Utility companies should have profit caps. Or is that a stupid idea ? Discuss

[hub2dee]

I am not pro nationalisation; have always thought the free market is the ideal way to balance price / demand etc. But the price hikes in electricty / gas (only partly due to wholesale price hikes IMHO), and the water utiltiy fiasco makes me wonder whether these companies (which make very healthy profits - I think Centrica was £1.5 bn last year) should have profit caps in an attempt to increase affordability / limit cost...

Or does the system just need an injection of competition ?

Maybe this upwards price pressure is the vehicle that makes greener energy schemes / owner-generated electricty etc. more viable IYSWIM ?

Would be interested to hear any comments.

oooer, I'm not sure my melted nappy brain is really up to discussing this one. BUT I think that maybe energy companies should be forced to spend a (sizeable) proportion of their profits on research into renewable energy, making their own green footprint less harmful to the environment etc. etc. etc. Companies like BP will claim to be already doing this, in fact this is how they justify their outrageous profits.

I'm amazed by the recent hikes in energy prices in the UK - it's all happened since I left, over 2 years ago. But at the same time consumers have to also learn to accept that this is the future - using the earth's resources costs money. When I lived in London I paid about 16 quid a month for water, here in Germany I pay 100€ per month. For heating/electricity I pay 250€.

Sorry, rather simplistic, but that's all my brain can cope with these days.

it did strike me as odd that Thames Water have no competition. What motivation do they have? None, unfortunately. Providing a decent public service is no motivation at all apparently. Don't quite know how you introduce competition into the water market though.

Re nationalise 'em, I say

I always thought the water one a bit odd too - we don't have a choice about who supplies us do we, so what's the point? And the bloody railways - big disaster that one.

Prices are certainly making me think more 'green'.

Well, there is only one conduit for gas, and one for electricity coming into my house, and there's competition there.... surely the same has got to be possible re: water ?

franke's idea is interesting... like the oil companies getting forced to investigate / develop green fuels / alternatives... but there's a conflict of interest for sure !

I imagine the older people will be completely stunned by the price of energy this winter in particular...

water is fundamentally different to other utilities though because of the issue of leaks. Presumably, the leccy and gas companies simply buy the amount of wholesale leccy and gas that they sell and the market evens itself out (i.e. you don't actually get brand x leccy when you switch from brand y, but company x fills in some forms, collects your money and pays more to someone somewehere). That doesn't work with water because of the infrastrcuture.

and since water is absolutely crucial not only to people, but to everything, I think it really should be public. what real motivation do shareholders have to minimise usage - thereby minimising bills? the more water we waste, the more likely it is that farmers will have to drain the rivers etc and we're talking all round catastrophe. competition will do nothing to change that.

well i think it was a disaster privatising it [and the railways] in the first place - but now it is done, can't see it going back.

but aren't the leaks just a 'feature' of a crap network ?

ie. Gas and electricity companies also must maintain their networks too...

The leakage is down to lack of investment in repair / lining and nothing else, surely ?

I agree we're stuffed without water, but things certainly grind to a halt without electricity too. Not in the same way, I agree...

We're surrounded by water and despite the 'drier than Rome' type b0llocks, there's got to be enough water available to keep us well-supplied...

But it's not a conflict of interest if, in the future, the main competition is coming from greener options.

but when gas pipes leak they have to be fixed, end of story. when water pipes leak, they can just leak away - doesn't really make any difference to the company because they can just get a drought order when it runs out.

I really think water in particular should be re-nationalised. I was going to say that leccy can stay private but actually since it's in society's interests for everyone to use less, that's probably better off national too. In spain leccy is private but there is no competition so it's way more expensive than in the uk. and guess what? everyone uses less. competition doesn't solve all problems.

seems to me that the problem is that these companies aren't held to account. they just get away with providing poor service and high prices. who's fighting our corner? would it really be better if it were re-nationalised? i think it would still be inefficient and costly. look at the nhs, i could see the government pouring money into 'management' and no real improvement on the ground. i don't think the public sector is the answer, they're not really held to account either. i think these companies should have some sort of competition and be totally accountable to the public.