If I see Sid..

[stowie]

I don't see how they can be regarded as "distributors" they do not own/operate the grid, or the gas pipelines, they are more akin to the Mobile Phone operators who piggy back off the main Networks (eg Virgin, Tesco, Smarty, ASDA, etc etc) IMHO.

I guess it depends upon your definition. In my work, a distributor can have a contract with a customer where the manufacturer actually ships directly (drop ship) to the customer and the distributor is just in charge of order management, extending credit terms, invoicing etc. Done when margins are very thin and the supply chain is simple.

With energy suppliers they control the customer contract so it feels like distribution although they don't own any of the infrastructure to deliver the product. This isn't too unusual even with physical goods. A distributor might only lease the warehousing / offices and the goods are shipped by a third party shipping company.

 

[BoldonLad]

I suppose there is no obligation for other suppliers to take on customers at the old contract, or indeed at all.

In the normal scheme of things, companies would like new customers so it isn't a problem until now. I expect also financially struggling energy companies would typically get bought (or at least their existing customer contracts bought) by another to boost their customer base. This of course assumes anyone wants them....

I am guessing the new fixed rate tariffs - which would seem to be the only ones available to customers of bankrupt suppliers - are considerably more money and currently on pretty poor rates which locks these customers into a poor deal for a significant period of time.

I wonder what would happen if the customer of the defunct company simply did nothing. No-one can force them onto a fixed contract but neither will suppliers take them on the standard variable tariff. I worked with someone who - by a million to one co-incidence - got all the suppliers telling him that he had no contract with them but he was still receiving gas and electricity. He got a solicitor to write them all letters saying they had 28 days to respond to clarify and resolve or all future consumption would be treated as gratis. He never got a response. I worked with him 15 years ago and at that time he had had free energy for over 2 years! For all I know he still is getting free energy...

This debacle might make it into text books about the law of unintended consequences with energy caps etc.

the thing is, if your energy supplier goes bust the gas and electricity to your home does not stop flowing. Ofgem arranged for another company to take you on. I originally thought that you transfered on your original terms. Apparently, this is not so. You are transfered at the capped standard variable rate, which is capped. At present, this not actually a bad deal, since it is (apparently) better than many fixed deals. You are not “locked in” and can switch to a fixed deal (if you wish, and, if one is available). Any credit you have with the bust supplier is guaranteed and switched to the new supplier. In short, the advice is “don’t panic, have a meter reading, and, sit tight”.

 

[BoldonLad]

I guess it depends upon your definition. In my work, a distributor can have a contract with a customer where the manufacturer actually ships directly (drop ship) to the customer and the distributor is just in charge of order management, extending credit terms, invoicing etc. Done when margins are very thin and the supply chain is simple.

With energy suppliers they control the customer contract so it feels like distribution although they don't own any of the infrastructure to deliver the product. This isn't too unusual even with physical goods. A distributor might only lease the warehousing / offices and the goods are shipped by a third party shipping company.

Sorry, I am growing bored with this now.

Put simplistically, I was saying the "Energy Companies" which are going bust are not the "manufacturers" of energy (yes, I know gas is pumped out of the ground, rather than "manufactured", but, lets not split hairs over my poor command of English).

I do recognise that in today's complex world, manufacturing no longer means starting with the raw material and end up with a product, thus, most car companies, for example, are assembly outfits, rather than manufacturing.

Can we just leave it at that?.... well, I am going to anyway.

 

[Bromptonaut]

There is a complex chain of contracts between the folks getting the gas out of the well and it arriving at your cooker or boiler.

The company you pay your bills to is effectively a retailer.

 

[Archie_tect]

As gas and oil supplies run down both them and the electricity generated by gas and oil fired power stations will be uneconomic to process... we should have maintained the development of alternatives but you couldn't get short-term politicians to listen and so here we are. Thatcher's and subsequent Governments' [on both sides] furtive drive towards privatisation has sold off the nation's assets. They were told but chose not to listen, and the electorate chose not to think.

 

[Rusty Nails]

There is a complex chain of contracts between the folks getting the gas out of the well and it arriving at your cooker or boiler.

The company you pay your bills to is effectively a retailer.

An unusual retailer that never actually has its hands on the product, or any way of storing it.

IMO they are more like brokers who buy and sell the rights to use the gas.

 

[stowie]

Has a plan materialised for managing customers of failing energy suppliers ?

I have been too distracted by the UK turning into a Mad Max sequel at the petrol pumps to notice whether things have progressed in the other clusterfarks.

 

[Fab Foodie]

Has a plan materialised for managing customers of failing energy suppliers ?

I have been too distracted by the UK turning into a Mad Max sequel at the petrol pumps to notice whether things have progressed in the other clusterfarks.

I’m starting to suffer crisis fatigue….

 

[BoldonLad]

Has a plan materialised for managing customers of failing energy suppliers ?

I have been too distracted by the UK turning into a Mad Max sequel at the petrol pumps to notice whether things have progressed in the other clusterfarks.

Elsewhere, on the main Cyclechat Site, there are at least a couple of posters whose Energy Provider has gone bust, and, they have been transferred to an alternative Supplier, by Ofgem, exactly as has always happened. Energy Suppliers have gone belly-up before, I believe, for example there was a costly (to local Council Tax Payers) example in Nottingham (?).

 

[mjr]

Elsewhere, on the main Cyclechat Site, there are at least a couple of posters whose Energy Provider has gone bust, and, they have been transferred to an alternative Supplier, by Ofgem, exactly as has always happened. Energy Suppliers have gone belly-up before, I believe, for example there was a costly (to local Council Tax Payers) example in Nottingham (?).

Not exactly as always happened. Ofgem have had to relax the requirements for taking over customers and there's talk of government having to pay surviving suppliers to take them.

When the Nottingham council supplier was collapsed (for not paying Ofgem sums due), British Gas actually bought the customer base. The council still made something like £40m loss on the five years of operation.

 

[BoldonLad]

Not exactly as always happened. Ofgem have had to relax the requirements for taking over customers and there's talk of government having to pay surviving suppliers to take them.

When the Nottingham council supplier was collapsed (for not paying Ofgem sums due), British Gas actually bought the customer base. The council still made something like £40m loss on the five years of operation.

Like I said, expensive for the Council Taxpayers, unless the Councillors paid the £40million out of their own pocket (joke).

 

[mjr]

Like I said, expensive for the Council Taxpayers, unless the Councillors paid the £40million out of their own pocket (joke).

I didn't disagree.

It's worth keeping in context, though. While £40m is expensive, that's for 5 years of trading (for the benefit of their taxpayers, not for profit), so £8m per year and the city council budget is about £250m/year, so it shouldn't be catastrophic. For comparison, their central government funding has been cut by £18m/year and Covid has increased costs by about £40m/year for the next two.

 

[stowie]

As I understand OFGEM have raised the cap by 12% to prevent any further energy supplier collapses. With another rise very likely in the Spring.

Is this the price paid (by us) for the big energy companies to take the customers of the failed suppliers?

 

[BoldonLad]

As I understand OFGEM have raised the cap by 12% to prevent any further energy supplier collapses. With another rise very likely in the Spring.

Is this the price paid (by us) for the big energy companies to take the customers of the failed suppliers?

Well, it will be part of the price I am sure. Who did you think was going to pay for it?

 

[stowie]

Well, it will be part of the price I am sure. Who did you think was going to pay for it?

Well us of course, either way.

I was wondering if the government were going to get consumers to pay direct by raising the cap (wildly unpopular) or indirectly get us to pay by chucking a bunch of money at some large suppliers (also wildly unpopular).

Looks like they went with the former.

In competely unrelated news, British Gas had doubled profits in the first 6 months of 2021 compared with the first 6 months of 2020.