Why does that cause you a problem?
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... because it seems (to me) to be just plain daft
"We" seem to have come to accept this bizarre concept in relation to utilities and certain services, whereas I doubt that we could get our head around it in relation to any other 'purchases'!
Kind Regards, John
Exactly my point
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Not quite. It's more like having a case of Heinz baked beans delivered to one's door directly from the Heinz factory, via a 'distribution network' provided (or contracted by) Heinz (or some third party with whom one had no dealings), and then being able to choose whether one wanted to pay Tesco, Sainsburys, Waitrose or whoever for those beans. Would that be sensible?
UKPN generate (or more accurately collate) the energy and deliver it to a distribution system, somebody (let's create a ficticious name - Edwer) purchases it at wholesale price, UKPN deliver it to your door.
Simultaneously:
UKPN generate (or more accurately collate) the energy and deliver it to a distribution system, somebody (let's create a ficticious name - EONSSE) purchases it at wholesale price, UKPN deliver it to your door.
At that point you have the choice of purchasing from either Edwar or EONSSE
Vs
Heinz manufacturer the product, somebody (let's create a ficticious name - Sainsco) purchases it at wholesale price, Heinz or their agent deliver to the Sainsco wharehouse. At that point there is a minor deviation whereby Sainsco move it from their wharehouse to the store.
Simultaneously:
Heinz manufacturer the product, somebody (let's create a ficticious name - Tesbury) purchases it at wholesale price, Heinz or their agent deliver to the Tesbury wharehouse. At that point there is a minor deviation whereby Tesbury move it from their wharehouse to the store.
You, the customer then have the choice of purchasing from either Sainsco or Tesbury.
No I don't see the difference...
The main difference is that, unlike the various people in the supply chain of baked beans, an electricity supplier has never had any involvement with the product they are selling or its distribution/delivery. It has never 'been on their shelves', or in their warehouse, and nor have they 'handled' it in any way. All the supplier does is to pass on consumer's money to the generators and distributors of the electricity (after removing some for themselves), which also requires them to provide and maintain metering equipment, so they know how much to bill each customer.
What is being sold is the movement of electrons in conductors, and the same electrons will move in exactly same way in the same conductors regardless of who I choose to pay for enabling that to happen.
Kind Regards, John
... because it seems (to me) to be just plain daft
"We" seem to have come to accept this bizarre concept in relation to utilities and certain services, whereas I doubt that we could get our head around it in relation to any other 'purchases'!
Kind Regards, John
There is nothing bizarre about it - you go to one supermarket and can buy a packet of cornflakes for one price, go to the one next door and they might sell the same packet 10p cheaper - it is called a free market and competition for your business. One supermarket might get a slightly better deal from the cornflake manufacturer, so they can offer them a bit cheaper, or they may simply sell at a smaller profit margin to attract customers.
Energy companies can likewise buy energy in wholesale and resell it, some have low overheads, so can undercut other suppliers. Energy prices have generally come down, since the monopolies were ended. Likewise with telecoms etc..
I'll try another thought:
A company manufacturers a product, let's say an electric drill and stockpiles it in their wharehouse. They use a 3rd party to advertise the product on the internet on their behalf. The third party advertises it, receives the order, collects the money and charges fees. They pass the remainder of the money along with delivery address to the manufacturer, who in turn packages and posts the drill to you.
The manufacturer may decide to use more than one advertising/fee taking service, let's call them Ebay and Amazon. Neither of them ever see the product. That compares with the 'energy provider'
The manufacturer may decide to use more than one delivery service, let's call them TNT and DPD. That compares with the meter company.
That's not the same because for electricity there is no TNT or DPD choice.
The manufacturer delivers the product in all cases but the manufacturer receives less money for it than if they had sold it themselves.
The manufacturer delivers the product in all cases but the manufacturer receives less money for it than if they had sold it themselves.
Yes, but would the 'manufacturer', the generation companies even want to get involved with me and the few Kwh I consumer per year?
It's more the generator and DNO combination that actually makes and delivers the goods and this doesn't change.
Yes, some DNOs do get involved with you.
Yes, some DNOs do get involved with you.
But there are meter companies who contract to the 'suppliers'.
Indeed - as you imply, that is "Capitalism 101" and applies to most 'tangible products', and even to many services.
However, commodities like electricity and piped gas are different. The infrastructure for getting 'the product' all the way from the 'source' (c.f. 'manufacturer') to the meter of each and every consumer already exists, in the form of cables/transformers (or pipes), and the 'supplier has, and can have, nothing to do with that.
Unlike the situation with the 'tangible products', with electricity and piped gas there really seems to be no point in having 'middle men' between the 'manufacturer' and the end-customer, each of whom takes a 'rake off' and thereby increasing the cost to the consumer. With the 'tangible products', the 'middle men' can advertise the products, provide distribution systems and warehousing & local 'convenient' retail outlets, online purchasing/delivery facilities etc., provide 'Customer Services' in relation to the product etc. - the nature any quality of which services may be relevant to consumers. However, none of those 'services' are applicable in the case of electricity or piped gas.
As I see it, the only real scope for differences between 'suppliers', hence the only real basis on which they can advertise, 'sell themselves' and thereby attempt to attract customers, is in relation to the extent to which they add on a 'surcharge' to what the 'manufacturer' charges for the electricity/gas.
What 'services' do you think that a 'supplier' provides beyond the issuing and administration of bills (and installation of meters to facilitate that)? In virtually any other buying/selling context, I think we would probably take a dim view of a situation in which a substantial percentage (not merely a 'fixed admin charge') was added onto the bill "for issuing a bill", wouldn't we?
Kind Regards, John
The industry has always been partitioned into generation, distribution and local electricity boards. CEGB and local electricity boards to whom you would pay your bills. The industry was so massive, it had to be departmentalised. The difference now, is simply that the local boards have been replaced by independent companies, which can bid for your business and you are free to choose any of them. As a result, costs have come down for the consumer. I doubt any of them are making big profits, as we have seen recently, many have been caught out and gone bust.
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