Home Business Scottish Power Insists On Less Of This Pesky Competition Stuff

Scottish Power Insists On Less Of This Pesky Competition Stuff

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Scottish Power is, however nicely it is trying to dress it up, insisting that those pesky competitors be forced to go away. Because, obviously, a large incumbent supplier in any market would much prefer there to be less competition.

No, this is what they’re doing:

Energy supplier Scottish Power has hit out at “unsustainable” pricing among smaller rivals and called on regulators to protect payments made by customers in advance.

More than 20 small to mid-sized energy companies have collapsed since September 2018, with several owing millions of pounds to customers for energy not yet delivered, as well as other industry payments.

This is, of course, all dressed up in polite language. Customers who have prepaid need to be protected, Oh Yes. Which, of course they are.

But if those pesky little upstarts are prevented from entering the market then Scottish Power regains its, umm, power over prices. Because that’s what happens in the absence of the irruption of competition.

Most such upstarts – especially into a mature market – fail. In which case their underpricing is a direct transfer of cash from the capitalist funders of that business to the customers of it. Transfers from richer peeps to poorer is not something we are against especially if it’s all voluntary.

Some, some very few, of such upstarts will succeed and this is what puts the downward pressure on the prices that the incumbents can charge. Which is, of course, why Scottish Power is against all this.

Strip this of the language being used and peer down to the message being conveyed. Stop these bastards from interrupting our ability to screw our customers. And, of course, now that we understand the message we can assemble the correct response. Something that will undoubtedly contain an Anglo Saxon Wave or three – but then why wouldn’t we be saying that to the demented porridge wogs anyway?

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6 COMMENTS

  1. Isn’t there a failure in logic here? The capitalists aren’t losing money, they take it from the customers, pocket it then go bust before paying their bills. That is then picked up by the Ofgem funded safety net (Supplier of Last Resort) which we all fund from higher electricity prices.

    Pretty sure this has been pointed out before Tim.

  2. @ MrKing
    If a company goes bust then the shareholders lose all the money invested in buying the shares.
    Usually some creditors also lose some money but the one invariable result is the one above.

    • The question is who is losing the money. You could (as you did) extend the definition of capitalists to cover the creditors but that wasn’t what might be read from Tim’s piece – “In which case their underpricing is a direct transfer of cash from the capitalist funders of THAT business to the customers of it.” (capitalisation my own).

      Let’s take an example – GB Energy which was founded in 2013 and didn’t do anything of note until 2015 (dormant company returns). It’s share capital consisted of 1,000 shares of £1 each. Now you could say that was the capital involved but it probably doesn’t cover everything invested so maybe we use the Fixed Assets from the 2015 filing (£273k).

      Handily they made payments of £2.55M to related companies in the same year. They then went bust in 2016 owning almost £40M from the auditors report.

      The SoLR was CEL who handily bought £20M of customer debts and income for £1.5M from the liquidators. They then went on to claim another £14.04M additional payment of which £10.9M was to recover 70% of the customer credit balances (yes, the same one’s they bought for £1.5M). Ofgem made note that the liquidation process wasn’t complete at the time they approved this however.

      So, potentially the founders could have got away with taking > £2M from the business – not a loss for them.

      The creditors took more of a spanking, but even there a significant amount of the costs were socialised across electricity customers. What should have been a £40M loss of capitalists money was more like £26M after Ofgem approved the additional payments which all electricity consumers paid for.

      Perhaps it’s the best we can manage if we want to ensure continuity of supply for customers of failed suppliers but government interference seldom leads to the best outcomes as Tim is always pointing out.

      • Conducting a business to the detriment of its creditors is a criminal offence – if GB Energy directors took £2m out of a company that failed after a year’s trading then they should be in Pentonville.

  3. Less of the demented porridge wogs here! The last time I looked, SP was wholly owned by Iberdrola, a Spanish company. Maybe it’s an EU ploy to get back at us for Brexit. Of course, that’s a bit ironic given that Scots voted to Remain, as we are continually told by some weirdo in Holyrood.

  4. One does wonder if all this power is supposed to come from windmills and solar panels.

    Normally, at least in Oz, the power company is compelled to buy the stuff, but the generators of this rubbish have no responsibility to pay for the grid or backup power. Thus the fossil fuel generators, out of a diminishing amount of cheaper power sold, have to meet all these costs.

    Eventually the system will fail. Not sure when though.

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