I’ve repeatedly said I don’t mind the companies profit situation, but that they have roughly increased charges on customers in line with wholesale gas price rises (you talk about us cherry-picking a time period, yet both you and John use the very short period of this singular year to show how energy companies are absorbing cost, ironic that) and as such there is no argument for them being required to keep the pricing structure they have because “times are tight”, in fact with the reserves they have to hand right now it’s the most opportune time do something revolutionary.

Consequently I was never pointing at the big profit to make my case for pricing reform, only for why announcing big subsidy figures needs to be compared to how much money it is in relative terms., you guys have just jumped on that through lack of forethought to tackle the real debate at hand (and given it is the lengthiest aspect of my article it’s not like you can miss it without having simply ignored it), to fight a point I never made.

Let me just break it down for you, in some simple small paragraphs that even you and john won’t fail to understand…

Energy companies are *not* in a precarious position and *haven’t* over the long term been absorbing the costs of wholesale gas prices until possibly only a couple of months ago. They do currently charge for the first (and therefore most essential) energy use disproportionately to how much they charge for more extravegant or needless energy use.

The time has come to say it is fairer on everyone, specifically the poor and the old, to reverse that scale so the more necessary energy use is cheaper, enforcing this would give Labour some headway back in to quelling the anger in their core vote. It is also a perfect solution to actually attempting to tackle climate change as it punishes disproportionate energy use through additional charging, rather than just saying “we’re reinvesting the money”. All of this doesn’t mean the companies should be making less or even more profit…the profit levels don’t come in to it, only the amount being charged for a proportionate level of “necessary” use.

I eagerly await more ignoring of these points so that you can roll about moaning about how people keep picking on the energy distribution industry.

Using a large percentage increase over a small base, and cherry-picking your time period to maximise that value is just sensationalism.

You might be right, and energy companies might be evilly exploiting the poor, but I don’t think that pointing at a big profit figure makes your case.

I’ve posted a follow up to this article here which is in response to john’s piece on the Sharpener.

I accept not all profit comes from bills and that extra services, streamlining and such can also create greater profit margins…but my point is that the ethical implications of an energy company in the position they are with the sheer power they have means that I don’t believe governments can sit by and let these sky rocketing profits happen without much better assurance and business regulation to protect the poor, keep pricing fair (this doesn’t necessarily mean cheaper for everyone or even the majority), and to aid environmental efforts.

No, you’ve said you believe that the situation isn’t competitive. It’s far from clear to me that that’s the case.

I don’t know enough about electricity and gas retailing to say for certain that it /is/ a competitive market, but I do know something about oil retailing - which is a market where nobody makes any money and margins are tight, because the producers capture nearly all of the market value.

Hence, I’m generally sceptical of claims in energy markets that retail suppliers are profiteering - when frequently what they’re actually doing is passing on cost increases without which they’d be unable to make an acceptable return on capital, and being blamed for it because the consumer gets their electricity bill from Centrica and not from Gazprom or Saudi Aramco.

Because the government would be telling companies how much they’re allowed to charge to whom and for what. That isn’t a free market solution - at best, it’s a corporatist compromise, characteristic of the current lot’s approach.

I guess it comes down to whether or not you think the retail electricity/gas market as currently constituted is competitive. If it is, then your plans are clearly government meddling; if it isn’t, then they might be seen as a reasonable solution to market failure.

But I suspect it is competitive: the very limited price variance you describe is typical not just of cartels, but also of commodity markets with very limited product differentiation. Like, err, electricity and gas.

But I fail to see how this, what I’ve written about, is “rigging” prices. Far from it the system I believe would work is it about making sure people are paying fairly for energy within the climate of environmental responsibility balanced with definite need. I also don’t believe it would cost much to implement nor that it would be too complex, not in terms of money available with the big 6 for certain, let alone government funding. Using simple information such as council tax banding isn’t a “perfect” solution in theory, it is what I feel would be a realistic solution much closer to the ideal situation.

I think you completely miss my point about keeping energy companies competative, and that is to find the right point of balance between not charging those that are truly needy too much for their basic energy (or indeed *anyone* for their basic energy) while making more money off of those that choose to use more. I don’t think the government needs to interfere any more than to set this control. In reality I believe the government under a correctly balanced system should rarely need to give benefits specifically on the issue of fuel poverty and that a free market solution is possible…it was that idea that I wished to explore here, especially given Labour’s propensity for moving away from their core values.

I’d also like to say that this was written before the 42 days decision, I’m much less inclined to believe anything is possible with Labour now ;)

Just like we could abolish tax credits and raise the personal allowance.

But because people prefer a solution that sounds more perfect in theory, without giving thought to the enormous complexity and expense it’d involve (not to mention the disincentives provided to investment in energy when compulsory price controls are in place), the simple, almost-as-effective-and-much-less-wasteful measures get ignored.

(also re home sustainability - the most effective way to achieve this would be through doubling council tax and removing all council tax benefits. I imagine this isn’t on your agenda…)