Saturday 15 March 2014

Saturday, March 15, 2014 Posted by Jake 1 comment Labels: , , , , , , , , ,
Posted by Jake on Saturday, March 15, 2014 with 1 comment | Labels: , , , , , , , , ,

The Financial Conduct Authority (FCA, previously the FSA) and OFGEM are the pantomime twins of regulation in Britain: Tweedle-dumb and Tweedle-dumber. 

The FCA waving its Vorple Sword is regarded by the banks as no more threatening than a cheer-leader wielding a furry pom-pom. The litany of bankers' interest rate rigging; pension annuity scams; insurance scams etc. goes on with no sign of any banker swapping his pure wool pinstripe suit for an acrylic stripey prison jersey.

At least the FCA can claim it is getting tricked by different scams all the time. OFGEM, evidently the dumber of the twins (it must be truly mortifying to be dumber than the FCA!), has managed to be deceived for years by one central fib: the soaring wholesale price of energy. 

For years energy companies have blamed consumer price hikes on World energy markets. Data published by OFGEM in October 2013 (why did it take them so long to do something so obvious?), and by NPower in January 2014 (why did they do it at all?) show wholesale prices simply have not been shooting up.

Combining this data from OFGEM and NPower, and retail prices from Consumer Futures reveal:
a) Using NPower's figures (in real terms) since 2007, customer bills have increased by 18% in 2013, and predict a 40% increase by 2020, while wholesale costs have actually fallen. In this NPower report instead of blaming wholesale prices NPower blames everything else except profits:

b) Using OFGEM's wholesale figures between 2011 and 2013, customer bills have increased by upto 28% while wholesale prices have only increased by 4%.

The Office of National Statistics reported a 29% increase in "excess winter deaths" during the winter of 2012-13. 2012 being, according to figures by OFGEM, a year of near record profits for the energy companies:

***Below: How in recent years wholesale prices were blamed for customer price hikes:

Price rises in the summer and autumn of 2011 were blamed by energy companies on volatile wholesale markets:
"UK wholesale gas prices have risen by around 30%, reflecting unrest in the Middle East and North Africa and increased global demand for gas, in part due to closures of nuclear plants in Japan," said British Gas
"With reduced quantities of North Sea gas, we are now forced to buy energy on the volatile global wholesale market. World events have pushed up prices and we believe this trend will continue....I know it hurts everyone when we put up prices and I wish we did not have to," said Npower.

OFGEM courageously caved in, stating in a 2011 report:
"Wholesale energy costs have continued to rise, particularly for gas, where for example the price of this winter's gas is around 40% higher than last winter's.
This increase has been driven by global rises in oil and gas prices. This has contributed significantly to recent increases in customers' bills."

In the Autumn of 2012 the same excuse was rolled out:
"Britain's North Sea gas supplies are running out and British Gas has to pay the going rate for gas in a competitive global marketplace," said Mr Bentley [MD of British Gas].
Speaking to the BBC, Mr Bentley pointed out that although wholesale prices are actually currently lower than a year ago, British Gas, like most utilities, fixes the price at which it buys gas well in advance, and these fixed prices had risen.

This drivel was lapped up wholesale by the Department of Energy and Climate Change (DECC), who stated in 2013:
"DECC suggested that the main drivers of recent increases are: wholesale energy costs, estimated to have contributed at least 60% of the increase in household energy bills between 2010-2012."

1 comment:

  1. This is proof that the power suppliers have been ripping us off for years but who will do anything about it?


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