Conference Mischief: Andrew Neil compares Centrica to Tesco!
On today’s Daily Politics (BBC2 25 September 2013) Andrew Neil is working hard (I think he may have been briefed by the energy lobby’s guardian angel – or should that be knight in shining armour?) in his interview with Stephen Twigg. I think he (AN) thinks he is the story – unfortunately he is making his attitude the story.
He lambasted Twigg for “not knowing Centrica’s Rate of Return on Capital Employed” – presumably supplied to him in his briefing – I doubt that Andrew Neil “knows” the rate of return of all the energy companies!
Neil then goes on to compare Centrica’s rate of return with Tesco’s (Centrica’s is lower). Well big deal – I did not realise the two companies were so similar.
- I can choose my super-market every time I walk through a super-market door
- Super-markets supply a vast range of goods and I can split my purchasing over a large number of suppliers
- Energy companies are large long-term companies whose exploration/exploitation/distribution cycles runs over decades. Supermarkets operate over much shorter time scales.
The comparison and the rate of return is irrelevant. The price freeze is for a 20 month period (which is tiny compared to their business cycle) and is there to allow a new Labour government (if elected) to sort out a market that is broken.
- The big 6 energy companies seem to operate their pricing as if their tariffs are linked by tiny bits of elastic – one up all up (within a few weeks)!
- The big 6 already seem to be on an investment strike (operating together)
- The big 6 have run down capacity so that they can claim that we are nearer to “the lights going out”
- It is next to impossible for new entrants to enter the market
- Tariffs remain complex and obscure. Try emailing/web messaging the big 6 asking “what is your unit price for domestic gas/electricity for delivery to a Northeastern household – paying by cheque every quarter?” I have tried – it is the basic question that prospective customers ask prospective suppliers. I got no answers.
- Ofgem is ineffective as a regulator – is it populated on a revolving doors basis?
- Now the big 6 are all squealing – in unison
- They have had to employ the apologist for the bankers to defend them (she’s on Daily Politics now – what a surprise, no energy company wants to make its own case)
If the big 6 do not like the idea of a price freeze they have – oh, almost 20 months! before the next election to sort it out for themselves. They won’t; the current situation suits them just to well.