Why do we have to pay, not shareholders? Or senior management?

[Ariela]

I am fuming that normal people, who have never been in debt to their energy company, more likely bank rolled them for years with a full 3 months payments up front, are now having to pay extra to cover the losses sustained by the energy companies for unsecured debts the COMPANY incurred or unsecured debts the COMPANY acquired through taking on collapsed energy suppliers.

We, and I'm sure many others, stupidly stuck loyally with their energy provider on the basis if a deal sounds too good to be true it won't last then your rate will go up above every else's and you'll be unable to change. Only to find that wasn't the case. So why should we be penalised? We paid a fair price for our energy, we've never defaulted.

Should not these losses be the responsibility of the senior management and ultimately the shareholders? The management should have been on top of debtors by being quicker to intervene compassionately rather than aggressively (I'm talking the widely reported breaking in and putting in meters for PAYG), and be more quickly able to offer social tariffs, payment plans, offer discounts or even free insulation etc and the like - after all they have access to many months of funds up front from normal people paying by direct debit and NOT being allowed to reduce the 'suggested' (insisted) amount paid even though electricity use is coming down month by month as we get to lighter days and knowing one day this rain will stop and we have solar (looking at you OVO, you're only doing this because I got the amount you have in hand down to the upcoming monthly bill).

Why should Mr & Mrs average have to now pay MORE for their energy to cover the screw-ups of the energy bosses?

Everybody paid very low energy prices, because new companies came into the market and bought cheap energy on a day-by-day basis, rather than forecasting and hedging future volumes properly.

Nobody complained about those very low prices, and the big energy companies lost billions of pounds because they ran their businesses properly, and couldn’t compete with the little cowboys. Ofgem encouraged the little cowboys to take on customers. The little cowboys didn’t care about going bust (often taking customers advanced money with them) because they knew Ofgem had a mechanism to transfer customers and cover the costs.

Then global energy prices shot up. All those little cowboy companies were caught swimming naked when the tide went out. They went bust because they had promised Mr Bloggs they could supply him at 12p a unit, and it cost them £3 to buy. The big companies had hedged their volumes (there’s a cost to this), they were safe.

Ofgem forced those big companies to take on people from bust suppliers. The big companies weren’t expecting them, so had to go out and buy extra £3 a unit energy to supply them. They could claim that money back from Ofgem and rightly so, it wasn’t their fault.

And Ofgem claims that money back from consumers everywhere, most of whom had originally benefitted from prices that were much lower than they really should have been.

The little cowboys don’t exist any more so they won’t pay, and global energy prices are much higher than they used to be, so this, and the cost of failed suppliers (effectively representing the prices that were unsustainably low three years ago) is what you are paying for now.

Even now, big suppliers over the last 5 years have made average margins of about 2.2%. So for every £102 of energy they supply, it costs them £100.

The people you should be most annoyed with are the little suppliers, and Ofgem/the Government, for allowing it to happen.

Meters and PAYG is a separate topic, but if people are allowed to default on their debt, that will also be spread across the population as a whole, so you will be paying the bill of your defaulting neighbour.