Is your energy supplier going bust?

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Gfamily
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Re: Is your energy supplier going bust?

Post by Gfamily » Mon Sep 20, 2021 7:13 pm

Gfamily wrote:
Mon Sep 20, 2021 7:09 pm
El Pollo Diablo wrote:
Mon Sep 20, 2021 2:58 pm
I'm in the opposite problem, which is that I have £350 credit sat with bulb and if I ask for it back, I'll just help them go bust faster. I've seen It's A Wonderful Life, I know how these things work.
Reminds me to submit our meter readings today - having been away for the last couple of months I'd rather we were assessed on our actual consumption rather than an estimate
Or would I rather have the next reading (the first post-transfer reading*) assume that I had used most of it under Bulb?
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Re: Is your energy supplier going bust?

Post by Millennie Al » Mon Sep 20, 2021 10:16 pm

lpm wrote:
Mon Sep 20, 2021 8:08 am
Amusingly, I'm on a 100% renewables tariff. Which is, of course, a sham. My provider puts prices up because gas prices have gone up, but obviously can't admit that, so has to invent a little fake explanatory email saying it's due to overall market conditions. And now it's going bust.
It might not be a sham, depending on how you look at it. Renewables are variable, so it may be that when there is excess, your provoder sells it, and when there is a deficit, they buy it back, so you're using an average of 100% renewable. And that would also explain the prices. When there is an excess, prices are probably low, while when there is a deficit, prices are high. That depends on accurate accounting etc, so it might not really be 100% in practice.
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Re: Is your energy supplier going bust?

Post by Millennie Al » Mon Sep 20, 2021 10:19 pm

IvanV wrote:
Mon Sep 20, 2021 5:49 pm
In the days when you were just an unsecured creditor if your energy supplier went bust, I was employed by Ofgem to advise them on this.
I don't understand why there is a problem. Why not just require energy companies to collect only money actually due? Not more to cover expected future usage.
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Re: Is your energy supplier going bust?

Post by El Pollo Diablo » Tue Sep 21, 2021 7:54 am

Millennie Al wrote:
Mon Sep 20, 2021 10:19 pm
IvanV wrote:
Mon Sep 20, 2021 5:49 pm
In the days when you were just an unsecured creditor if your energy supplier went bust, I was employed by Ofgem to advise them on this.
I don't understand why there is a problem. Why not just require energy companies to collect only money actually due? Not more to cover expected future usage.
Because people with largely fixed income and largely fixed outgoings would prefer not to have to spend a much higher sum in winter than they do in summer, all in all.
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Re: Is your energy supplier going bust?

Post by El Pollo Diablo » Tue Sep 21, 2021 7:57 am

IvanV wrote:
Mon Sep 20, 2021 5:49 pm
El Pollo Diablo wrote:
Mon Sep 20, 2021 2:58 pm
I'm in the opposite problem, which is that I have £350 credit sat with bulb and if I ask for it back, I'll just help them go bust faster. I've seen It's A Wonderful Life, I know how these things work.
These days, the government protects consumer credit balances with energy suppliers, and has the power to charge a levy on other energy suppliers to fund it. I don't think it is necessarily completely 100% protected, but you are probably OK. There would certainly be a huge scandal if loadsa suppliers went bust and lots of customers lost their credit balances. I think back in the days, a small number lost a bit of money, but not enough for it to be noticed above the parapet.
Cheers Ivan, that's good to know, thanks.
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Re: Is your energy supplier going bust?

Post by headshot » Tue Sep 21, 2021 9:09 am

IvanV wrote:
Mon Sep 20, 2021 2:54 pm
headshot wrote:
Mon Sep 20, 2021 2:46 pm
When we moved house in May we notified our small supplier about the move. They didn’t respond to any of my three emails and continued to take the direct debit in June until I cancelled it.

As far as I know, we owe them about £180, but they haven’t contacted us to settle the bill…
Suppliers can object to you taking out a contract with another supplier if you haven't settled their bill. And generally will. So they were completely asleep on the job.
It was Avro Energy. They're being investigated by the ombudsman and have had hundreds of complaints about lack of contact.

If they would actually issue me with a bill, I would pay the balance.

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Re: Is your energy supplier going bust?

Post by plodder » Tue Sep 21, 2021 9:22 am

I suspect more than a few of these energy companies were set up by a couple of city fly-boys who signed service agreements with call centers, gambled on prices, and didn't do much more.

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Re: Is your energy supplier going bust?

Post by WFJ » Tue Sep 21, 2021 9:49 am

El Pollo Diablo wrote:
Tue Sep 21, 2021 7:54 am
Millennie Al wrote:
Mon Sep 20, 2021 10:19 pm
IvanV wrote:
Mon Sep 20, 2021 5:49 pm
In the days when you were just an unsecured creditor if your energy supplier went bust, I was employed by Ofgem to advise them on this.
I don't understand why there is a problem. Why not just require energy companies to collect only money actually due? Not more to cover expected future usage.
Because people with largely fixed income and largely fixed outgoings would prefer not to have to spend a much higher sum in winter than they do in summer, all in all.
And it would require monthly readings with the associated costs.

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Re: Is your energy supplier going bust?

Post by IvanV » Tue Sep 21, 2021 12:55 pm

plodder wrote:
Tue Sep 21, 2021 9:22 am
I suspect more than a few of these energy companies were set up by a couple of city fly-boys who signed service agreements with call centers, gambled on prices, and didn't do much more.
If they actually signed a service agreement with a call centre, they wouldn't be the worst. Some turned out to be not much more than a spotty schoolkid operating out of their bedroom.

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Re: Is your energy supplier going bust?

Post by IvanV » Tue Sep 21, 2021 1:13 pm

WFJ wrote:
Tue Sep 21, 2021 9:49 am
El Pollo Diablo wrote:
Tue Sep 21, 2021 7:54 am
Millennie Al wrote:
Mon Sep 20, 2021 10:19 pm
I don't understand why there is a problem. Why not just require energy companies to collect only money actually due? Not more to cover expected future usage.
Because people with largely fixed income and largely fixed outgoings would prefer not to have to spend a much higher sum in winter than they do in summer, all in all.
And it would require monthly readings with the associated costs.
Those are both true. But probably the biggest issues are the following:

(1) Bad debts are one of the largest costs in energy retail. So setting up the arrangements to ensure your customers are nearly always in credit, is a substantial reduction in cost and enables you to reduce the supply price you can make a profit at.

(2) Borrowing money from banks is another large cost which you can avoid if you can get your customers to provide your working capital for free. So such an arrangement is a substantial reduction in cost, and enables you to reduce the supply price you can make a profit at.

Even the mainstream legacy energy suppliers will give you a material discount if you sign up to a fixed monthly payment, carefully designed so that you are almost always in credit.

But the big issue for the industry is hedging. Hedging is insurance, and so costs you money. But if you don't do it, and sell to customers on fixed price contracts, you can go bust very quickly when the supply price goes up. As is happening now. There were previous rounds of bankruptcies in earlier rapid price rise episodes. So there is a tough conundrum for the supplier. Should I hedge, and so increase my costs and the amount I have to charge my customers? Or should I not hedge, make money now, and go bust when the inevitable fast price rise episode arrives, maybe next week, maybe not for 20 years. And it is particularly difficult for the small suppliers, because, as with many things, hedging is more expensive per unit when you do it on a small scale.

Established suppliers will hedge, because their investors don't want them to self-destruct of an instant. Or be self-hedged through being integrated with production businesses. But the small ones generally don't. It's a kind of free-riding.

It has been a conundrum for Ofgem. They like the lively competition. New entrants have to be able to start somewhere. If they ring it with too many regulations (ETA: such as Millenie Al suggsests) we'll be back with something like the Big Six and not much else. But it isn't really fair competition if new entrants can free-ride to get free financial insurance for their customers.

The legacy providers do have a problem. If you set up a supplier from new, you can build the customer billing system, etc, to modern best practice. You can also start small and then gradually expand it, debugging it on the way. That is much cheaper to run than the legacy systems the legacy suppliers have. But if you are already large, then building a new large modern best practice customer accounts system, and transferring your customers over to it, is more expensive than they can afford, and prone to disasters on the way.

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Re: Is your energy supplier going bust?

Post by Bird on a Fire » Tue Sep 21, 2021 1:49 pm

Where there's a national grid, it seems like energy provision is one of those things that's basically a natural monopoly, like water and train operating, where privatisation doesn't seem to be especially useful for efficiency. Ultimately they're all buying from the same provider, and just doing some financial services faffing to provide different consumer experiences.

I can understand having private entities selling into the grid (eg solar startups, private wind farms, etc), but power distribution doesn't seem to involve much opportunity for genuine competition.

What am I missing?
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Re: Is your energy supplier going bust?

Post by El Pollo Diablo » Tue Sep 21, 2021 2:02 pm

In the case of the gas national grid, it's arguably even worse, as opportunities for private entities to sell in are even more limited.
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Re: Is your energy supplier going bust?

Post by noggins » Tue Sep 21, 2021 2:06 pm

What entity (/ies) actually purchase the gas for domestic supply and the fuels for power stations?

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Re: Is your energy supplier going bust?

Post by Woodchopper » Tue Sep 21, 2021 2:13 pm

WFJ wrote:
Tue Sep 21, 2021 9:49 am
El Pollo Diablo wrote:
Tue Sep 21, 2021 7:54 am
Millennie Al wrote:
Mon Sep 20, 2021 10:19 pm


I don't understand why there is a problem. Why not just require energy companies to collect only money actually due? Not more to cover expected future usage.
Because people with largely fixed income and largely fixed outgoings would prefer not to have to spend a much higher sum in winter than they do in summer, all in all.
And it would require monthly readings with the associated costs.
Not necessarily. Where I am there are large monthly changes in the consumer electricity price (eg the winter price can be 10-15 times the summer price). We send in a meter reading about once a year. All the other monthly bills are estimates.

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Re: Is your energy supplier going bust?

Post by Bird on a Fire » Tue Sep 21, 2021 2:22 pm

My meter sends readings automatically, but it isn't a smart meter. The (nationalised) power company swapped it about a year ago. I'm not quite sure why in this day and age meters don't all just have a little widget sending readings every week or whatever.
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Re: Is your energy supplier going bust?

Post by Grumble » Tue Sep 21, 2021 2:55 pm

Bird on a Fire wrote:
Tue Sep 21, 2021 1:49 pm
Where there's a national grid, it seems like energy provision is one of those things that's basically a natural monopoly, like water and train operating, where privatisation doesn't seem to be especially useful for efficiency. Ultimately they're all buying from the same provider, and just doing some financial services faffing to provide different consumer experiences.

I can understand having private entities selling into the grid (eg solar startups, private wind farms, etc), but power distribution doesn't seem to involve much opportunity for genuine competition.

What am I missing?
There’s a separation between energy generation and energy supply. I don’t think any consumers directly pay the power distributor? We either pay the generator or someone standing in for a generator.
You’ve got no chutzpah, your organisational skills are lacklustre and your timekeeping is abysmal.

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Re: Is your energy supplier going bust?

Post by IvanV » Tue Sep 21, 2021 2:57 pm

Bird on a Fire wrote:
Tue Sep 21, 2021 1:49 pm
Where there's a national grid, it seems like energy provision is one of those things that's basically a natural monopoly, like water and train operating, where privatisation doesn't seem to be especially useful for efficiency. Ultimately they're all buying from the same provider, and just doing some financial services faffing to provide different consumer experiences.

I can understand having private entities selling into the grid (eg solar startups, private wind farms, etc), but power distribution doesn't seem to involve much opportunity for genuine competition.

What am I missing?
The National Grid is indeed a natural monopoly, as are the local distribution networks. And they are regulated as natural monopolies. But it is only one piece of your energy bill. But it is the only part of the value chain that is a natural monopoly.

About 22.3% of the total electricity price are these network costs that there is limited choice over, for the average domestic customer of a large supplier.

Though they also have no choice over the taxes and other tax-like costs. So probably a better way of looking at it is 22.3 : 50.1, or 31% of the non-tax-like costs are limited choice. But the other 69%, they have much more choice over.

Your criticism is much more on the mark when it comes to potential supply competition in the domestic water sector. A lot of people think there is very little point to that. Not only is the raw water and water processing a much smaller proportion of the total cost, you don't really have a practical choice over that either in most cases. So it really is only the "financial service" aspect that there is likely to be realistic competition over in most cases in water.

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Re: Is your energy supplier going bust?

Post by WFJ » Tue Sep 21, 2021 5:30 pm

Woodchopper wrote:
Tue Sep 21, 2021 2:13 pm
WFJ wrote:
Tue Sep 21, 2021 9:49 am
And it would require monthly readings with the associated costs.
Not necessarily. Where I am there are large monthly changes in the consumer electricity price (eg the winter price can be 10-15 times the summer price). We send in a meter reading about once a year. All the other monthly bills are estimates.
Yes I think that is how it works in most places. Although without such a large differential. I took MA's suggestion/question to mean people should only pay for what they used within the last payment period. Which, assuming monthly bills, would require monthly readings.

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Re: Is your energy supplier going bust?

Post by dyqik » Tue Sep 21, 2021 6:07 pm

WFJ wrote:
Tue Sep 21, 2021 5:30 pm
Woodchopper wrote:
Tue Sep 21, 2021 2:13 pm
WFJ wrote:
Tue Sep 21, 2021 9:49 am
And it would require monthly readings with the associated costs.
Not necessarily. Where I am there are large monthly changes in the consumer electricity price (eg the winter price can be 10-15 times the summer price). We send in a meter reading about once a year. All the other monthly bills are estimates.
Yes I think that is how it works in most places. Although without such a large differential. I took MA's suggestion/question to mean people should only pay for what they used within the last payment period. Which, assuming monthly bills, would require monthly readings.
Monthly readings is how my electricity and gas supply works.

We have a monopoly billing and distribution company that does both gas and electric in this town, but they do just one or the other in other towns nearby. They drive a van around to wirelessly pick up readings from meters on a monthly basis, and bill accordingly. The generation costs are billed according to your chosen electricity generation supplier's tariff.

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Re: Is your energy supplier going bust?

Post by Millennie Al » Tue Sep 21, 2021 10:56 pm

El Pollo Diablo wrote:
Tue Sep 21, 2021 7:54 am
Why not just require energy companies to collect only money actually due? Not more to cover expected future usage.
Because people with largely fixed income and largely fixed outgoings would prefer not to have to spend a much higher sum in winter than they do in summer, all in all.
If energy companies want to achive that, they can allow people to fall into arrears in the winter. It's not necessary to make people have a large credit balance at any time.
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Re: Is your energy supplier going bust?

Post by Millennie Al » Tue Sep 21, 2021 10:58 pm

WFJ wrote:
Tue Sep 21, 2021 9:49 am
Millennie Al wrote:
Mon Sep 20, 2021 10:19 pm
I don't understand why there is a problem. Why not just require energy companies to collect only money actually due? Not more to cover expected future usage.
And it would require monthly readings with the associated costs.
Readings can be estimates (as long as they are honest ones). And we have this massive push for smart meters, so there should be no reason why readings cannot be taken much more often at little expense.
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Re: Is your energy supplier going bust?

Post by science_fox » Wed Sep 22, 2021 9:15 am

El Pollo Diablo wrote:
Mon Sep 20, 2021 3:05 pm
As long as I don't end up with either Co-op energy or nPower, I'll be happy. Okay, I'll be content. Fine, apathetic. Minimally hostile then, whatever.
For what it's worth, I have no significant complaints about Good Energy (https://www.goodenergy.co.uk/) who I've been with for several years. They aren't the cheapest, but they do help fund new renewable sources.
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Re: Is your energy supplier going bust?

Post by plodder » Wed Sep 22, 2021 11:02 am

So, we left the EU internal energy market. I never really quite understood what that is, but I am reading that high prices are not an issue in the EU.

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Re: Is your energy supplier going bust?

Post by El Pollo Diablo » Wed Sep 22, 2021 3:37 pm

headshot wrote:
Tue Sep 21, 2021 9:09 am
IvanV wrote:
Mon Sep 20, 2021 2:54 pm
headshot wrote:
Mon Sep 20, 2021 2:46 pm
When we moved house in May we notified our small supplier about the move. They didn’t respond to any of my three emails and continued to take the direct debit in June until I cancelled it.

As far as I know, we owe them about £180, but they haven’t contacted us to settle the bill…
Suppliers can object to you taking out a contract with another supplier if you haven't settled their bill. And generally will. So they were completely asleep on the job.
It was Avro Energy. They're being investigated by the ombudsman and have had hundreds of complaints about lack of contact.

If they would actually issue me with a bill, I would pay the balance.
I don't know if you're going to have to pay that £180 any more...

https://www.bbc.co.uk/news/business-58652083
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Re: Is your energy supplier going bust?

Post by Matatouille » Wed Sep 22, 2021 3:39 pm

BOOM. My supplier just went bust. Green, sad as they were excellent to deal with and actually competent. This is going to be fun. Hopefully we won't end up back on npower, death would be preferable with an Economy 10 meter.

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