The larger suppliers typically forward-buy their energy so are insulated to an extent, though not completely.
But this is also one of the reasons they’re usually more expensive.
When the going is good it is usually cheaper buy the energy at the spot price, so smaller providers do this and offer cheaper tariffs. That strategy doesn’t work when the going is not so good, as you’ve agreed to sell energy for less than you can buy it.
The Ofgem price cap will also be having an impact - at the moment it is lower than the wholesale cost of energy. Usually, as people come to the end of fixed deals they go on to new fixed deals which, if you’re running your business correctly will be at rates that are profitable for you, or if they don’t the standard variable is usually more expensive anyway - right now the standard variable tariffs that are capped and unprofitable are the cheapest, so people will be sticking to those after their fixed deals end.
Well if Bulb are in the trouble they seem to be in as the 6th largest energy provider in the UK, then I definitely don’t hold out much hope for the remainder of the very small players. So as little at 10 energy companies remaining, doesn’t seem at all far fetched. Clearly I hope Bulb pull through this, but part of me thinks they’ll fold before a Government bail out. Let’s see what the next 48 hours brings because I think we’re talking about hours rather than a week. I hope I’m wrong for their employees and customer sakes.
I think bulb are in this predicament due to both the combination of their approach to fair pricing and the price cap.
Unlike the larger ones, they can’t build up that buffer for situations like this. Maybe they’ll need to better evaluate their approach going forward and act pre-emptively with raising prices, and be slower to decrease them again. Just so they can retain a safety net, an emergency fund.
The idea of a price cap is nice. Stops energy companies blatantly robbing people. But in a world where the wholesale costs are higher than the cap, bulb are now operating at a loss on a per customer basis.
If this goes on too long, don’t rule out the security of the big players either. Whilst their parents will have fingers in pies elsewhere, if their energy providing subsidiaries hit trouble, they’ll want government bailouts too.
I’m not sure how others pay for their energy use, but for me with British Gas, I’m on monthly billing variable direct debit on a very competitive fixed rate tariff until June 2022, so I only pay for the energy I’m using as reported by my smart meters. Previously when I was with British Gas at my former address, they set my monthly D/D payments and increased them whenever they felt like it, even though my actual energy useage was far below what their preposterous monthly direct debits were. The same was with Utility Point and So Energy when I was with them. I’m assuming this was done so they could buy and pay for energy in advance.
Even though we are talking about this on this forum, there will be plenty of householders who won’t be taking much notice of what’s going on. I know many people who quite literally haven’t got a clue about what’s going on in the world, many don’t even look or read the news on current events. They are the people that get the bill shocks because quite literally, they isolate themselves from the important stuff in life.
Your monthly income is probably fixed, yet your bills could be all over the place, especially the variance between summer bills and winter ones.
Personally, I’d probably set myself an annual budget, divide it by 12, and then put it aside and Pay from Pot, so to speak, but this of course depends on when you start that budget plan.
You might be paying for exactly the number of kWh’s you’re using, but it’s how they price how much they charge per kWh that allows them to buy their energy in advance. For instance, ideally, you’re a lot paying more per kWh than they pay per kWh to buy the energy you will use.
Not the illogical price bumps prior to smart meters. You’re not actually paying more when they bump your direct debit. They just think you’re going to use more than your direct debit will cover. Because it’s all estimated until they get the meter readings, at which point, you’re either in credit, or debt.
I always got annoyed with energy companies that tried to justify putting up my direct debit in summer, to cover the increase in winter, when in reality I rarely use heating and my bills didn’t tend to vary much month by month. They also then usually put direct debits up in winter hoping you won’t notice.
I’m sorry, I don’t understand? It’s only me and the Wife and our monthly energy useage is pretty much exactly the same every month. As with all of our bills, we just pay them when they arrive, well obviously we have some on D/D, mortgage, tv licence, level term life assurances and such, but everything else, we just pay it when the bill hits the mat, or as in most cases, when the email drops. We only get a water bill twice a year, we have no idea how much it costs until the bill arrives. I just check it against their reading and if it matches, I pay it. All of our monthly bills go out on the first working day of the month anyway, so that’s how we budget, no need for separate pots and such like, that’s why we have a joint Nationwide account, specifically to cover all of our household bills and nothing else.
Of course with Smart meters, there’s absolutely no estimating, it’s all real time. We’re just a bit lucky at the moment I think because we were put on an ‘exclusive homemove tariff’. The price per kWh and standing charge are below what many are paying at the moment.
Ah of course, that would make sense. Of course it turns out to be the governments fault and no doubt there will be a tax payer cost to fix it.
Makes sense for bulb, I don’t think the offer fixed tariffs, they still only do a variable rate don’t they?
Over the past year or so bulb have seemingly quite frequently increased peoples direct debits when there was no need to do so leaving people with hundreds or more in credit, I think they’ve been trying to bump their cash balance for a while
Hence why I get so bloody annoyed when I read people blubbing that they’ve built up a £600 credit and then Wham! their energy company goes bust and it takes months to get their money back. I’d be yelling at being £100 in credit and if I didn’t get it back pronto, I’d be cancelling my direct debit.
Every energy company does that with credit meters. It’s not to bolster their cash balance but to make sure they have enough to cover the customer’s usage, which is entirely algorithmically predicted and recalculated annually until they get the meter readings. The customer doesn’t have to accept the increases either, so long as they don’t end up in debt.
If they take too much and you’re in credit, they’ll refund you.
Smart meters fix this. To some degree. There’s still variations month to month that your annual cost, and thus monthly average will fluctuate year over year. But the scary direct debit hikes should cease unless in response to prices going up, or your usage increasing dramatically more than in the past.
At least when you do end up In credit with Bulb, the refund is easy to request, and fast to arrive, electronically. Unlike British Gas who have been sending me a cheque for close to 4 years now.
I wonder if that would be applicable as of now, today
I’d be interested to know exactly how much it is they owe you if you’re willing to divulge?
When I was last with British Gas at my former home before I swapped to So Energy, I worked it out, that I would be in credit with British Gas once my final bill was issued, so I cancelled my Direct Debit with them whilst the swap was taking place. The end result was, I owed them money, albeit just a few quid, but they certainly let me know about it! I paid it as soon as the final bill hit me, which funnily enough was issued very quickly. I’d do exactly the same again. I did it with So Energy when I told them I would be moving on X date. I cancelled my direct debit before the move and the bill was issued and once again, I just owed a few quid which I paid. I’ve read far too many stories of people struggling to get their own money back for my liking.
£12.50 for gas, £30 for electricity. Gave up chasing them for it though. The cheques are never going to arrive.
At the time I left them, I was under the impression my account was settled, nothing owed. Then out of the blue I got a letter several years later to say they made an error and actually owed me money. Got in touch, was told a cheque would be sent within the next 6 weeks but could take up to 3 months. Chased them the first few times they never arrived, said they’d send another. The others didn’t arrive either and I gave up.
So if you have the proof they owe you money, why not just take it to the ombudsman? unless of course it’s gone well over time for claiming back? I just wouldn’t let it drop if it were me, but that’s me. It does sound though that by you mentioning ‘several years later’, you may well have missed the boat.
If it makes you feel better, my next variable direct debit for gas useage is just £0.12, yup 12 whole pence I had an issue with my Smart meter not being connected to the National database and I was overcharged on an estimated useage because my meter wasn’t reporting correctly. It’s been sorted now. But in any case, without any heating on, our monthly bill for gas is working out at just under £15 and that’s just for showering and cooking.
In an odd way, I am actually looking foward to seeing how much heating is going to cost us this forthcoming winter. I know, because I’m originally from the South West anyway, that the winters are no where near as cold where we are now compared to where we were, so I’m hoping our move will knock at least a decent amount off our heating bill. Ordinarily, we wouldn’t even consider putting our heating on until the beginning of November, and it usually gets switched off end of March begining of April, but that was where we were living before.
I don’t fully remember when I was last was British Gas. I think perhaps 2012?
It was 2017 when they got in touch with me to tell me they owed me money.
I never really pursued it after the first few emails to say the cheque never arrived. Wasn’t worth the hassle for £42. And it was so long ago, wasn’t worth doing it out of principle either.
Yes, looks like it’s far too long down the road now anyway for trying any sort of reclaim.
I know I’ve mentioned it before, but I’m so glad I have smart meters fitted. I was glad to have them fitted at my former home. I can at least see on a daily basis via my BG App just how much my energy is costing me without having to constantly resort to mathematics. I couldn’t ever go back to 20th Century metering.
and no doubt there will be a tax payer cost to fix it.
I had an issue with my Smart meter not being connected to the National database and I was overcharged on an estimated useage because my meter wasn’t reporting correctly. It’s been sorted now. But in any case, without any heating on, our monthly bill for gas is working out at just under £15 and that’s just for showering and cooking.