Obscene Energy Companies' Profits

I cannot believe the people who are still lauding Johnson and the present government
I went out with a group of school friends last week I have never discussed politics so no idea what their beliefs are but someone praised Johnson and everyone around the table was saying the same oh he wasn’t the bad chap they make out he got us Brexit he got us through the pandemic
Even my best friend who I love dearly was whilst saying nothing nodding in agreement
These are all well educated people
I felt sick

Thanks Maizie

It's very immoral and certainly shouldn't be used by companies providing one of life's basic necessities.

I had read the term Warm Bank I think it was last week, and dismissed it as a joke.

Not so. James O’Brian had various callers citing Bristol, Plymouth and other in preparation for this coming winter.

It’s like living in a parallel universe.

I doubt that most energy is bought 95% in advance, in normal times the margin between high and low is very small so it’s not really comparable. It’s the uncertainty that drives prices up, we don’t know what the supply is going to be next year, even when Ukraine is settled energy bought forward will keep prices high.

All companies have different strategies, 18 months ago those buying spot were the cheapest, that changed 12 months ago. OH got a new 3 yr business contract at 18p/kw a gift at todays prices, when it returns to normal spot prices will likely be cheapest again, new companies will spring up to take advantage of that.

Katie59

I doubt that most energy is bought 95% in advance, in normal times the margin between high and low is very small so it’s not really comparable. It’s the uncertainty that drives prices up, we don’t know what the supply is going to be next year, even when Ukraine is settled energy bought forward will keep prices high.

All companies have different strategies, 18 months ago those buying spot were the cheapest, that changed 12 months ago. OH got a new 3 yr business contract at 18p/kw a gift at todays prices, when it returns to normal spot prices will likely be cheapest again, new companies will spring up to take advantage of that.

Are you speaking as an expert on energy company dealings, Katie59.

Did you work in the industry?

Why would you think that someone who was an electricity supply manager is not telling the truth?

How is your OH's experience relevant?

Genuine questions.

Because if it was true the high prices we are seeing today would be very damaging to established energy companies, enabling newcomers to undercut them when prices do fall. Forward trading in a free market is complex, we saw a lot of small companies go out of business because they could not buy energy to fulfil contracts, they certainly were not buying much forward.

The energy producers like EDF can price their own energy at a lower price to gain market share when there is a shortage, when there is a shortage they loose market share to spot traders with short term contracts..

Katie59

Because if it was true the high prices we are seeing today would be very damaging to established energy companies, enabling newcomers to undercut them when prices do fall. Forward trading in a free market is complex, we saw a lot of small companies go out of business because they could not buy energy to fulfil contracts, they certainly were not buying much forward.

The energy producers like EDF can price their own energy at a lower price to gain market share when there is a shortage, when there is a shortage they loose market share to spot traders with short term contracts..

Do you not like answering questions?

So-called green energy (so-called because when you look into it, it isn't "green" at all) cannot be made without it costing a hell of a lot. So anyone who approves of net zero policies is being unrealistic if they object to high energy prices.

I am reading – and highly recommend – the philosopher, Alex Epstein's new book, Fossil Future. Philosophically it is a fantastic and, I think, ground-breaking book. Check it out.

Shouldn't the title be 'Energy companies obscene profits'? Word order is important. The question of the profits is a complex one. I favour the windfall tax but I'm aware that our pension funds benefit from the shareholder dividends.

It seems to me that there's some misunderstanding about forward trading. Forwards have their own dynamics and are no guarantee of future prices. They are primarily a hedging tool, which buyers usually use to balance out surges in spot prices. Futures aren't actually delivered. Anybody who doesn't operate in futures trading (and most purchasers don't) is going to be hit by high spot prices.

Baggs

So-called green energy (so-called because when you look into it, it isn't "green" at all) cannot be made without it costing a hell of a lot. So anyone who approves of net zero policies is being unrealistic if they object to high energy prices.

I am reading – and highly recommend – the philosopher, Alex Epstein's new book, Fossil Future. Philosophically it is a fantastic and, I think, ground-breaking book. Check it out.

I was admonished yesterday, possibly correctly, for being "pugnacious". But when I see absolute unfounded rubbish being posted, I can't help myself.

I haven't read Epstein's book but I am 99% certain it is bull****. It won't be ground breaking, it will be ... well ... basically ... wrong, I suppose.

Green energy is not inherently more expensive to produce than carbon-rich energy and anybody who tells you otherwise is either deluded, mistaken or taking you for a ride.

Posters can dismiss this as an opinion if they like, but its an opinion based on 40 years of knowledge of alternative energy sources and a realisation that a person who used to be part of the Ayn Rand Institute and thinks that African countries are inferior to the West, probably isn't someone who's got a lot going on upstairs.

I just read the synopsis of "Fossil Future" on Amazon.

Seems I was right about the bull****.

Years and years ago, as an employee of British Gas, I was gifted a few shares, along with all other employees. There weren't many and I've held on to them, always reinvesting the dividends in shares. For 2020 and 2021 there have been no dividends paid. They are now paying a dividend for 2022 of 1p per share, so in November I'll be receiving £11.13. I'll hardly be rubbing my hands together with glee as per the OP's comments.

twinnytwin

Years and years ago, as an employee of British Gas, I was gifted a few shares, along with all other employees. There weren't many and I've held on to them, always reinvesting the dividends in shares. For 2020 and 2021 there have been no dividends paid. They are now paying a dividend for 2022 of 1p per share, so in November I'll be receiving £11.13. I'll hardly be rubbing my hands together with glee as per the OP's comments.

Surely it's Centrica that's making the profits and not British Gas
(the energy provider) which is a subsidiary of Centrica but I expect you know that.

growstuff

It seems to me that there's some misunderstanding about forward trading. Forwards have their own dynamics and are no guarantee of future prices. They are primarily a hedging tool, which buyers usually use to balance out surges in spot prices. Futures aren't actually delivered. Anybody who doesn't operate in futures trading (and most purchasers don't) is going to be hit by high spot prices.

Or indeed low spot prices because you can buy or sell in advance, also you can buy or sell months or years in advance. Futures are a mixture of hedging and speculating (gambling), speculators are needed but can make a market volatile.

I think we should not have utilities in private hands at all.
weownit.org.uk/public-ownership/energy

And here's a really good article which some of you may be interested in:
think.ing.com/articles/energy-price-caps-could-be-game-changers-for-european-utilities

Katie59

growstuff

It seems to me that there's some misunderstanding about forward trading. Forwards have their own dynamics and are no guarantee of future prices. They are primarily a hedging tool, which buyers usually use to balance out surges in spot prices. Futures aren't actually delivered. Anybody who doesn't operate in futures trading (and most purchasers don't) is going to be hit by high spot prices.

Or indeed low spot prices because you can buy or sell in advance, also you can buy or sell months or years in advance. Futures are a mixture of hedging and speculating (gambling), speculators are needed but can make a market volatile.

Actual (spot) and futures prices act in parallel. If a purchaser buys futures which then go up in value, they can make a profit, which they can then use to pay more for their actuals and vice versa. It stabilises the price they pay.

It’s not just energy companies raking it in, water companies are being reported as making vast profits for shareholders and paying executives eye watering salaries and bonuses whilst failing to invest in preventing/prompt resolution of water leaks, storage and movement of water around the country. One water boss is critical of domestic paddling pools whilst having a vast swimming pool at his property

When some of the utility companies were privatised my HD dealt with some of their tax affairs. The managers and directors had their salaries with at least a 0 added.( eg £80 became £800 ) but the workers only had very small pay rises. So what has changed?

Its obscene the large profits the Gas companies are making. For a lot of people the £125 per week in January will take up most of their income. We are heading back to Victorian times when most of people's wages were taken by the Landlord leaving very little to buy food or fuel.

When all the utilities were being sold off under Thatcher, many were rubbing their hands with glee at the thought that they could buy shares and make a killing! So too the hope that competition in the marketplace would bring and keep prices down! Such innocent hopes for a future that has turned out a lot more complicated than anyone thought! Not looking too good at the moment, I must admit.

Most of the shareholders of large companies are investment bodies like pension funds rather than individuals with gold plated Rolls Royces. My DH was a pension trustee and said most people don't know it but the money goes to ordinary individuals in the long run through pension providers paying out to their members.

Additionally, much profit is needed for research, exploration and development. We urgently need power and fuel companies to be exploring new gas fields and technologies to replace power sources coming offline and that is exactly what companies do with much of their money.

Furthermore, wealthy individuals spend their (taxed) income which goes into the economy, funds jobs and is taxed again through VAT.

Do we want to live in Marxist style authoritarian regimes where we are assigned a bleak government flat where it chooses to place us and have to wait ten years for a clapped out car? The price of not living like slaves is that successful companies share their wealth.

Whitewavemark2

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.

??? #meAswell
I woke right up when I heard Liz (gentlemen's appendage grabber) Truss vocalise a revolting wish to return to Thatcherite (read Stalinist) type rule. Where the weak are cast aside, greed is good and lunch is for wimps, basically de-unionising the workforce and reducing working folks rights to a distant memory of being able to stand up to bullying bosses........ Gawd help us all! I fell foul of the 2year dismissal ruling 3times!!! 6 years of my working life wsted on companies who just used me then sacked me- legally a day before my 2year anniversaries at their poxy firms!! And they wonder why workers aren't loyal?!? When are we gonna wakey wakey and realise that conservatives are only interested in.... conservatives. End of

Margharet Thatcher's key policy of privitisation has done a lot of damage. Just look at the energy companies, the water companies and the sad state of public transport.

Her signature "right to buy" policy , allowing council tenants to buy at a huge discount and forbiding the councils from spending the revenue on building more new homes with the money has contributed to rocketing house prices and homelessness.

And yet we still today have would be Tory leaders boasting of being Thatcherites.

In the same way they still claim to be better brexiters than each other as if that was something to boast about when the damaging effects of brexit are there for all to see.

They seem incapable of being honest about the effect of their policies.