Obscene Energy Companies' Profits

Parody Boris
@Parody_PM
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1h
Thank goodness Margaret Thatcher privatised our energy companies, otherwise the £1.34billion profit Centrica have just made might have been wasted on ordinary people instead of wealthy shareholders.

Just heard on radio that Sunak introduced a rule that energy companies should spend excess profits on infrastructure rather than distribute them to shareholders. Foolish or what?

It is sickening to see these large profits being made by the privatised utility companies. This is partly causing the gap to widen between the haves and have nots. There is obviously enough profit floating around in these companies to provide for investment without relying on shareholders. This system is tipping me into becoming an ardent socialist.
Smaller fish I know, but Aldi and Lidl, are now giving the larger supermarkets a run for their money. Efficiently run businesses who give value to shoppers and look after their staff. Their prime asset is that they have no shareholders looking for dividends.

Until the bulk of the population wake up from their slumber and realise that nothing that this particular government does is ultimately designed to benefit us plebs, this will just go on and on.

They are obsessed with destroying public services and privatising everything in sight, including our NHS.

Rameses

Until the bulk of the population wake up from their slumber and realise that nothing that this particular government does is ultimately designed to benefit us plebs, this will just go on and on.

They are obsessed with destroying public services and privatising everything in sight, including our NHS.

Exactly this

It’s hard not to despair, public services, including the nhs - all dismantled, not funded, not valued since the tories got in. The leadership candidates talk about tax cuts ?

Yes, exactly this Rameses.

Our local town facebook page is constantly full of residents complaining about lack of local services from street sweepers to GPs. This in a safe Tory seat where time after time almost everyone votes Tory. I constantly provide details of underfunding of the council/NHS/social care until I'm blue in the face but people still don't put two and two together and STOP VOTING TORY!

Martin Lewis
@MartinSLewis
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20h
NEWS: It gets worse!
I've just got uodated price cap predictions from @CornwallInsight
.

The latest spike in year-ahead wholesale price means the OCT cap prediction is now UP 78% (so £3,500/yr on typical bills) & likely up again in Jan.

Its will be desperate. Intervention needed

They mentioned up to £500 on the news. Well it isn’t going to happen is it.

Are the companies which claim to be providing electricity partly or entirely from renewable sources raising their prices to the same extent?

If so, how could they possibly justify such profiteering?

Whitewavemark2

They mentioned up to £500 on the news. Well it isn’t going to happen is it.

They meant £500 for one months’ energy - will be the average bill for January alone !!

Pammie1

Whitewavemark2

They mentioned up to £500 on the news. Well it isn’t going to happen is it.

They meant £500 for one months’ energy - will be the average bill for January alone !!

Yes! how can that happen?

varian

Are the companies which claim to be providing electricity partly or entirely from renewable sources raising their prices to the same extent?

If so, how could they possibly justify such profiteering?

I think you’re talking about the supply companies. The profits just announced are the producers.

Whitewavemark2

Pammie1

Whitewavemark2

They mentioned up to £500 on the news. Well it isn’t going to happen is it.

They meant £500 for one months’ energy - will be the average bill for January alone !!

Yes! how can that happen?

For anyone on the cap it’s a distinct and utterly terrifying possibility. I read an article in The Times online this morning which carried news of the announcement and the arrogance of these companies is staggering - trying to justify over 30% of the increased revenue being paid in shareholder dividends. Bet they’re not keen on executive pay and bonuses being made public any time soon either.

With the interest rates paid by banks and building societies so pathetic you can understand people with a few thousand to invest looking elsewhere.

However the so caller investors in these organizations are unlikely to be small individual shareholders who own say 100 or 200 shares. More likely hedge funds and corrupt offshare millionares who dont pay their taxes because they can afford clever accountants to circomvent the system. In other words dyed in the wool Tories.

Thank goodness people are protected by the ECHR from going to prison if they can’t pay their bill.

There are thousands of small shareholders who have held them for years, and whose income has been decimated, literally, since Rishi Sunak's comment at the start of Covid that shareholders would suffer. There is yet no sign that things will return to pre Covid levels which gave a modest income. They have put their own money into the companies, unlike managers who invest others'.

the energy companies are not nationalised though ,they are private companies.Unsure what government can do to help other than what they have announced and to up that by providing more money to help households in the autumn budget?It is indeed frightening when energy bills can triple in a year.
there is a case for the utility companies to be run by government for the future.

According to Yahoo finance (giving a source as requested) 80.50% of the shares are owned by institutions and the general public owned 15.8% - back in 2020.

Centrica's origins go back to the 19th century. Various gas boards were created (same as for electricity) which were merged into the British Gas Corporation in 1973. In 1986 British Gas was sold off to the public, institutional and individuals alike. Most of the individuals sold their shares almost immediately and made good profits upon doing so.

There are thousands of small shareholders who have held them for years, and whose income has been decimated,

What they weren't told when they bought them, but which now seems to be standard practice when 'selling' investments (a legal requirement now?) is that 'The value of your shares can go up or down'. Obviously dividends can follow the same principle.

There is absolutely no safe place for your money to be invested apart from in an interest paying bank account, which is legally obliged to guarantee that you won't lose your principle, up to £85,000, in the event of any 'downs,' and, in government bonds or savings accounts which are absolutely guaranteed to be 'safe' as the government will not renege on its debts.

Expecting share values and dividends to remain constant, or continually rise is unrealistic. Investment is always a lottery. If the market bombs, you lose your money.

The UK based energy companies will pay tax on those profits and there will be a windfall tax unless the invest the excess in UK energy production.
Specifically fossil fuel development , there is a lot of gas and oil offshore that has not previously economical to exploit.

As for investors energy companies are doing well their shares are strong, which in turn helps our pension funds and investments.

Katie59

The UK based energy companies will pay tax on those profits and there will be a windfall tax unless the invest the excess in UK energy production.
Specifically fossil fuel development , there is a lot of gas and oil offshore that has not previously economical to exploit.

As for investors energy companies are doing well their shares are strong, which in turn helps our pension funds and investments.

Increases in pension funds and investments don't help everybody.

So ..... the Tories privatise the energy companies ..... these companies make huge profits ........ customer prices go up because shareholders have to have their money .... government steps in with money to people to pay their energy bills (basically giving us some of our own money back).

Where is the logic in this? There is none - it is purely based on government free market dogma.

An explanation from a man who used to buy energy for a local authority on J O'B this morning. Apparently the companies buy most of their energy in advance, months or years, paying low prices (ie futures). They always need to buy more which they do in real time and those prices are high. The price cap is based upon the prices for the last 6 months which is why the profits are so high.

I'm paraphrasing here but to me the explanation makes sense.

Dinahmo

An explanation from a man who used to buy energy for a local authority on J O'B this morning. Apparently the companies buy most of their energy in advance, months or years, paying low prices (ie futures). They always need to buy more which they do in real time and those prices are high. The price cap is based upon the prices for the last 6 months which is why the profits are so high.

I'm paraphrasing here but to me the explanation makes sense.

To expand on this post. An interpretation from twitter of the same expert's explanation

Tom56789@RedTomLoveApple

Energy expert calling J O'Brien LBC used to manage £m supply explains price increase. Large &/or state companies buy 95% energy years ahead eg now for 2025 at eg 3p. Remaining 5% bought on day spot price eg 28p. Cap based on spot price 100% thus huge profits big energy companies

It's the fact that only 5% is bought at spot prices that is driving the huge profits. The futures price for the remaining 95% is much cheaper.

This looks a bit immoral to me.