Any half sane human being could have pointed it out years ago. It is not an efficient market, its a grotesque circus, overseen by incompetent ringmasters and we are paying too much for the tickets.

  • Comment number 74.

    65. At 13:05pm on 21st Mar 2011, avalanche-jersey wrote:

    "But lenin DID go on to set up his Communist system and over the next 60-70 years that communist system and its leaders were responsible for some of the worst atrocities in recent history."

    ---------------------------------------------------------------------------------

    No he didn't. Lenin set up temporary War Communism to be effective during the civil war then he presided over the National Economic Policy which temporaraily allowed individual enterprise to rebuild industry and agriculture after the decimation caused by the civil war. Lenin never actually had chance to set up socialism as he envisaged it, he was too busy reacting to circumstances. As for Stalin, well he didn't even try communism.


  • Comment number 75.

    I'm not a communist or by nature a capitalist, but the article WOTW linked does relate to a direct comparison as to whether capitalism (1916 Russia) or communism are more effective systems of government. In 1917, Russia capitulated against a Germany fighting on two fronts. In 1943, Russia turned the tide of world war 2 despite moreorless fighting single handledly (if one overlooks the relatively weak North African front) on land against a much more menacing German force that had already overran the rest of continental Europe. That's one measure where Communism could be said to have been more effective.

  • Comment number 76.

    All this user's posts have been removed.Why?

  • Comment number 77.

    65. At 13:05pm on 21st Mar 2011, avalanche-jersey wrote:

    "At no point did i even imply that i thought that assisination was acceptable, i was merely pointing out the reasons stated in the article that you provided."

    ...and the point of that was.....?

    "Errr - But as you well know one of the common arguments AGAINST capitalism seems to be that 'other systems (i.e. communism) do work"

    No it isn't - aren't you paying attention? - the MAIN argument against Capitalism is that it DOESN'T work - regardless of any better working alternatives! (or do you call this mess we're in 'working'?)

    "..... of course surely if they were better and did work then we would have them already,"

    Back to square one....my point was that alternative systems weren't successful because the CAPITALIST GOVERNMENTS DID THEIR BEST TO PREVENT THEM WORKING. Which bit of that didn't you understand?

    "i mean its not as though we are unable to get those systems to work. werent there a load of communists around a while ago.....i wonder what happened to them, maybe they are all living in some kind of paradise somewhere???"

    ...back to square one again - there are no communists left because the ideals of Communism were commonly believed not to work - and so people gave up. it turns out (officially now as most people knew this already) that it's failure had little to do with it's ideological implementation (well if it was we'll never be able to tell) but more to do with capitalists not wanting a competitive system.

    Capitalists designing monopolies - sound familiar?

    "But lenin DID go on to set up his Communist system and over the next 60-70 years that communist system and its leaders were responsible for some of the worst atrocities in recent history."

    No, Lenin did start the workings of Communism, but western influences undermining the system ensured that Stalin had a requirement to 'take control' - try and remember the Iramian situation where we supported the overthrow of the Shah with our interference and as a result they have 'enjoyed' a dictatorship for the last 20 years or so.

    "The capitalists west failed to stop a communist system rising up in Russia and eventually other eastern european countries so the idea that we would never know wether or not it would have worked is a load of rubbish."

    No they didn't - the USSR was generally only Russia until the second world war - it was during / after the war that Stalin annexed Eastern Europe - not during Lenins' time. Communism was long dead by then, that was simply a party dictatorship with the new ideals of Stalinism.

    Don't they teach kids history at all these days?

    How can you even attempt to debate the question of international undermining of communism when simple basics of historical fact are missing from your knowledge? Doesn't it worry you that a lot of what you argue is based on information that is not historically correct?

    You'll notice nobody else is entering the debate - there is a good reason for this...

  • Comment number 78.

    When wholesale energy prices go down, the energy companies, acting as an unofficial cartel, deliberately have a period of time capitalising on them before they reduce their prices. When prices go up, they raise prices immediately, ensuring they don’t lose out. Therefore they periodically get short periods of massive profits and the consumer has no redress whatsoever against being fleeced on a regular basis.
    Consumers have no ability to buy energy in advance when it is cheap- they can only buy as they use. If energy companies were forced by legislation to permit consumers to buy energy in advance of using it,(ie when it is cheap) and properly participate in the market, as they do in genuinely competitive markets, this might incentivise them to invest in storage capacity ( making national energy supply more secure as a byproduct) and forcing them to become properly competitive.
    It’s not rocket science so I cannot believe that those who created this “market” didn’t consider it when the “market” was created, which tends to suggest that all the “outrage” by ofgem and government is just a sop to keep “consumers” quiet. Any answers Robert ?

  • Comment number 79.

    Thank you post 18 @ 11:01am on 21 March 2011 - 'watriler'. In particular for your last paragraph.

    Currently, there are no financial or ecological benefits for using less energy when you see that a proportion of your energy bills are charged at the highest price per unit the less you use.

    So that's the sting? Use less energy - yet pay more per unit. Didn't, what's his name now .... oh yes, Vince Cable mentioned this problem on News Night and Question Time before the election - any progress on that Mr Cable?

  • Comment number 80.

    69. At 13:15pm on 21st Mar 2011, That_Ian wrote:

    "Are you referring to the fledgling "democratically run centralised state" that butchered the czar (long after the abdication and living in complete isolation anyway) and his entire family (!) without trial? Even Charles I and Louis XVI were put on trial in that "rotten" early-capitalist system. That fledgling democratic state that instituted Red Terror in...1918, that killed many innocent civilians? That one - or are we talking about Das Kapital fantasies again?

    Yet again, your selective reading of history is letting you down, WOTW"

    ---------------------------------------------------------------------------------

    Does your history book include the "White Terror" that took place from 1917. Often forgotten in the hallowed halls of anti-communists.

  • Comment number 81.

    Robert. Typically, when city folk start talking about energy prices they talk of gas and electricity. And the media get in a lather when these commodities rise by a couple of percent. The (non) competition in these markets is hardly surprising, but at least there is some form of regulation.

    What you conveniently ignore is those of us at the mercy of a completely unregulated market for their heating needs - ie oil. We are a significant minority - and the majority in rural areas. Yet most of us do not have the luxury of choice - LPG is the unattractive alternative.

    In the November 2010, heating oil rose from around 40 pence a litre to 70 pence a litre. That level of increase for gas or electricity customers would cause people to take to the streets. But there was scant mention of it in the media.

    Would it be too much to ask the BBC and others to start reporting on a story that had a very real and severe impact on people in rural areas and give the gas/electricity refrain a rest?

  • Comment number 82.

    There appears to be widespread misinformation about the "big 6" energy companies. They don't actually suppply anything apart from bills. They are simply large billing systems with a bunch of traders buying energy futures at the other end. They only really compete for cheaper supply to retain and increase margin and the cash cow that is the consumer gets what they are given - how can there be competition when they don't have any control over the actual supply ?

    The supply is done by the National Grid and these companies simply pay a transport and metering cost. They could just as well be pretending to "supply" potatos or elephants for all their self-promoted expertise.

  • Comment number 83.

    66. At 13:11pm on 21st Mar 2011, north_view wrote:

    "Really? Where did you hear this from? I wasn't aware that the UK aircraft in theatre could use an aircraft carrier (Typhoons and Tornados having been designed without the little hook at the back to prevent them skidding off the carrier into the sea, you see), so not sure what point you're trying to make?"

    That's EXACTLY why you shouldn't involve yourself in someone else's debate - the ability of Typhoons to work on aircraft carriers was never in question.

    "Added to which, not all of the sorties flown have been from RAF Marham - bases in Cyprus and Italy have been utilised too."

    Got any evidence for that? - or are you mis-interpreting 'could be used' with 'is being used'?....and I believe no UK aircraft have been used to 'operate a no fly zone' - but merely to 'create the conditions for a no fly zone' - one being air to air combat and the other 'bombing'.

    "Off point on this blog's debate, I know, but as a good friend of mine is currently in theatre, I get annoyed by some misinformation flying around (if you'll pardon the unintentional pun!!)."

    ....it seems you have done that yourself by adding irrelevant information into a debate you were never part of (the information may be relevant - but not to this particular debate).

  • Comment number 84.

    The problem with the argument of 'buyer beware' is that we have no choice but to pay someone for our water, gas and electricity. It's not an optional luxury to own. That's why these companies are able to chanrge such ridiculous prices, because they know whatever they charge, we have to pay it. What I want to know is how are they allowed to get away with backdating wholesale price rises, yet dragging their feet when wholesale prices drop. Energy companies' behaviour is verging on profiteering, as we have no alternative to paying them. And yes, the price plans are far too complicated, and paper bills are near impossible to understand. If they truly cared about the customers they would take heed, and make it easier to work out! But as they only care about their profits, I doubt we will see anything come of OFGEM's comments.

  • Comment number 85.

    #66 cheers for correcting WOTW, save me the bother

    Amazing isnt it. WOTW spent ages showing how the no fly could not work, how the planes did not have the range to make it work (and getting geography wrong), yet when the no-fly zone is put in place, operations to make it stick actually taken, somehow all the previous posts he made are forgotten.

    Anyhow back on subject.

    The evidence is that only 40% of consumers have never switched. By definition that means that 60% have taken a choice to move.

    Of the 40% that have not moved, presumeably some have not done so because they are happy with the service received and value that more highly than say a saving of £30 a year - that is a perfectly rationale choice.

    Of the rest I suspect most fall within "the too busy to be bothered" catagory (see post 39).

    That leaves the rest for whom the market may or may not be working. In some cases (possibly many) I suspect the reason is that they have not got internet connections or are elderly and not comfortable shopping around via the internet (in which case why does there family not help them). The problem is that the rest could be as little as 10% of the population - this is a guess because in truth no one knows.

    Does that mean that the market is not working? No. At the very least we can say it works for a significant majority of the population.

    Does it mean that the market in electricity is perfect - also no. Problem is that it is an oligopoly. Oligopolies rarely work as well as more competitive markets. So Ofgem should (and to be fair its report does go down this line) be working out how to change regulations to allow new entrants into the market: an Easyjet (but not Ryanair) energy supplier sounds a great idea

  • Comment number 86.

    Tha_Ian

    "regarding phones, there is Virgin, Sky, talk talk, T-mobil, O2 etc etc, so there is quite a bit of choice there
    "

    You should check the prices. There is every bit as much a cartel in operation as there is in energy and supermarkets. Capitalism's natural aim is to control the market - its their nirvana. While the monopolies and mergers addresses single company monopolies (badly) it really doesn't address cartels.

  • Comment number 87.

    77. At 13:25pm on 21st Mar 2011, writingsonthewall wrote:

    "Back to square one....my point was that alternative systems weren't successful because the CAPITALIST GOVERNMENTS DID THEIR BEST TO PREVENT THEM WORKING?"

    Did they? You better explain that to Cambodians - the communists in there decided themselves on complete isolation. Or are you saying, for a change, they were not communist...?

  • Comment number 88.

    @grahambp

    Funny, that electricity-powered boiler in my place must not do a lot then...

    You have a point, yes, but electricity is something consumed by all, which can provide all necessary heating etc, and which is a fair comparison for all. Bringing "do you have gas", "do you need oil" etc into it merely complicates matters.

  • Comment number 89.

    36 Helen Taylor

    "Anglophone (13) - I too have worked in the energy industry for many years and couldn't agree more with you."

    Thanks but as the monstrous cacophony of paranoid ignorance roaring about our ears shows, people neither know nor care about the fundamentals of an industry. They simply assume that they are being cheated whilst overlooking the fact that it is in fact they who are stealing both the wealth and resources from future generations.

    I gave up hope long ago of hearing much in the may of knowledgeable discussion on these threads. Just the same merry go round of lunatic conspiracy theorists and populist tub-thumpers. It's not a good advert of democracy...or human beings in general!

    To anyone who's interested. I looked into the various tariffs. Being reasonably in the know I understood what they meant but agree that without good modeling skills some people could easily get caught out. That's why I went with the small start-up supplier OVO Energy. Flat tariff, cheaper than the big 6 and with reasonably good green credentials too!

  • Comment number 90.

    This is all a bit petty domestic for a churnalist of your talent, Robert, isn't it?

    I mean, it doesn't compare in any way with your direct-from-No10/Treasury scoops on the banking crisis, does it?

  • Comment number 91.

    80. At 13:30pm on 21st Mar 2011, NorthSeaHalibut wrote:

    "Does your history book include the "White Terror" that took place from 1917. Often forgotten in the hallowed halls of anti-communists."

    --------------------------------

    It does, NSH, very much so - don't worry, Soviet propaganda was full of it. However, I am not trying to put anybody on the pedestal, like WOTW does, only pointing out that the fledgling "democratically run centralised state" was anything but. This brings us dangerously to the human nature territory, you know, an argument I know you guys just love...

  • Comment number 92.

    We need to remember one simple thing - they are all selling the same product!
    The difference with each company is how well they have been able to hedge themselves with respect to gas & electricity price changes and this has its own inherent risk. If they all sell you the same product, bought from the same place how can you expect a huge different in price? The only difference with each company is how well they can control their other costs (wages, pensions, investments, etc).

  • Comment number 93.

    It may be that lots of people don't bother to change since there is a feeling that they are all suppliers are equally bad - like the banks. I have changed suppliers several times on the basis of a calculation that I would apparently save hundreds of pounds every year. It has never happened. Do I increase my energy consumption if the price is lower? I don't think so and my meter readings confirm it.

  • Comment number 94.

    69. At 13:15pm on 21st Mar 2011, That_Ian wrote:

    "Just to simply paraphrase that - you would have to be REALLY STUPID to believe centrally planned economies work when all around us is evidence of them ALWAYS failing..."

    Ian - that's just repeating what I say - like a child would but replacing 'free market' with 'centrally planned' - and how is the Chinese economy doing BTW? - yet another failing centrally planned economy which is on course for being the biggest in the world.....

    ...I know your next response will be (because you cannot answer this) to bring in the human rights of China (even though the debate is between centrally planned and free market) - I can read you like a dull novel now.


    "Are you referring to the fledgling "democratically run centralised state" that butchered the czar (long after the abdication and living in complete isolation anyway) and his entire family (!)"

    Try reading about bloody sunday before you start putting your allegiance to the Czar - murdering his own people? - sounds a bit like Gaddaffi to me....now I'm sure you're all up for supporting Gaddaffi in order to support your claim about the Czar.

    The problem with revolutions is always what happens to the previous state - the Czar was an unelected dictator Ian - are you saying he should have been allowed to live? Does that mean Saddam should have been allowed to live too?

    Oh dear - ideological sticky mess again Ian.

    "Even Charles I and Louis XVI were put on trial in that "rotten" early-capitalist system."

    ...before execution - yeah - right on Ian - that showed me about execution of previous heads of state!

    "That fledgling democratic state that instituted Red Terror in...1918, that killed many innocent civilians?"

    Oh you mean the murder of the counter revolutionaries (part of the previous ruling minority) who threatened to restart the bloody revolution and cause chaos for their own ends? They were not innocent civilians Ian, they were counter revolutionaries - you call them 'terrorists' these days and that means thousands of civlians are killed every day in Afghanistan fighting the 'terrorists' in an effort to maintain order - no different to the Communists imposing the red terror (although a much greater number of civilians have died in afghanistan than in the red terror)

    "That one - or are we talking about Das Kapital fantasies again?"

    It seems you have a problem with fantasy - thinking the Czar and his family were 'innocents' indeed.

    "Yet again, your selective reading of history is letting you down, WOTW."

    Well at least I've read it to be selective about it - you haven't even got that far!

  • Comment number 95.

    All this user's posts have been removed.Why?

  • Comment number 96.

    75. At 13:25pm on 21st Mar 2011, United Dreamer wrote:

    Hmmmm. A tiny matter of 20m dead in expending that WWII effort can always be forgotten for the convenience of the argument, I take it...

    The czarist Russia more or less lost the war largely because of the sabotage of those very Communists bent on their revolution in their armed forces. Arguably, patriotism of some German-descended generals could be put to question too. So, not exactly comparing like with like, are we?

  • Comment number 97.

    39. At 11:56am on 21st Mar 2011, Anonymous wrote:

    There's more to life than that, Robert, and you don't seem to get it. People aren't "too thick to notice". They're too busy."

    If they are too busy to care, then they are being ignorant. Most people put a value on their time. If they think their time is worth more than the money they'll save by spending some time, then they won't bother spending that time. That doesn't mean that they're too busy to care, just that they think it is more efficient to leave things as they are.

    If my time is worth £10 an hour, and I'll think I'll save £5 by shopping around for 2 hours, then I'd be stupid to shop around. But if I can save £100 by shopping around for an hour, I'd be stupid NOT to. Even if I have to take an hour's unpaid leave from work to do so, I'd save far more than my lost earnings.

    "72. At 13:21pm on 21st Mar 2011, Fran wrote:

    Customers who don't shop around are thick and should be ripped off. What a vile, ugly person you've become. Disgraceful."

    Why? If you do your weekly grocery shopping at the local corner shop because you can't be bothered to shop around, is that anyone's fault but your own?

    Yes, energy pricing is very confusing, but it doesn't take much effort to get together your last year's bills, and call a couple of suppliers and ask them if they can supply you cheaper than your existing supplier. If you can't be bothered to do that, then, well, you probably do get what you deserve.

    Do you expect someone to follow you around all the time checking out everything you want to buy and seeing if you could get it cheaper anywhere else? Or, is that your own responsibility?

  • Comment number 98.

    When I go to BP garage it will cost 1.29 per litre. If I go to a Shell garage it will cost me 1.30 per litre. When I go to Tesco it will cost me 1.31 per litre. Guess what - I can compare the prices.

    When it comes to gas or electricity - well the first number of units you use - you will pay x, then y for the next. PS don't forget the 90 days of standard charge at z. How do I compare this to the next gas or electricity company in a simple manner.

    The companies need to get simple - or do I??

    I wonder if Shell,BP or whoever would want to start giving me discount on the first 10 litres you will pay 1.30 then on the next 20 pay 1.20 per litre, then on the next 20 - 1.10 per litre. Maybe they can try and start confusing simple people like me?

  • Comment number 99.

    82. At 13:34pm on 21st Mar 2011, Peter Galbavy wrote:
    There appears to be widespread misinformation about the "big 6" energy companies. They don't actually suppply anything apart from bills. They are simply large billing systems with a bunch of traders buying energy futures at the other end. They only really compete for cheaper supply to retain and increase margin and the cash cow that is the consumer gets what they are given - how can there be competition when they don't have any control over the actual supply ?

    The supply is done by the National Grid and these companies simply pay a transport and metering cost. They could just as well be pretending to "supply" potatos or elephants for all their self-promoted expertise.
    ============================

    Finally, some sense.

    Does EDF gas have a whiff of French perfume? Or that from E.ON the smell of Bratwurst? Or good ol' British gas - buy local?

    The whole thing is a joke, an utter joke. If Kafka were still alive he wouldn't be able to write about it because its just too ansurd for words. It's beyond belief. It's the same blooming gas from the same pipes from the same depots from the same refineries from the sources whichever supplier you "choose" to subscribe from.

  • Comment number 100.

    This comment was removed because the moderators found it broke the house rules. Explain.

 

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