October 2017
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How our lying energy companies fleece us and get away with it

A couple of days ago, I explained why I believe Ofgem is ducking its responsibility to regulate the energy market by asking another useless regulator to investigate the market – an investigation that will take 2 to 3 years. Today I’d like to try to explain briefly the tricks and lies the energy companies use to fleece us. Here are the key points:

1. The ‘Big Six’ control the market With 98% of households using the ‘Big Six’, they have complete control over the market

2. Energy company profits are shooting up Profit per household from supplying power has rocketed from about £8 in 2009 to £65 last year (click to see pictures more clearly)

energy profits per household

3. The ‘Big Six’ claim they have to put prices up because wholesale prices are rising As this chart shows, this is a lie. Wholesale prices up 3.2% in 4 years, the price we pay up 24%

energy profits5

4. Energy companies ‘hide’ their real profits With a claimed profit level of around 5% for supplying electricity and gas to our homes, energy companies insist their profits are low compared to many other businesses. But the clever trick here is their selective use of data. There are two parts to the energy business – power generation and power supply to households. It’s true that profit margins are modest on the ‘downstream’ (power supply) part of the business (4% to 5%). But all the ‘Big Six’ also generate power which they sell to themselves at much healthier profit margins – 25% or more (click to see more clearly)

energy_profit_margins_2012_v2

So, by only mentioning their downstream profit margins (4% to 5%) when defending themselves against criticism for predatory behaviour, the energy companies try to fool us into believing that their profits are not excessive.

5. ‘It’s a competitive market’ Energy companies’ claims that they are in a ‘competitive market’ are rubbish. It’s almost impossible for a competitor to enter the power generation market as the initial investment costs are so huge. The only place competitors can enter is in power supply. So, the energy companies keep high profit margins on power generation (where there’s no competition) and deliberately keep profit margins low on energy supply to discourage many companies from entering the market.

6. ‘We need the money for investment’ The other claim energy companies make is that they need to generate large profits to pay for investment in new power generation and supply infrastructure. But their profits, even after they’ve paid for investment, rocketed up by over 74% in the last few years

energy real profits

7. Angela is back You remember the fragrant Angela Knight? She used to be head of the British Bankers Association and vigorously defended the banks as they plundered our savings and drove the country towards bankruptcy. Well, now she’s the big boss at Energy UK and is defending the ‘Big Six’ energy companies

angela knight

Well, (IMHO) experience should tell us that anything that Angela defends is likely to be rotten to the core and right royally ripping us off.

Oh, and my new book “DON’T BUY IT!” is now available on Amazon in paperback and Kindle. Please show your support for this website by buying some copies for yourselves, friends and family so I can afford to pay my ever-rising energy bills and Angela Knight’s extremely generous salary.

 

 

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