BREXIT - Is This Really Still Rumbling On? 😴

TheBigBean

briantrumpet said:

rick_chasey said:

Just read that some of the suppliers are screwed because they hadn’t hedged their wholesale prices but are locked into their customer prices.

Madness.

You really ought to read Private Eye (or if you do already, read it more thoroughly) - they really have been on this for absolutely ages, and have been predicting that many of the smaller suppliers were going to come unstuck, even before this recent price surge.

Is it really noteworthy though? Who do you think the losers are when a smaller supplier goes bust?

TheBigBean

kingstongraham said:

Jezyboy said:

rick_chasey said:

Just read that some of the suppliers are screwed because they hadn’t hedged their wholesale prices but are locked into their customer prices.

Madness.

Presumably when you operate in a market where the only possible differentiator is price, all you can do is seek cost savings and at a certain point these become completely irresponsible.

Yes, *if you are aiming for price sensitive switchers*, and pay for the hedge and someone else doesn't, your price is higher and you don't sell anything. So you underhedge and then you cross your fingers that this doesn't happen.

It's not that easy to hedge. I'm sure a gas hedge is relatively easy for a larger player, but that gives a basis risk for wholesale power markets. Plus, that won't hedge the demand, so there would still be volume risk. A small player will struggle with their credit rating for any form of hedging where the counter-party is taking a risk.

surrey_commuter

TheBigBean said:

briantrumpet said:

rick_chasey said:

Just read that some of the suppliers are screwed because they hadn’t hedged their wholesale prices but are locked into their customer prices.

Madness.

You really ought to read Private Eye (or if you do already, read it more thoroughly) - they really have been on this for absolutely ages, and have been predicting that many of the smaller suppliers were going to come unstuck, even before this recent price surge.

Is it really noteworthy though? Who do you think the losers are when a smaller supplier goes bust?

Big 6 customers who never switch as they pay the levy?

kingstongraham

TheBigBean said:

kingstongraham said:

Jezyboy said:

rick_chasey said:

Just read that some of the suppliers are screwed because they hadn’t hedged their wholesale prices but are locked into their customer prices.

Madness.

Presumably when you operate in a market where the only possible differentiator is price, all you can do is seek cost savings and at a certain point these become completely irresponsible.

Yes, *if you are aiming for price sensitive switchers*, and pay for the hedge and someone else doesn't, your price is higher and you don't sell anything. So you underhedge and then you cross your fingers that this doesn't happen.

It's not that easy to hedge. I'm sure a gas hedge is relatively easy for a larger player, but that gives a basis risk for wholesale power markets. Plus, that won't hedge the demand, so there would still be volume risk. A small player will struggle with their credit rating for any form of hedging where the counter-party is taking a risk.

I'm sure it isn't easy, but if you are selling at fixed price and buying at a variable price, then you have to cross your fingers.

The price cap should obviously be raised, but equally obviously will not be. If the regulator forces everyone to sell at a max price that makes everyone lose money, there's a fundamental problem.

TheBigBean

kingstongraham said:

TheBigBean said:

kingstongraham said:

Jezyboy said:

rick_chasey said:

Just read that some of the suppliers are screwed because they hadn’t hedged their wholesale prices but are locked into their customer prices.

Madness.

Presumably when you operate in a market where the only possible differentiator is price, all you can do is seek cost savings and at a certain point these become completely irresponsible.

Yes, *if you are aiming for price sensitive switchers*, and pay for the hedge and someone else doesn't, your price is higher and you don't sell anything. So you underhedge and then you cross your fingers that this doesn't happen.

It's not that easy to hedge. I'm sure a gas hedge is relatively easy for a larger player, but that gives a basis risk for wholesale power markets. Plus, that won't hedge the demand, so there would still be volume risk. A small player will struggle with their credit rating for any form of hedging where the counter-party is taking a risk.

I'm sure it isn't easy, but if you are selling at fixed price and buying at a variable price, then you have to cross your fingers.

The price cap should obviously be raised, but equally obviously will not be. If the regulator forces everyone to sell at a max price that makes everyone lose money, there's a fundamental problem.

There are broadly two choices (i) give all consumers smart meters and charge them a price related to the wholesale price (ii) accept there is a risk and manage as best as possible. The first option isn't going to happen, because consumers won't like the risk, therefore it defaults to the second option.

Last year gas prices and power prices were at record lows, so presumably all the companies struggling now did very well then, as a result I have very little sympathy. It is the usual thing that always amazes me how people genuinely believe that they create the profit, so should have 100% of it, but the government should step in and help with any loss.

kingstongraham

TheBigBean said:

kingstongraham said:

TheBigBean said:

kingstongraham said:

Jezyboy said:

rick_chasey said:

Just read that some of the suppliers are screwed because they hadn’t hedged their wholesale prices but are locked into their customer prices.

Madness.

Presumably when you operate in a market where the only possible differentiator is price, all you can do is seek cost savings and at a certain point these become completely irresponsible.

Yes, *if you are aiming for price sensitive switchers*, and pay for the hedge and someone else doesn't, your price is higher and you don't sell anything. So you underhedge and then you cross your fingers that this doesn't happen.

It's not that easy to hedge. I'm sure a gas hedge is relatively easy for a larger player, but that gives a basis risk for wholesale power markets. Plus, that won't hedge the demand, so there would still be volume risk. A small player will struggle with their credit rating for any form of hedging where the counter-party is taking a risk.

I'm sure it isn't easy, but if you are selling at fixed price and buying at a variable price, then you have to cross your fingers.

The price cap should obviously be raised, but equally obviously will not be. If the regulator forces everyone to sell at a max price that makes everyone lose money, there's a fundamental problem.

There are broadly two choices (i) give all consumers smart meters and charge them a price related to the wholesale price (ii) accept there is a risk and manage as best as possible. The first option isn't going to happen, because consumers won't like the risk, therefore it defaults to the second option.

Last year gas prices and power prices were at record lows, so presumably all the companies struggling now did very well then, as a result I have very little sympathy. It is the usual thing that always amazes me how people genuinely believe that they create the profit, so should have 100% of it, but the government should step in and help with any loss.

I agree - the issue is that if there is someone in the market willing to charge a lower price than is sensible, and there is no real downside for the consumer when they go pop - then they will get the custom. I'm sure that the owners are not personally out of pocket either.

ddraver

TheBigBean said:

It is the usual thing that always amazes me how people genuinely believe that they create the profit, so should have 100% of it, but the government should step in and help with any loss.

AKA Modern Capatalism?

🟥⬛🟥

TheBigBean

kingstongraham said:

TheBigBean said:

kingstongraham said:

TheBigBean said:

kingstongraham said:

Jezyboy said:

rick_chasey said:

Just read that some of the suppliers are screwed because they hadn’t hedged their wholesale prices but are locked into their customer prices.

Madness.

Presumably when you operate in a market where the only possible differentiator is price, all you can do is seek cost savings and at a certain point these become completely irresponsible.

Yes, *if you are aiming for price sensitive switchers*, and pay for the hedge and someone else doesn't, your price is higher and you don't sell anything. So you underhedge and then you cross your fingers that this doesn't happen.

It's not that easy to hedge. I'm sure a gas hedge is relatively easy for a larger player, but that gives a basis risk for wholesale power markets. Plus, that won't hedge the demand, so there would still be volume risk. A small player will struggle with their credit rating for any form of hedging where the counter-party is taking a risk.

I'm sure it isn't easy, but if you are selling at fixed price and buying at a variable price, then you have to cross your fingers.

The price cap should obviously be raised, but equally obviously will not be. If the regulator forces everyone to sell at a max price that makes everyone lose money, there's a fundamental problem.

There are broadly two choices (i) give all consumers smart meters and charge them a price related to the wholesale price (ii) accept there is a risk and manage as best as possible. The first option isn't going to happen, because consumers won't like the risk, therefore it defaults to the second option.

Last year gas prices and power prices were at record lows, so presumably all the companies struggling now did very well then, as a result I have very little sympathy. It is the usual thing that always amazes me how people genuinely believe that they create the profit, so should have 100% of it, but the government should step in and help with any loss.

I agree - the issue is that if there is someone in the market willing to charge a lower price than is sensible, and there is no real downside for the consumer when they go pop - then they will get the custom. I'm sure that the owners are not personally out of pocket either.

The owners will be out of pocket unless they made enough from the last year to recover their investments. Also, these firms will have PPAs in place with some generators. Those generators will be out of pocket as they won't get paid for the power they produced.

No one start a company, employs people, pays to market it etc. with a view to going bust and losing the entire investment.

kingstongraham

TheBigBean said:

kingstongraham said:

TheBigBean said:

kingstongraham said:

TheBigBean said:

kingstongraham said:

Jezyboy said:

rick_chasey said:

Just read that some of the suppliers are screwed because they hadn’t hedged their wholesale prices but are locked into their customer prices.

Madness.

Presumably when you operate in a market where the only possible differentiator is price, all you can do is seek cost savings and at a certain point these become completely irresponsible.

Yes, *if you are aiming for price sensitive switchers*, and pay for the hedge and someone else doesn't, your price is higher and you don't sell anything. So you underhedge and then you cross your fingers that this doesn't happen.

It's not that easy to hedge. I'm sure a gas hedge is relatively easy for a larger player, but that gives a basis risk for wholesale power markets. Plus, that won't hedge the demand, so there would still be volume risk. A small player will struggle with their credit rating for any form of hedging where the counter-party is taking a risk.

I'm sure it isn't easy, but if you are selling at fixed price and buying at a variable price, then you have to cross your fingers.

The price cap should obviously be raised, but equally obviously will not be. If the regulator forces everyone to sell at a max price that makes everyone lose money, there's a fundamental problem.

There are broadly two choices (i) give all consumers smart meters and charge them a price related to the wholesale price (ii) accept there is a risk and manage as best as possible. The first option isn't going to happen, because consumers won't like the risk, therefore it defaults to the second option.

Last year gas prices and power prices were at record lows, so presumably all the companies struggling now did very well then, as a result I have very little sympathy. It is the usual thing that always amazes me how people genuinely believe that they create the profit, so should have 100% of it, but the government should step in and help with any loss.

I agree - the issue is that if there is someone in the market willing to charge a lower price than is sensible, and there is no real downside for the consumer when they go pop - then they will get the custom. I'm sure that the owners are not personally out of pocket either.

The owners will be out of pocket unless they made enough from the last year to recover their investments. Also, these firms will have PPAs in place with some generators. Those generators will be out of pocket as they won't get paid for the power they produced.

No one start a company, employs people, pays to market it etc. with a view to going bust and losing the entire investment.

What a way to run an essential utility.

https://www.energyscanner.com/which-energy-suppliers-have-gone-bust/

"Losing money by selling energy below cost in a market where everyone else is losing money by selling energy on the cheap, was never going to end well. "

TheBigBean

ddraver said:

TheBigBean said:

It is the usual thing that always amazes me how people genuinely believe that they create the profit, so should have 100% of it, but the government should step in and help with any loss.

AKA Modern Capatalism?

🟥⬛🟥

For further comedy value, they typically vote Tory even though the prospects for government support are much better under labour.

surrey_commuter

so a quick Google suggests that existing suppliers bid for the customers of failed companies.

If it will cost them more than the cap to supply energy to these customers why would they bid at all? I know there is a argument for lifetime value of the customer but these people by their very nature are price sensitive and flighty.

I am thinking the populist solution will nationalisation

pblakeney

surrey_commuter said:

so a quick Google suggests that existing suppliers bid for the customers of failed companies.

If it will cost them more than the cap to supply energy to these customers why would they bid at all? I know there is a argument for lifetime value of the customer but these people by their very nature are price sensitive and flighty.

I am thinking the populist solution will nationalisation

I think it has been said before but being an essential supply is there not a case for nationalised supply and privatised service? Probably not enough profit in service only.

TheBigBean

surrey_commuter said:

so a quick Google suggests that existing suppliers bid for the customers of failed companies.

If it will cost them more than the cap to supply energy to these customers why would they bid at all? I know there is a argument for lifetime value of the customer but these people by their very nature are price sensitive and flighty.

I am thinking the populist solution will nationalisation

I went through a run of constantly being given a BarclayCard, because they would have bought me from my previous credit card company. They would then remove my previous benefits e.g. cash back. I would get a new card from a new company who would then sell me to Barclaycard again. I found it quite tedious, but I was intrigued what Barclaycard's game plan was. Presumably a certain percentage of the the bought people stay.

surrey_commuter

TheBigBean said:

surrey_commuter said:

so a quick Google suggests that existing suppliers bid for the customers of failed companies.

If it will cost them more than the cap to supply energy to these customers why would they bid at all? I know there is a argument for lifetime value of the customer but these people by their very nature are price sensitive and flighty.

I am thinking the populist solution will nationalisation

I went through a run of constantly being given a BarclayCard, because they would have bought me from my previous credit card company. They would then remove my previous benefits e.g. cash back. I would get a new card from a new company who would then sell me to Barclaycard again. I found it quite tedious, but I was intrigued what Barclaycard's game plan was. Presumably a certain percentage of the the bought people stay.

lifetime value of a customer can be surprisingly high so they are willing to pay a lot per client acquisition as the alternative is marketing and KYC and onboarding costs

TheBigBean

surrey_commuter said:

TheBigBean said:

surrey_commuter said:

so a quick Google suggests that existing suppliers bid for the customers of failed companies.

If it will cost them more than the cap to supply energy to these customers why would they bid at all? I know there is a argument for lifetime value of the customer but these people by their very nature are price sensitive and flighty.

I am thinking the populist solution will nationalisation

I went through a run of constantly being given a BarclayCard, because they would have bought me from my previous credit card company. They would then remove my previous benefits e.g. cash back. I would get a new card from a new company who would then sell me to Barclaycard again. I found it quite tedious, but I was intrigued what Barclaycard's game plan was. Presumably a certain percentage of the the bought people stay.

lifetime value of a customer can be surprisingly high so they are willing to pay a lot per client acquisition as the alternative is marketing and KYC and onboarding costs

They certainly managed to put me off Barclaycard for a lifetime.

kingstongraham

surrey_commuter said:

TheBigBean said:

surrey_commuter said:

so a quick Google suggests that existing suppliers bid for the customers of failed companies.

If it will cost them more than the cap to supply energy to these customers why would they bid at all? I know there is a argument for lifetime value of the customer but these people by their very nature are price sensitive and flighty.

I am thinking the populist solution will nationalisation

I went through a run of constantly being given a BarclayCard, because they would have bought me from my previous credit card company. They would then remove my previous benefits e.g. cash back. I would get a new card from a new company who would then sell me to Barclaycard again. I found it quite tedious, but I was intrigued what Barclaycard's game plan was. Presumably a certain percentage of the the bought people stay.

lifetime value of a customer can be surprisingly high so they are willing to pay a lot per client acquisition as the alternative is marketing and KYC and onboarding costs

Especially once there's only 6 big companies and switchers can't get the big discount from loss making companies.

rick_chasey

I had to laugh, in the team morning meeting, our boss who is a) a big open brexiter and b) obsessed with getting everyone back to the office, was talking about our new office move.

He's been using the office move as a carrot with which to persuade everyone to get back into the office.

Anyway, our arrival in the new office has been delayed by a month. He claimed "brexit" was holding up the office move as the fitters were struggling like all construction people are.

It's a bit more complicated than that, but after his little rallying speeches of how Brexit will be great over the past few years and we're all worrying about nothing, it make me laugh quite a bit.

Stevo_666

rick_chasey said:

How’s the range?

Late reply, but good.

Stevo_666

briantrumpet said:

I'm just waiting for Stevo to say that he's got plenty of gas for his boiler.

Funnily enough, the house we're buying has oil fired central heating and no gas (house buying attempt #2 after the last one fell through).

rick_chasey

Stevo_666 said:

briantrumpet said:

I'm just waiting for Stevo to say that he's got plenty of gas for his boiler.

Funnily enough, the house we're buying has oil fired central heating and no gas (house buying attempt #2 after the last one fell through).

Oh mate, don't do it! I couldn't tell you how long I've listened to people whine about how much faff that is.

Stevo_666

briantrumpet said:

https://www.telegraph.co.uk/business/2021/09/19/mounting-fears-1970s-style-three-day-week-britains-energy-crunch/

Data from Gas Infrastructure Europe show that the UK has less than nine terawatt hours of storage compared to 75 terawatt hours in the Netherlands (with a quarter of the population). Dutch storage is nevertheless unusually low for this time of the year at 52pc of capacity, compared with 85pc to 90pc normally. The stocks are 113 terawatt hours in France, 148 in Germany and 166 in Italy.

Mr Moffatt said he warned that closing Rough was a dangerous decision in key meetings with British officials but the Department for Business, Energy and Industrial Strategy dug in its heels. “They refused to listen and kept saying that we had diversity of supply: they misunderstood the responsiveness of liquefied natural gas to short-term shocks,” he said.

“We are now extremely vulnerable and I’m afraid the situation is going to get worse. Prices could go through the roof. You can’t rely on the interconnectors. Contracts can be rescinded and suppliers can declare force majeure: end of story. The EU made this very clear during the negotiations over Brexit,” Mr Moffatt added.

“We could easily see a three-day working week. The Government has been playing dangerous games with the grid and has allowed a situation to develop that is outside their control. It’s terribly depressing.”

Come on, cheer us up, Stevo. Even the Telegraph is getting depressed.

I thought some of you lot would be cheered up by the prospect of only working 3 days a week?

surrey_commuter

rick_chasey said:

Stevo_666 said:

briantrumpet said:

I'm just waiting for Stevo to say that he's got plenty of gas for his boiler.

Funnily enough, the house we're buying has oil fired central heating and no gas (house buying attempt #2 after the last one fell through).

Oh mate, don't do it! I couldn't tell you how long I've listened to people whine about how much faff that is.

not so much the faff as the cost!!!! I would ask to see a few years delivery receipts

rick_chasey

surrey_commuter said:

rick_chasey said:

Stevo_666 said:

briantrumpet said:

I'm just waiting for Stevo to say that he's got plenty of gas for his boiler.

Funnily enough, the house we're buying has oil fired central heating and no gas (house buying attempt #2 after the last one fell through).

Oh mate, don't do it! I couldn't tell you how long I've listened to people whine about how much faff that is.

not so much the faff as the cost!!!! I would ask to see a few years delivery receipts

Honestly, I have never heard so much whining from people about oil fired houses.

Christ alive. The regular days off to take delivery. The general maintenance. Running out of oil before the season is over. Delays in oil delivery. My favourite, the "my house is so big it's so much to heat. Oi, can you do that work so I can deliver it to the client and charge the next fee which i get 50% off and you none".

Honestly Stevo, don't do it.

Stevo_666

rick_chasey said:

Stevo_666 said:

briantrumpet said:

I'm just waiting for Stevo to say that he's got plenty of gas for his boiler.

Funnily enough, the house we're buying has oil fired central heating and no gas (house buying attempt #2 after the last one fell through).

Oh mate, don't do it! I couldn't tell you how long I've listened to people whine about how much faff that is.

Tbh we wouldn't have specced oil fired CH, but not a lot of choice in that location and on its own that's a long way from being a deal breaker given how many other boxes the house ticks (you would never approve anyway as its in a village...flame suit on)

rick_chasey

Well as long as you stick to your no whining policy, as it seems to give everyone carte blanche to whine and whine.

Stevo_666

surrey_commuter said:

rick_chasey said:

Stevo_666 said:

briantrumpet said:

I'm just waiting for Stevo to say that he's got plenty of gas for his boiler.

Funnily enough, the house we're buying has oil fired central heating and no gas (house buying attempt #2 after the last one fell through).

Oh mate, don't do it! I couldn't tell you how long I've listened to people whine about how much faff that is.

not so much the faff as the cost!!!! I would ask to see a few years delivery receipts

I'm a Northerner so will be putting my shorts & t-shirt on and firing up the barbie for a house warming do in November (hopefully). Tbh the biggest challenge is going to be the commute into work - I make it about 27miles each way with the North Downs ridge challenge en route. What doesn't kill you makes you stronger...

Stevo_666

rick_chasey said:

surrey_commuter said:

rick_chasey said:

Stevo_666 said:

briantrumpet said:

I'm just waiting for Stevo to say that he's got plenty of gas for his boiler.

Funnily enough, the house we're buying has oil fired central heating and no gas (house buying attempt #2 after the last one fell through).

Oh mate, don't do it! I couldn't tell you how long I've listened to people whine about how much faff that is.

not so much the faff as the cost!!!! I would ask to see a few years delivery receipts

Honestly, I have never heard so much whining from people about oil fired houses.

Christ alive. The regular days off to take delivery. The general maintenance. Running out of oil before the season is over. Delays in oil delivery. My favourite, the "my house is so big it's so much to heat. Oi, can you do that work so I can deliver it to the client and charge the next fee which i get 50% off and you none".

Honestly Stevo, don't do it.

I hear you Rick, but compared to my upcoming and slightly eye watering stamp duty bill, it's not a biggie.

Pross

My sister has oil heating (out in the sticks with no gas supply). The price fluctuations are huge. I think you can be quite savvy and buy your supplies when rates are lower even if you don't get it delivered at that time but it is still very volatile.

rick_chasey

Pross said:

My sister has oil heating (out in the sticks with no gas supply). The price fluctuations are huge. I think you can be quite savvy and buy your supplies when rates are lower even if you don't get it delivered at that time but it is still very volatile.

Honestly, the state of this place. Not even gas supplies to houses.

Pross

rick_chasey said:

Pross said:

My sister has oil heating (out in the sticks with no gas supply). The price fluctuations are huge. I think you can be quite savvy and buy your supplies when rates are lower even if you don't get it delivered at that time but it is still very volatile.

Honestly, the state of this place. Not even gas supplies to houses.

I don't think that's UK specific to be honest. Lots of countries will rely on propane tanks or oil tanks in rural areas.