Bang goes Zog energy.

[Andrew]

Another 11,000 cheapskaters have discovered that bargains sometimes turn out not to be so ...

Andrew

[Jim GM4DHJ ...]

haha

[Sysadmin]

I had made several calls to E.ON_Next and only today have I received any sensible information. Got an account number, a new lower than expected tariff and have been able to set up a direct debit...apparently they are still waiting for all the info from Symbio. I was concerned about getting a big bill in January, but E.ON had received my overpayment from them and that should cover a couple of months..

[newshound]

Not at all. They got (and are still getting) a bargain by paying below cost for their electricity. It's the rest of us users who pick up the tab. (Taxpayers in the case of Bulb).

[RJH]

OOI, what's your tariff?

[Dave Plowman (News]

So you both enjoyed paying over the odds for gas and electricity, then?

That doesn't quite fit in with your love of free food parcels, Jim.

[John Rumm]

So customers jump ship from the big boys and get a better quality of customer service and lower prices for however many years. Now they get shifted to a different supplier, taking any credit/debit balance with them.

So where is the downside again?

[Pancho]

Thank you taxpayers, We, Bulb customers, appreciate it :-).

[Dave Plowman (News]

Can you clarfiy? For the many years since I left BG etc, I've been getting energy at below cost? How did these firms survive for so long - making a loss on every sale?

[newshound]

Not for years, just recently with the price hike. If I understand correctly, it will still be capped at the tariff until April. The gas price is predicted to start falling by then, but THE REASON THE COMPANIES WENT BROKE IS THAT THEY WERE PAYING OUT MORE THAN THEY WERE GETTING IN. And now the SOLRs have to take the hit.

[Harry Bloomfield, Esq.]

newshound submitted this idea :

Gas prices have fallen over the past month. Everyone, major supplier or tiny supply company on a fixed contract taken out before the costs shot up, will have been getting their energy on the cheap, so it's unfair to blame it on those who sought a cut price supplier. The cut price suppliers simply had less meat on their bones, to absorb the wholesale price hikes.

[Andrew]

But in the normal scheme of things related to failed companies there is no money left to pay creditors who typically get little or nothing.

QED E.on is definately *not* getting your credit from the failed supplier, it is getting notification of the amount, which Ofgem are 'paying', except at the end of the day *your* losses are being shared out amongst all energy users, 15 million of which have never switched.

[Andrew]

Nope. They went up yesterday according to the commodities page on BBC text.

ALL of those fixed price deals should have had a get-out clause for the energy supplier, just like the telecom companies, who can offer

24 month 'deals' that still go up by X%+cpi every april. These clauses could and should have been activated this year when global energy prices shot up.

[Andrew]

The downside is that these failed companies are allowing their losses (the customers 'credit') to be guaranteed by OFGEM even if there is no money left in the bank of the failed company. OFGEM will simply allow the cap to go up by more than necessary to 'compensate' all the rescuing energy companies.

This means they could make some profit when it was possible but not have to suffer any losses at all. All they did was cease operations.

I don't think there is an equivalent of the landlords deposit protection scheme for energy users credit balances, is there ?

[alan_m]

Being a cheapskate I've lost nothing and have the satisfaction that over the last decade or so I've not been overpaying for my energy.

If over the same period the big players have been buying future gas at cheaper prices why have their customers been paying more?

[Robin]

Bulb reported multi-million pre-tax losses for 2018 2019 and 2020 totalling c£m200. Like many "disruptors" it was following the Amazon model of buying market share. The way the energy market is regulated their customers won, their managers won, their investors lost (but many will get tax relief to cushion the blow), and other customers/taxpayers lost (with no cushion).

[Robin]

There is not. Ofgem even let them carry on trading after they've failed to pay their levies. Making it easier to enter the market was a "good thing" but it's way beyond time Ofgem demanded reserves/bonds.

[Steve Walker]

Except that many of the gas and electricity suppliers also fix their buying price way ahead, so it has not gone up for those that did.

[alan_m]

15 million customers made the choice not to save money. Was this wise or just stupid?

If it wasn't for the guarantee that customers credit is protected, even yours if you supplier fails, then no-one in their right mind would allow any credit to be built up. This would possibly mean that ALL suppliers would only be able to charge the amount on the monthly usage bill. Perhaps these failures will result in a fundamental change in the way payments will be made.

You also make the assumption that the customers of the suppliers that have gone bust haven't been paying the guarantee levy in all the years these companies were trading.

How do you feel about the £85k guarantee for domestic customers if a UK regulated financial institution fails?

[Theo]

In the normal scheme of things businesses who hold client money are required to hold it in separate accounts. So your firm of solicitors might go bust, but your house deposit is separate from their working cash fund. The administrators have to untangle things, which takes some time, but the money is safe. Similar may apply here.

Theo