Big Six Bosses v Energy and Climate Change Committee - Starts 2.30pm

[Darkwood]

The US and UK gas markets are completely different to each other, there's absolutely not chance that fracking will impact UK gas prices in the same way it did in the US for the very simply reason that the UK is effectively a gas hub capable of exporting huge volumes of gas to the rest of Europe, whereas the US had almost no gas export capacity at all.

When shale gas delivered a glut of gas in the US there was nowhere to absorb that extra gas until the price was low enough to undercut coal for power generation because the gas couldn't be exported.

In the UK any shale gas produced effectively just feeds in to the entire European gas market, so will have a relatively negligible impact on price, though it may well help to slow the rate of price rises to some degree if it can be produced cheaper than LNG.

The US gas price is likely to rise again fairly rapidly in a couple of years time when they get LNG gas exporting facilities on line and start exporting. Unless they impose export controls, the price will probably pretty much equalise with European gas prices minus the costs of LNG compression and transport.

Fair point about the difference in the US and UK markets but either way ive watched the grilling by the Energy and Climate change Committee .... and its hard to see the Big six are playing a fair game ... OVO's seated member has dealt some massive blows against the big six and they really couldn't respond... hmmm strange how shareholder companies can't provide a transparent open account of when they purchased and how much for yet a non shareholder company is happy to offer all their accounts up and follows up with a blowing comment on how the big six are manipulating the prices... again no comments but some very sheepish looks. As i have already said before this grilling the 5% they claim to make is smoke screened clever manipulation of the sums and there explanations for them in the light of yesterdays questioning committee are showing the sums don't quite add up.

 

[Badged01]

Just to add my two pennies worth to all this debate! Energy companies are there to make a profit and are not the slightest bit interested in the end user regardless of all the bullsh*t they spout out about customer satisfaction! If they are making their profit margin to satisfy the shareholders then they are happy, and if the customer is happy thats a bonus. If they arent making their margin then prices will only go one way ....... they hold the monopoly, if you dont like it go elsewhere for your energy! Ooops, you cant, there isnt anyone else .....

 

[Darkwood]

Strange how the non shareholder companies have kept their prices pretty much stable the last few years yet the big 6 who have to answer to their shareholders have bleated rising wholesale costs etc .... you'd think a small independent energy supplier would also have to pass on these costs.... Oh wait! they have shown the wholesale price over the last few years has been generally stable and they even have shown this to be so... The minute you float a company on the stock market it becomes all about profit and seeing how hard you can push the customer before they break...

 

[FB.]

The minute you float a company on the stock market it becomes all about profit and seeing how hard you can push the customer before they break...

It also becomes about being as efficient as possible to maximise profits. Unfortunately, anything run by the government is plagued by large numbers of (expensive) middle managers and high union membership which makes it difficult to control costs.
I have no doubt at all that the utilities back in government ownership would result in even higher prices due to lack of any need to innovate or be efficient (unless the government subsidised it, but a subsidy still has to be paid by someone else's taxes). I worked for the government for two decades and the bureaucracy was a major reason why I left: I spent a lot of my day filling out paperwork to satisfy all the middle-manager-audits rather than getting any work done.

Also note that "the big six" are the ones having to carry the bulk of the cost of green levies and subsidies.

 

[FB.]

The minute you float a company on the stock market it becomes all about profit and seeing how hard you can push the customer before they break...

But a privately-owned business is not much different: it effectively just has one or two shareholders (its owner or joint owners).
Should we cap the allowed profit margin of all businesses? I think offering cheap solar to people is desirable, so why not have a zero profit margin applied on all installers so consumers can get a good deal to help with their energy costs?
As I said earlier: don't try impose on others' businesses what you wouldn't want imposed on your own company, because sooner or later the price-controls will come for you too.

 

[Ian-LS]

I'm assuming that was a rhetorical question about installers having zero profit margin?

 

[Darkwood]

But a privately-owned business is not much different: it effectively just has one or two shareholders (its owner or joint owners).
Should we cap the allowed profit margin of all businesses? I think offering cheap solar to people is desirable, so why not have a zero profit margin applied on all installers so consumers can get a good deal to help with their energy costs?
As I said earlier: don't try impose on others' businesses what you wouldn't want imposed on your own company, because sooner or later the price-controls will come for you too.

When the company is floated and becomes the domain of the shareholders it effectively becomes a profit driven empire as multiple shareholders are in it for one thing and one thing only and thats to make good returns on their investment.... this usually means any voted decision isn't based around the original ethics of the company but gets blind sided to put profit first then anything else second.... a business like my own and many others have a different kind of customer relation in that they come first and your profits usually are a consequence of your good business nature... i totally disagree with you regarding your comparison of the Energy market with a standard business model.... affordable energy is as essential to the consumer as water and food thus this put the energy market in a unique position where they must provide affordable energy .... you keep quoting 5% profit margin yet this is only because the big 6 say this is what they make but when you start to break down how they arrive at this then you see just how sneaky and colluding they are OVO have seen wholesale costs fall recently and provided the proof yet the big 6 say they are rising yet accessible evidence contradicts them.. strange how the big 6 are all singing the same song yet the smaller companies are been transparent and showing the cracks in the big 6 claims... also if they were so confident in their accounting and claims then why didn't 5 of the 6 bosses even turn up and instead send their monkeys in to take the heat. I understand your angle on the business issue but these giants and in a very unusual position of actually generating the Energy and selling it to themselves to pass on the customer... this can't be right in any market its too easy to manipulate figure - put smoke screens up and hide true profit, this is why we are seeing all these rises that totally contradict market trends and wholesale prices.

May i ask why your so defensive of the big 6 .. im starting to think your either brainwashed by all their claims or you have a vested interest i.e. a shareholder yourself?

 

[FB.]

May i ask why your so defensive of the big 6 .. im starting to think your either brainwashed by all their claims or you have a vested interest i.e. a shareholder yourself?

Yes, I hold shares in SSE and Centrica (and National Grid); I am a professional investor who gave up the bureaucracy and stuck-in-their-old-inefficient-ways government job to trade financial markets from home, which is why I pop up on here at various times of day.
But I also hold shares in a variety of other companies - at the moment my largest shareholding is Sainsbury's which I picked up in late 2011's market panic for a silly low price and am now awaiting my chance to cash-out at a good price, but my largest holding varies from time to time.
Pension funds and managed investment funds (of the sort which you might have in your ISA or endowment) also hold such investments - and you will have holdings of those companies if you have a FTSE tracker fund.

Actually my very largest holding - more than twice the size of my Sainsbury shareholding and four times my SSE/Centrica holding - is gold which I've been loading-up with in the recent gold-price slump because I think Quantitative Easing is causing all kinds of economic distortions (including rising commodity prices which are part of the gas/electric price rise) which will eventually snap back like a financial earthquake when governments and central banks can no longer hold things together. From dotcom boom-bust in 2000, to housing boom-bust in 2007, to QE boom and probably soon QE-bust.

 

[FB.]

May i ask why your so defensive of the big 6 .. im starting to think your either brainwashed by all their claims or you have a vested interest i.e. a shareholder yourself?

I am defensive of them because I vigorously defend everyone's right to make a fair profit from their business. If this conversation was about the profit margin charged by a solar panel manufacturer I would be equally defensive of their right to make a fair profit.

Without a fair profit, there is no incentive to increase efficiency (which would increase profits and/or bring costs down for consumers). Without a fair profit there is no incentive to invest (which maintains or increases the supply of what we want).

Capitalism works because the profit it allows encourages businesses to compete, to become lean-and-mean and to innovate - and if something is too profitable it encourages newcomers to enter the market (as was the case with solar PV companies springing up in 2011).
Without a profit reward the pharmaceutical companies would not bother to develop new medicines (disclaimer: I hold shares in AstraZeneca and GlaxoSmithKline) and without new medicines healthcare would not advance. Similarly: without a profit a solar panel manufacturer would not be encouraged to advance solar technology to the next level.

If we take away free market pricing, we end up with communism - and we all know where that ends.

But I expect Miliband will get into power at the next election and spank the utility companies so hard that they never forget it. But also the investors this nation needs - including those who lend to the much-needed deficit money to the government - will also not forget, and very likely there would be a rapid and severe slump in the British Pound (and soaring import prices which encourage Red Ed to "fix" even more prices) as investors' money hurries to other nations.
Even Tony Blair criticised Red Ed's price-capping; Blair knows how "anti-business" it would sound.

 

[Darkwood]

Explains alot; you were talking about the big six s though you had blinkers on even with all the recent drama where they now seem to be sitting on shakey ground and not a fracking in sight to blame, but yes i see now that its in your interest to counter any negative talk or speculation as this will have a direct effect on the share value of your shares in SSE .....

I very much doubt then that i could get you into any kind of agreement with me as you kinda have vested interests to protect your money so on that note we will just have to agree to disagree...

OVO has done the country a good deed as i said earlier they are a small independent company and still believe their customers come before profit hence they challenged and even explained how the big six are hiding the truth... No comment was given in response which says alot!

Im no expert on the stocks and shares but i can see consumer pressure and all the generated attention been the downfall of the big six if they don't change their ways and the consequence of been open and transparent will affect profit massively hence shares will plummet --- its a one way road now they have let the shareholders push big profits ahead of consumers needs now they are been exposed... clever accounting and smokescreens are been exposed and they have no answers...


When people die to protect and push shares up then morality of the shareholders needs questioning ... corporate manslaughter wouldn't be far off in my mind... ill agree with you regarding other floated companies - yes business is business but when lives depend on fair play then yes the industry needs over hauling when it goes wrong as it clearly has.

Im not against shareholders and business practices as such just some markets should be under strict control and yes even if it means the government stepping in and stripping it all apart - they may not be the best people to run it but the big 6 has shown greed is worth more than life.

 

[FB.]

"....Without a fair profit there is no incentive to invest (which maintains or increases the supply of what we want)...."

The low margins and political instability is a deterrent to building new power and gas infrastructure. Do you see many investors queueing up, begging to build new power stations or grid?

"..... if something is too profitable it encourages newcomers to enter the market (as was the case with solar PV companies springing up in 2011).

So with apparently such vast profits available why isn't everyone muscling-in for a piece of the action in the energy market, like they did with solar? Apparently the small energy supplier "Ovo" who were present along with the "big six" was originally started from someone's home kitchen.
If it's that easy and that lucrative, why isn't everyone doing it? Why don't Tesco and Sainsbury's get a piece of the action like they do with high-margin banking, insurance and mobile phones?

 

[FB.]

Explains alot.

But I didn't come here as a troll or shill for the "big six". I came here because I have an interest in renewables. I would also consider myself to be one of the best recyclers. I also spend a great deal of time studying and experimenting with chemical-free fruit and veg growing; any "fertiliser" is in the form of compost and manure obtained from a local recycling site.
Go ahead: test my commitment to "green where practical" by asking me questions about chemical-free "grow-your-own". I particularly specialise in ancient, rare fruit trees.
I'll make a plea for the Milton Wonder apple tree which is in imminent danger from property developers:
http://www.miltonwonder.org.uk/

Just "an old apple tree"? Absolutely not. It is one of the oldest three known apple trees in the world - a real survivor which has outstanding natural disease resistance (no need for sprays) and produces good quality fruit. Unlike the modern varieties which are inbred, sickly, short-lived and disease-prone.

 

[Darkwood]

Again you compare to other non-related markets ..check my edit to last post!

Please realise people are dying because they can't afford to cook or heat their homes .... really hope you can sleep a peaceful night as your money rolls in again this is a moral issue the Energy companies provide an essential service of which without this service lives are at risk... as for all your other investments then fair people play then consumers don't die when shareholders push for more or the accounting is smoke screened to hide profit margins ... sorry but i can't seriously belief that the shareholders of the big 6 have no knowledge of the deceptions that are occurring to ensure shareholders are kept smiling, buying shares is about risk taking and this should be fair play but its all sounding like another big scandal is about to be blown open ..and id like to see your replies when that happens because rumours are a couple of ex employees in the know are ready to talk the truth! - watch this space

PS this is not about your other investments or interests i see no issue at all that way its regarding the nature of this thread and a market that needs a complete overhaul.

 

[FB.]

Please realise people are dying because they can't afford to cook or heat their homes ....

And please realise that even if the companies operated with no profit, or under inefficient middle-managers of government, it would only cut bills by £75 per year.
Far greater savings could be achieved by addressing other costs of living.

So we'll start with capping the power companies.
Then move on to the food retailers.
Then move on to the food manufacturers.
Then move on to the farmers.
Then move on to the oil/gas exploration and production companies.
Then move on to house builders.
Then move on to the pharmaceutical companies.
Then the furniture and household appliance manufacturers.
Then the car manufacturers.
Then......the economy is suffering Soviet-style shortages because nobody can sell anything for a fair price so they don't bother offering it for sale at all.


Where does it stop?
Does it stop when there's nobody left to speak out in defence of the rights of others to make a fair profit?
Does it stop when they come for the profits of your business because it's alright until it directly affects your earning power?
I do not consider the 5-6% profit margin of utilities to be extortionate. Even at almost double that rate it would only be in-line with the typical profit margins of the average company.

 

[Darkwood]

And please realise that even if the companies operated with no profit, or under inefficient middle-managers of government, it would only cut bills by £75 per year.
Far greater savings could be achieved by addressing other costs of living.

So we'll start with capping the power companies.
Then move on to the food retailers.
Then move on to the food manufacturers.
Then move on to the farmers.
Then move on to the oil/gas exploration and production companies.
Then move on to house builders.
Then move on to the pharmaceutical companies.
Then the furniture and household appliance manufacturers.
Then the car manufacturers.
Then......the economy is suffering Soviet-style shortages because nobody can sell anything for a fair price so they don't bother offering it for sale at all.


Where does it stop?
Does it stop when there's nobody left to speak out in defence of the rights of others to make a fair profit?
Does it stop when they come for the profits of your business because it's alright until it directly affects your earning power?
I do not consider the 5-6% profit margin of utilities to be extortionate. Even at almost double that rate it would only be in-line with the typical profit margins of the average company.

This is my point im trying to get across - this is a smokescreen figure with clever use of presentation and wording, the maths don't work here their claims are been questioned and they can't or are unwilling to be transparent to explain them, their has been speculation of collusion between the big 6 and profit manipulation, now under investigation cracks are showing in their claims and stories and very big ones so all this post im in agreement with if the last sentence were true hence i said numerous times the figures are been conjured for the public eye when in reality profits could be 30-40% as has been claimed already but when they refuse to be open and transparent its can only be because they are hiding something big ... they are in control of both the generation and selling this gives them an easy playing field to manipulate any figures and never be found out but fate has stepped in i.e. the little man who is exposing the lies they are claiming.