Posted by Jake on Sunday, October 28, 2012 with 8 comments | Labels: Article, energy, Liebrary, OFGEM
The fact is the retail energy companies, who bill domestic consumers, buy their wholesale gas and electricity from...you guessed it...themselves. The generating companies, who take the coal and gas from the Earth and generate the wholesale electricity, are the retailers’ own conjoined twins. Each of the ‘big six’ are now able to supply virtually all their own needs. The graph below from OFGEM shows above the zero line how much energy the retail companies' generation twin can generate, and below the zero line how much energy the companies sell to the likes of you and me and the businesses that employ us. All six are more or less in balance – they can supply their own demands. [In the graph, RWE is the owner of nPower, SP is Scottish Power]
Since 2004 the energy industry has simply moved its profits from the retail side of the business to the wholesale generation business. This can be seen from the soaring OFGEM graph below showing the Value Chain Profitability. Profits from generation were small until 2004, after which they boomed as did overall profits:
Energy companies' wholesale arms sell at a high price generating profits. Their retail arms buy wholesale energy at a high price, allowing their retail arms to blame wholesale prices for them hiking our bills. This applies whether they buy from themselves, or they buy (i.e. swap) wholesale energy at a high price with one another. This allows them to state with a straight face that they are making tiny margins on their retail business. It keeps their wholesale profits hidden - even from the spineless regulator OFGEM.
Do you think no civilised executive would condemn fellow Britons to fuel poverty, with many thousands dying in the cold? The Tory MP, Colonel Bob Stewart, said in parliament in 2011:
"I am shocked that between 20,000 and 25,000 pensioners a year in this country are said to die from hypothermia. In my constituency, I am told, an average of 30 old people die of cold each winter, which is shocking."
Could anybody be so nasty? Remember how many decades tobacco companies sent out executives who looked you straight in the eye and said smoking did not cause cancer. Having convinced lobbyists, lawyers and untold millions to believe and even support their fibs, the tobacco industry eventually came clean. Energy companies, for now, are sticking to their guns.
There is (soon to be ended) a very good scheme called the Warm-front Grant Scheme to help reduce fuel poverty and cold weather related deaths. It proved to be very successful and helped around 5 million households. The scheme was not perfect but instead of investing and improving this scheme, the previous govt decided to cut funding for it and this govt are about to scrap it altogether when the Green Deal is launched. We can only expect to see a rise in these preventable deaths unless something is done to prevent them.
ReplyDeleteYou can ask these companies for the "assist tarrif" if you have low income .. you have to ask. They do not promote it but is much less. ... just ask if you can have the assist tarrif and they will let you know if you can asking the usual questions..
ReplyDeleteThis is missing the point somewhat. We shouldn't have to ask for an assist tariff. They should charge a fair price for all users instead of profiteering from something that is a necessity.
DeleteNeed to split the wholesale companies from the retail companies. This could be legislated for in the Energy Bill.
ReplyDeletePrecisely!
Delete...and I'm fairly sure if OFGEM had teeth, balls or a backbone they would likely uncover evidence of extensive price fixing between the firms.
ReplyDeleteTime for our nation to take back what is rightfully our's. We don't want to be ordered around by, ripped off by, patronized by, brainwashed by, kept in our place by the ruling, privately educated, bred for power toffs ANYMORE rise up Britain and show them the door.
ReplyDeleteIt's not a fib, it's a blatant lie. Someone once told me: remember this number 874. Where 8% percent of the population own 74% of the wealth and the rest of us the 92% are just here to make sure it stays this way.
ReplyDelete