Law1 min ago
John Major Wants A Energy Windfall Tax !
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It is more pressure on the energy companies, and indeed on the Coalition to respond to the very obvious anger of the consumers, many of whom feel helpless in the face this perceived profiteering and effective cartel.
Not sure that a windfall tax would do much to address consumer concerns though. Treasury might be happy, but it does not really address consumer concerns.
Not sure that a windfall tax would do much to address consumer concerns though. Treasury might be happy, but it does not really address consumer concerns.
According to experts, energy companies are not raking in the massive profits that the media loves to infer.
Current profit levels are about 5%, less than if investors put their money in something like Tesco. If energy companies are forced to pay money out to consumers that would be used for investment, then the investment has to come from central government, which rather defeats the object of the exercise.
If I know this, you'd expect JM, a fomer Chancellor, to know it as well.
Current profit levels are about 5%, less than if investors put their money in something like Tesco. If energy companies are forced to pay money out to consumers that would be used for investment, then the investment has to come from central government, which rather defeats the object of the exercise.
If I know this, you'd expect JM, a fomer Chancellor, to know it as well.
The energy companies declared profits comes after they have stripped out costs for maintenance, development and investment costs. It also rather conveniently glosses over the massive profits most of the big 6 make being wholesalers/producers of energy - profits backed by government guarantee. And those profits can be in the order of 20% or more.
The amount of profit on domestic energy bills varies quite significantly also; Average profits back in April, for instance, worked out at around £100 per household or around 7% profits. This is remember, over and above they have taken out the green levy, taken out VAT, taken out the set-aside for investment and development. Infrastructure maintenance is already factored into their costs.
And lets not forget - Whenever the wholesale price of gas goes up, the retail companies immediately pass on that price rise; When the price falls dramatically, as it did in 2011-2012, that price reduction is rarely passed on.
We, the consumers, pay for all of this. We effectively pay for the cost of 6 competing sales and marketing operations, 6 lots of shareholders and dividend payments, 6 boards of directors salaries and bonuses, 6 customer service operations and infrastructure, 6 hierarchies of middle management, and all the evidence suggests we get precious little benefit that a market is supposed to produce - because the market is broken.
The amount of profit on domestic energy bills varies quite significantly also; Average profits back in April, for instance, worked out at around £100 per household or around 7% profits. This is remember, over and above they have taken out the green levy, taken out VAT, taken out the set-aside for investment and development. Infrastructure maintenance is already factored into their costs.
And lets not forget - Whenever the wholesale price of gas goes up, the retail companies immediately pass on that price rise; When the price falls dramatically, as it did in 2011-2012, that price reduction is rarely passed on.
We, the consumers, pay for all of this. We effectively pay for the cost of 6 competing sales and marketing operations, 6 lots of shareholders and dividend payments, 6 boards of directors salaries and bonuses, 6 customer service operations and infrastructure, 6 hierarchies of middle management, and all the evidence suggests we get precious little benefit that a market is supposed to produce - because the market is broken.
Yes, The Tory government sold them off and is now in power, but I suppose you could argue that Labour had 13 years to renationalise them or at least put much tighter regulation in place. They will not be renationalised by either party now so maybe we should just look forwards and try to resolve this through regulation, price controls, taxation, more effective competition or by reduction in green taxes.
I really dislike the way the energy market works but I'm puzzled because if the energy companies really were making excessive amounts of money out of us why haven't other entrepreneurs and businesses stepped into the market- where is Richard Branson, Tesco, etc?
I really dislike the way the energy market works but I'm puzzled because if the energy companies really were making excessive amounts of money out of us why haven't other entrepreneurs and businesses stepped into the market- where is Richard Branson, Tesco, etc?
Why would you enter a "market" so rigged in favour of the big 6? They have a massive market share. Most of the big 6 are retail arms of energy providers, so selling energy wholesale to themselves.In retail terms, the profit margins might be relatively small, so you need millions of customers- tough for a start up entrant into the marketplace to find. Difficult to find a competitive market model in those circumstances.
Branson was in the energy market, briefly, back in 2000. Was bought out by EDF.
And there are other issues that offer a barrier to new entrants in the marketplace. We all know just how incredibly profitable and successful the retail grocery chains have been in the last few decades. You might just as well ask why, if the grocery business is so profitable, the Bransons etc have not entered the grocery marketplace.
Privatising food provision might make sense in that you can have genuine competition. Privatising utilities, which makes use of a single common distribution system and where the major retail providers are also the power generator makes much less sense to me.
Branson was in the energy market, briefly, back in 2000. Was bought out by EDF.
And there are other issues that offer a barrier to new entrants in the marketplace. We all know just how incredibly profitable and successful the retail grocery chains have been in the last few decades. You might just as well ask why, if the grocery business is so profitable, the Bransons etc have not entered the grocery marketplace.
Privatising food provision might make sense in that you can have genuine competition. Privatising utilities, which makes use of a single common distribution system and where the major retail providers are also the power generator makes much less sense to me.
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