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

[FB.]

"...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...."

Quote from Centrica's latest results (for year-ending 2012):
"....The preliminary results of the year ended 31 December 2012 have been extracted from audited accounts...." (my emphasis on audited)

Accounts available here: http://www.centrica.com/files/results/prelim12/2012_preliminary_results.pdf
Auditor comments here: http://www.centrica.com/files/reports/2011ar/index.asp?pageid=70

So you're claiming that not only Centrica are engaged in outright fraud, but their auditors are facilitating a cover-up?

Be careful with your response, because it may have legal implications if you cannot back up what you say.

 

[Darkwood]

Quote from Centrica's latest results (for year-ending 2012):
"....The preliminary results of the year ended 31 December 2012 have been extracted from audited accounts...." (my emphasis on audited)

Accounts available here: http://www.centrica.com/files/results/prelim12/2012_preliminary_results.pdf
Auditor comments here: Centrica plc - Annual Report and Accounts 2011 - Financials - Financial Statements - Independent Auditors' Report to the Members of Centrica plc

So you're claiming that not only Centrica are engaged in outright fraud, but their auditors are facilitating a cover-up?

Be careful with your response, because it may have legal implications if you cannot back up what you say.

I make no claims it speculation for the purposes of debate ... i give opinions take them how u want.
I will not make a open accusation but the auditors can only use the info given if the info of any company is in its foundation manipulated at source and figures and sums cleverly expressed then how would they suspect anything, when you generate the very product you sell to yourself then its simple to create a fantasy profit margin tailored to whoever is interested....

Your either in denial here or very gullable .... how can 2 small players in the market show the big 6 up to the extent that they cant reply .... ill tell you why because they walked in all invincible and left with tails between their legs ......

 

[FB.]

.... how can 2 small players in the market show the big 6 up to the extent that they cant reply .... ill tell you why because they walked in all invincible and left with tails between their legs ......

If it is so profitable, why are there only two small players? When solar PV offered high rates of return it didn't take long for new installation companies to spring up all over the place and it didn't take long for homeowners and rent-a-roofers to catch on.
So why the slow take-up of companies competing with the big six? If the big six under-state their profits then surely there's a bonanza waiting for smaller players as they could both report higher profit margins and offer lower prices to consumers: a win-win situation.

 

[Darkwood]

If it is so profitable, why are there only two small players? When solar PV offered high rates of return it didn't take long for new installation companies to spring up all over the place and it didn't take long for homeowners and rent-a-roofers to catch on.
So why the slow take-up of companies competing with the big six? If the big six under-state their profits then surely there's a bonanza waiting for smaller players as they could both report higher profit margins and offer lower prices to consumers: a win-win situation.

There are many more than 2 small players it was just the fact they were the bigger ones out there that they were called to the committee meeting i never said there was only 2, and no matter how you cross examine my posts the very point is im trying to make is that the big 6 has been delivered a blow by the little man ...ive not made this up it was televised live and is available to view on catch-up ... anything ive speculated or said has already been in the public domain by media coverage, political programs and the rest so accusational wise its already out there by bigger fish, if you watch the debate it was even suggested that collusion is a factor, OVO's rep' accused the big 6 and explained how they did it on live TV so i doubt me repeating any of this is going to be a legal issue to me.

Ive enjoyed the debate between us i hope i may have opened your eyes to who exactly you decide to invest in but if morals come after profit then ill never change your mind.

You as you have admitted have a vested interest to defend my opinion and your right to but think on this on we have to agree to disagree, i study politics and economy and im expressing opinion from a neutral front where as you hold biased from the start .... i have agreed with many things your have pointed out except the relevance to the big 6 so ill end on that note - the pillow is calling

 

[yorkshiremike]

If it's believed that the big 6 are ripping us off, then rather than just repeat this as a mantra as most politicians and the press (including the BBC) seem to be doing, it should be being demonstrated how. Since most of the big 6 are vertically integrated it may be that they shifting profits upstream, but it doesn't seem very likely based on the current evidence:
1) There's visibility on the rest of the company's profits and they don't appear excessive - so where are they hiding this excess profit?
2) Energy prices paid in the UK are in line with the rest of Europe (unless of course it's a European conspiracy!), this is particularly the case for gas, which (before local 'taxes') appears to track the 'production price'. Electricity prices seem to be explained by the country's production method, e.g. cheaper in France (Nuclear) and some of the Nordics (Hydro), getting more expensive in UK as coal is switch out, fairly expensive in Germany (Green subsidies/taxes)
3) They are regulated and there is no evidence for conspiracy/cartel operation.

And despite the smaller companies like OVO not being subject to some of the same costs (e.g. ECO), then for me at least they are still not the cheapest and this even after the announced price rises.

More of a problem for the poor/low energy user is the impact of standing charges, and reducing their usage has less of a reduction on their bills. It might be more benefit to mandate no standing charge, so that high energy users subsidize the low.

 

[Worcester]

If it's believed that the big 6 are ripping us off, then rather than just repeat this as a mantra as most politicians and the press (including the BBC) seem to be doing, it should be being demonstrated how. Since most of the big 6 are vertically integrated it may be that they shifting profits upstream, but it doesn't seem very likely based on the current evidence:

You obviously closed your ears when BG answered these exact question at the Parliamentary Questions, and they made it clear that there SERVICES division was the one that made the big profits mmm... guess who they cross charge a lot of business to .....

More of a problem for the poor/low energy user is the impact of standing charges, and reducing their usage has less of a reduction on their bills. It might be more benefit to mandate no standing charge, so that high energy users subsidize the low.

Often the 'poor' user ISN'T a 'low' energy user because of the the type of property they live in - do you have any facts to substantiate this claim that the standing charge is causing any such problem?

More likely their ignorance and and 'laziness' when it comes to shopping around and switching - I was with one customer today who just filled his oil up last week at 67.56 p/litre, I filled mine up, same volume, same postcode 55.2p / litre..... I pointed out they could cut their bills by 20% just by shopping around, however they've been with their current supplier for 10 years now, and he always calls just when they need it filling, so they tell him to without asking the price....


I've stayed out until now, and I'm not coming back in......

 

[yorkshiremike]

Hi Worcester,
Not sure if you'll read this, but it is a non sequitur, to think the high (18%+) profit margin in residential services explains much:
- It isn't a 'secret that was revealed to parliament', but has always been declared in their annual accounts (Centrica plc - Annual Report and Accounts 2012 - Business Review - Operating Review - British Gas)
- Services are quite a bit smaller than the energy supply side, so its 'big profits' contribute about 28% of British Gas's total profits.
- The vast majority of the residential services revenues, have nothing to do (no chance of offset/transfer pricing etc) with the energy supply side. Most revenue is from service and installation of central heating systems. Residential services do some insulation work, so it's possible some of this is cross charged from the supply side (e.g. as part of ECO). However, this part of the business is some proportion of the 100k 'other' contracts they had in 2012, versus the 8 million+ contracts they had for gas/electrical/plumbing installation and services, so not much opportunity to transfer 'excess profits' across.
You're right, that a large part of the problem is that some people can't for what ever reason 'be bothered' . Most of the big 6 have fixed deals at a discount to their standard tariff that few apply for. You'd hope that the poor in badly insulated homes would apply for the 'grants' available, so that we have fewer poor high users of energy. But although (as you say) there is an overlap between 'poor households' and 'poor quality housing' (e.g. see 'Hills report' on fuel poverty https://www.gov.uk/government/publications/final-report-of-the-fuel-poverty-review) it is still the case that poor households spend less on energy and ('high') standing charges are regressive (low users charged relatively more). For example, our energy use is 50% of average (mainly due to insulation, but I'm a tight-wad Yorkshire man who keeps the heating below 17 deg C) , and the standing charge with the big 6 means our effective unit rate is over double in the summer and about 30% higher overall, which reduces any incentive to economise more (next move would be to disconnect from gas altogether).

 

[Gavin A]

IMO standing charges should be banned, as should charging more for the first x amount of units used.

These charges are completely regressive, as well as working against the principles of energy efficiency / using pricing mechanisms to nudge people into reducing their energy usage etc.

 

[FB.]

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