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Why Are Energy Companies Still Caning The Poorest In Society?

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Hypognosis | 07:37 Tue 26th May 2015 | News
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A rep appeared on BBC Breakfast just now and has any amount of justification for why direct debit customers should pay £80 per year less than coin-meter customers.

He steered clear of admitting that DD can't possibly save that amount per year (care to disabuse me of that notion?)

Has it occurred to no-one that the administrative savings of DD or, conversely the costs of the *forcible* imposition of coin-metering could *both* be spread around all customers, for a more unified energy price?

I think DD still needs to have a savings incentive element to it but why should coin-meter people shoulder the cost of bribing other customers (the "I don't trust them with direct debits" types) into switching?

I welcome your views and will catch up with the thread this evening.

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Actually one could argue, mikey, that the competition in the market has been a really good thing - it would have been disastrous to see a policy for fixing prices like Miliband proposed - at what price - too many countries have had problems with such umbrellas, oft used in French colonies for example, for when the price goes significantly above the benchmark,...
08:53 Tue 26th May 2015
ladybirder, I was with OVO for three years, got the 3% interest paid but I've now switched to a much cheaper (for me) company - Flo.
Mikey,// the Party that you didn't support at the time, but don't now,//

I do now – but that said, there’s little point in looking at the original fault, acknowledging that it is a fault, and subsequently ignoring it - which is what Labour did.

(Incidentally, I don’t believe I have asked this question before. Council house sales, yes, but not this one).
I noticed the young woman on TV this morning moaning about having a pre paid gas meter had a giant flat screen TV (MUCH larger than mine) in her lounge.

Maybe she decided having a large flat screen TV was more important than paying her gas bill.

I pay my gas bill by DD, and it is always in credit, so why should I subsidise those who decide to spend their money on other items like TVs rather than pay their bills.
VHG...I am not suggesting that you need to subsidise anybody, but I would maintain that they companies shouldn't charge different rates for energy, dependent of how they pay. Why should someone that pays by a quarterly cheque, pay more than someone who pays by DD ?
Actually one could argue, mikey, that the competition in the market has been a really good thing - it would have been disastrous to see a policy for fixing prices like Miliband proposed - at what price - too many countries have had problems with such umbrellas, oft used in French colonies for example, for when the price goes significantly above the benchmark, the government (taxpayer) is left holding a bucket with a massive hole in it. I have had to help dig out operations in several countries in the past because of this.....wit Morocco and Tunisia for example. Also safety levels go as there is no 'yen' to invest as the margings are not there.

As to the UK, price levels are such that he return on investment for the industry (on investment or equity) has turned sharply lower than the returns for the FT Industrials - why invest in an industry that generates only 4 percent and half of the market at large or the SP 500 in the States?

This is largely driven by the oil and natural gas industry being massive and requiring huge investments in manufacture, distribution and even home/industry metering.......ROI becomes a key benchmark on performance.

Essentially it is imperative that we have a market and tax regime that permits companies to reinvest in the facilities, infrastructure and new technologies to keep us secure and safe well into the future - and while generating generating returns that meet shareholders’ expectations, even low end ones.

Yes, revenues are large, but so are the costs of providing consumers with the energy they need. Among those are the cost of finding and producing oil and natural gas and the costs of refining, distributing and marketing it.
These costs remain huge, regardless of whether earnings are high or low – as was the case throughout most of the 1990s and during other industry downturns over the past five years, including the current one.

Moving onto a state driven system would be disastrous, higher costs longer term, complacency, less operational safety, less incentive to develop new technology and renewables and a return to the dark days of Labour in the 70s potentially, a country where the Unions ran (blackmailed) the country effectively.


and why - the costs of accountants and clerks and remember they have to handle accounting systems manually with cheques - to book them in against invoice, bank them, then the second count to ensure proper clearance and booking of revenue, then the cost of handling debtors and actions, the cost of this and the extra treasury charge of handling these as it takes at least ten days longer than a DD. "Why did the Venetians invent double-entry book-keeping? - To count their money twice" but it's the basis of all our accounting systems.
DD's are fully automated, any other method involves a human - and humans 'aint cheap.

An extra £80 a year to empty a meter, count it Bank it (at a higher charge) and feed it all back through the systems? Seems a bargain to me.

Quite how privatization comes into the equation I am mystified.
Perhaps we will all know better when Ofgem has finished its investigation ::

http://www.bbc.co.uk/news/uk-32876422

The generalisations spouted here about those who may choose to/or have to pay by metre,is really appalling...and a bit insulting. Since being on my own and working part time,I find a metre much more convenient. I know exactly how much I have to spend at any time,and I can control my usage. I owe no one. Being the bank for a utility company,having my payments raised willy nilly, or paying for something I've not used is the last thing I need.
Please stop painting everyone with the same blinkered brush.
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@pastafreak

that's the trouble with broad brush strokes - the tendency to smear areas outside the frame.

In case you missed it, the BBC story was centred on *forcibly installed* meters. In my OP, I missed the finer point about these being only customers who got into intractable arrears. I was corrected on this point, in the first few replies.

You are not in this category. Apologies anyway if you felt the thread was having a go at meter users, as an amorphous group.

@peter_pedant

I don't know what possessed me to refer to "coin-meters". I was in a shared flat, using a charge-up plastic key, 25+ years ago!


@everyone
A good balance of replies on both sides. I am ambivalent about privatisation, ideologically, I don't like to see things currently in collective ownership being dispersed amongst the few (dispossession of those with no money spare to buy shares - in something which was partially theirs, the day before). DTC's answer appeals to my pragmatic side and highlights what the state generally sucks at.

I take issue with naomi's posts, partly because you were basically just stirring the mikey embers with the poking stick (grin) but, mainly, because re-nationalisation is a pain when a utility was under valued at the time it was sold off. Using taxes to make up the shortfall, at buyback is effectively billing all those taxpayers who got dispossessed (when they couldn't afford to invest in shares) to buy their own former possession back.

You may think I make that sound like theft but I couldn't possibly comment.

Libertarians like to go on about nationalisation as theft but that's another debate for another day.





"The idea was that people would be so glad of this opportunity, that they would vote Tory next time, and it worked, at least until Major ran out of steam in 1997. " - so what made them vote Tory this time then mikey!?
Hypognosis, I beg to differ. I am not poking Mikey with a stick – simply poking a stick at his ever-spinning and increasingly tedious political agenda.
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@naomi24

If not mikey's agenda, what is he? (rhetorical, unless you're itching to vent)

If I have a perceptible agenda myself, I trust it is sufficiently changeable and inconsistent to remain interesting. :o)

@mikey

Thanks for the news link. The figures really show the scale of the problem:-

"The figures, supplied by Ofgem in response to a Freedom of Information request. showed about 97,000 pre-pay gas and electricity meters were installed in England, Wales and Scotland last year alone."

Assuming Peter_Pedant was right about the price of the meter plus installation, £125 each, that is about £12.1 million on just setting up the *means* to recover debt, which looks like it will take more than a year, for some customers. Good business for the meter manufacturers, I suppose, so there's another mansion in it for someone.

Still all that outlay probably pales into insignificance with the scale of the customer debts, or they wouldn't bother. The woman in the story owes £700 and is paying £4 on gas, £4 on electricity per week, over and above her current consumption, which is 20 months.

So, rethinking a bit, if me and 10-20 million other customers, acting as banker to the power companies stops them going into debt due to a half million customers in *substantial* arrears (500k x £500 = £250million) then that means we are not wasting our bill payments on servicing the energy company's debt interest. So maybe it is no bad thing?

Can £250 million buy a power station or a tidal barrage or something which moves us all forward?

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@VHG

"Maybe she decided having a large flat screen TV was more important than paying her gas bill. "

Well, we cannot have a dolite story without the obligatory reference to the big (expletive) TV in the back of shot.

But, you were right. From mikey's link

"I need electricity for (daughtername) to watch telly and then gas to cook and to eat and to keep us warm. It's a nightmare. I just want it paid off so I'm better off and when I'm topping it up it's all mine and I'm not running out as quick."

What she needs is someone to convince her to sell the telly before its second-hand value drops below three figures and cancel her TV licence, saving £125 in the first 12 months (15 weeks shaved off the payment plan). Persuading her that kids can survive quite happily without TV will be a lot harder. A few months teaching the kid not to pester her for things she wants could boost (or bust) their bonds.

It is a solution to the financial mess she is in but the trouble with it is that I am advocating decisions I know nobody would voluntarily make unless they were a hyper-rational and quite controlling type of person. I certainly cannot advocate private companies or government intervene in what someone does in the privacy of their own home.

The issue of people on benefits with big TVs does need exploring but it is peripheral to this thread. If energy arrears and money spent on tellies go hand in hand, then it is fully on-topic. I don't know how anyone could prove it, case by case.

On the same subject. Why, when oil prices are still very low, has the price of petrol shot up again? Pure greed as far as I can see.
Hypognosis, if you do have an agenda a penchant for introducing it into practically every topic is not apparent. ;o)
the price of crude has gone up quite significantly, demand bouncing back in China and India, fears about ISIS and the Yemen colouring the market - and, not written about, the countries need the revenue so have pulled back on the spigots.
Question Author
@DTCwordfan

I thought the idea of them turning the taps up to max was to push north American fracking back into the zone of being uneconomic? So I am genuinely puzzled at how quickly they've caved and, if I say caved I have to mean that somebody is applying pressure to whoever has power over prices. I'm not sure who I am suggesting is doing this, other than to say they don't like their income stream being cut off abruptly, as if they are consuming wealth rapidly but have little or no savings to draw on.

Characteristics of most modern governments, ironically.

Either that or house Saud is concerned about growing ISIS influence and realises it needs that full income stream in order to maintain a defence or enter into active attack.

I know some like to characterise the insurgency as being a free-range agency of Arabia but, if we cannot unearth proof, we have to be careful what we say. It is, nonetheless curious how ISIS has been faffing around in the crop-growing regions of Mesopotamia, instead of reaching the gulf coast and becoming a serious threat to tanker traffic.

The TV news does not cover areas which are unthreatened, not does it explain what forces are holding the insurgents back from going in that direction.


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