For help, advice and discussion about stuff not related to aviation. Play nice: no religion, no politics and no axe grinding please.
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By T6Harvard
VRB_20kt wrote:I must confess that I thought the power companies bought futures. It seems that they effectively offered their customers uncovered options. It’s a bizarre way to run a company and turns the entire operation into a substantial gamble - which some of them have lost spectacularly.

Ah but..... you are assuming the business was designed to be a, good old fashioned long term business. What if one set up a limited company, paid oneself massive wages (or better still, dividends), stuck the max into off-shore pensions, paid other huge pots to your other companies and, having not hedged against upwards energy prices (to save the company short term), your company went bust..... Do you lose anything?

Seen it too many times. It's a business model but not one that benefits many people.
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By VRB_20kt
Interesting comment from Pure Planet tonight who have ceased trading because of future losses and not current losses.

“"In our case, despite being hedged until next spring, and having had the backing of BP, Pure Planet faced increasing risks and large potential losses by continuing to operate in this market," Pure Planet said in a separate statement.”

I guess when the future cost is higher than the allowed charge then you are stuffed. The only winners will be those that can hang on until most of the competition have been killed off and then reap bumper profits through having large volumes of customers paying the maximum charge.

The cap scheme presumably works on rolling average pricing or similar and as long as the wholesale price doesn’t inexorably rise, there must be a time when the margins will pick up, handsomely rewarding the big companies with the funding resilience to survive.
By johnm
E'on Next sent me an email saying we're here for the long haul and please don't keep ringing us up!
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By Flyingfemme
VRB_20kt wrote:The only winners will be those that can hang on until most of the competition have been killed off and then reap bumper profits through having large volumes of customers paying the maximum charge.

The ones who are being "gifted" customers from companies that did go bust are in a pretty good position. My rate is doubling, to Shell's "standard" rate, and I am unable to switch anywhere else.
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By PeteSpencer
It’ll be interesting to see what my new rate with EDF will be when my two year cheapo fixed deal ( negotiated last year when I opted not to switch providers) ends in 13 months time…. :roll:
By johnm
There are many ways to manage this sort of thing but at the end of the day energy fuels economics and social cohesion so its infrastructure and price needs to be regulated such that all members of society and all industry reliably get what they need to live comfortably and compete effectively.
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By Pete L
We have politicians that seem to read a lot of history but somehow end up ignoring the lessons. Are they mis-advised or is it simply the potential tax burden that stops them? Does any part of our state machinery do long term planning? (Waiting for kanga...)
By Colonel Panic
johnm wrote:... and price needs to be regulated...

Price regulation does not always lead to "cheaper" prices though. The Net Book Agreement (whilst not law, granted) only really served the minority of readers who wanted to read off-peak books. And the regulation of consumer gas & electricity prices seems to have done little other than mean suppliers just charge the maximum allowed and those who don't go bust.
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By kanga
Pete L wrote:..Does any part of our state machinery do long term planning? (Waiting for kanga...)

.. yes, when allowed or directed by Ministers, who (sometimes for ideological reasons, it sometimes seems) explicitly forbid it :roll:
By riverrock
The price regulation made sense, as some suppliers where setting very high default / standard tariffs which were punishing those who didn't bother to, or didn't have the capacity to, switch to other tariffs. It ensured that some retailers didn't punish customers, and it still allowed operators to make a profit. It was also set high enough that competition was still very much possible below the figure. Before the recent market volatility, no-one was hitting the cap - so it was doing its job nicely in setting a ceiling for competition to be within.

Utilities are highly regulated, but done so in a way to still allow competition in key areas - hence why the UK has had one of the most competitive (I didn't say cheap) electricity and gas markets in the world with space for lots of smaller, innovative operators.
By low&slow
If politicians & civil servants were any good at industrial planning they would be working in industry. State industrial planning ends up as civil service empire building using taxpayer's money to prop up failing industries because no-one wants to admit they were wrong. Fun article on state industrial planning.

Bail outs? Where does the government get it's money from? From you, of course, so you end up paying for it anyway and if the government is paying half your bill you have even less motivation to use less. Price controls? Because they worked so well in Venezuela?

Removing the idiotic restrictions that make fra cking all but impossible would be a good start.