I suspect we are paying through our teeth for all the fixed contract, all the social tarifs, all the people with solar panels, taxes, for all the subsidies that everybody in europe is getting (was it 80 or 200 billion in germany…) and for tons of profits just because they can… and yeah the gas prices went higher too.
How else can you explain that gas costs 100 to 400 euro per mWh on the market, and i need to pay 2k for just 10 (000 edited) kWh= 10 mwh.
Edit: Actually this is a factor of 2000, so i suspect/hope i’m making a mistake. Don’t see where though.
I just moved somewhere together with my girlfriend and this week we got our first bill.
1146 euros for three months. Around 800 for gas and 250 for electricity. 382 euro per month.
I just input our meter for the past 4 weeks and had the app recalculate. We now pay 170 euro per month so less than half… Granted, we haven’t started using gas for heating yet.
Still, it’s very obvious that these companies are overcharging on purpose because they want to maintain a high cashflow.
So to explain it a bit. Yes, companies are definitely using a markup to cover their bases. But it’s not as easy as “greedy company be greedy” cause it’s not money they keep anyway. There’s several reasons, all pretty much grounded in the time based and volatile nature of the energy market, the lack of viable storage, and also just stupid policy. So here’s a few reasons:
– Companies buy energy in advance, the later they buy, the more they likely pay for it, and the more you pay for it. So to stay competitive they need to buy in advance and that requires cashflow.
– They know that with the increased prices, the yearly bills will be high, and there will be a lot of unpaid bills. This is quite problematic for companies as this means they bought energy far in advance and are not seeing any money for it for quite a long while. So they need close this gap to be able to secure continuity.
– A huge increase in social tariffs is another financial hole. They are technically payed for by the state, but as i explained below: The state only pays that amount back in 18 months IF they don’t discover any mistakes in a heap of 1000 ish contracts they will control for mistakes. That can be anywhere between millions up to a billion – billion and a half that the company is effectively “lending” the state for 18 months depending on the size of the company.
– Contrary to popular belief, most energy providers here are actually in the red. Some companies like Mega (yes i’ll gladly call them out by name cause i don’t like their practices) are keeping money in and doing some questionable things cause they know they are on the brink and they want money in the bank when they go down.
– Fixed contracts are basically a loss for any company always. Since a client can leave a contract whenever they want, a fixed contract is actually not interesting for a company. Cause when the price is low, customers stay, when the prices is higher than the market, they leave. We have a lot of clients on old contracts with extremely low energy prices compared to now. That means the company is taking a huge loss there.
– It’s not always the markup that is at fault. For example i see people who just moved into a home. It often happens they estimate your consumption on the last 3 years of tenants in that building. They have no clue what you will consume there, so the first estimates will be based on previous tenants.
– Right before the crisis, Belgium actually introduced a new communication system between the Distributienetbeheerders and the providers. This cost a lot in IT development and to this day still doesn’t work fully properly both externally and internally for providers. This causes a customer contact overflow combined with the crisis that causes their customer services to have huge work overloads, people not wanting to work for them, and this also costs tremendous amounts of money as they need to entice people to work for energy companies, to then train them thoroughly in the hopes that they won’t leave in 2 weeks for getting shat on 24/7 by customers. (and then the government wants to force them to answer in 15 days).
– I see a lot of people try to predict what they need to pay by looking at where gas and Elec are at the moment on the markets. But it’s far far far from that simple. Companies aren’t buying energy right now, that you consume right now. As stated, companies buy far in advance to secure having enough energy. That means that the company not only has to cover the current energy price, but also any other energy they bought at way higher prices on other moments. If you have a variable tariff, you need to look at the formula the company uses + the index that they follow, as there’s different price indexes that move at different speeds due to taking into account different data.
Anyway, it’s a highly complex industry. And while there is greed, as everywhere, i think here we are more dealing with the problem of a product that can not be stored, structural problems of a very fickle system, a total lack of communication from the authorities also, and we have to realize the energy industry doesn’t work like any other market.
Anyway, i just wanted to write this down to maybe give people a bit more insight. As it’s just such an opaque industry and it’s obvious nobody really knows how it works (heck even the people who work in the industry don’t know 90% of the time) and just soaks up half-baked stories. It’s time we reform all of this to be much more straightforward and transparent if you ask me. But till then, this is what we have.
And you have those reports saying natural gas is so cheap the price is negative. But hey there’s nothing fishy going on.
4 comments
I suspect we are paying through our teeth for all the fixed contract, all the social tarifs, all the people with solar panels, taxes, for all the subsidies that everybody in europe is getting (was it 80 or 200 billion in germany…) and for tons of profits just because they can… and yeah the gas prices went higher too.
How else can you explain that gas costs 100 to 400 euro per mWh on the market, and i need to pay 2k for just 10 (000 edited) kWh= 10 mwh.
Edit: Actually this is a factor of 2000, so i suspect/hope i’m making a mistake. Don’t see where though.
I just moved somewhere together with my girlfriend and this week we got our first bill.
1146 euros for three months. Around 800 for gas and 250 for electricity. 382 euro per month.
I just input our meter for the past 4 weeks and had the app recalculate. We now pay 170 euro per month so less than half… Granted, we haven’t started using gas for heating yet.
Still, it’s very obvious that these companies are overcharging on purpose because they want to maintain a high cashflow.
So to explain it a bit. Yes, companies are definitely using a markup to cover their bases. But it’s not as easy as “greedy company be greedy” cause it’s not money they keep anyway. There’s several reasons, all pretty much grounded in the time based and volatile nature of the energy market, the lack of viable storage, and also just stupid policy. So here’s a few reasons:
– Companies buy energy in advance, the later they buy, the more they likely pay for it, and the more you pay for it. So to stay competitive they need to buy in advance and that requires cashflow.
– They know that with the increased prices, the yearly bills will be high, and there will be a lot of unpaid bills. This is quite problematic for companies as this means they bought energy far in advance and are not seeing any money for it for quite a long while. So they need close this gap to be able to secure continuity.
– A huge increase in social tariffs is another financial hole. They are technically payed for by the state, but as i explained below: The state only pays that amount back in 18 months IF they don’t discover any mistakes in a heap of 1000 ish contracts they will control for mistakes. That can be anywhere between millions up to a billion – billion and a half that the company is effectively “lending” the state for 18 months depending on the size of the company.
– Contrary to popular belief, most energy providers here are actually in the red. Some companies like Mega (yes i’ll gladly call them out by name cause i don’t like their practices) are keeping money in and doing some questionable things cause they know they are on the brink and they want money in the bank when they go down.
– Fixed contracts are basically a loss for any company always. Since a client can leave a contract whenever they want, a fixed contract is actually not interesting for a company. Cause when the price is low, customers stay, when the prices is higher than the market, they leave. We have a lot of clients on old contracts with extremely low energy prices compared to now. That means the company is taking a huge loss there.
– It’s not always the markup that is at fault. For example i see people who just moved into a home. It often happens they estimate your consumption on the last 3 years of tenants in that building. They have no clue what you will consume there, so the first estimates will be based on previous tenants.
– Right before the crisis, Belgium actually introduced a new communication system between the Distributienetbeheerders and the providers. This cost a lot in IT development and to this day still doesn’t work fully properly both externally and internally for providers. This causes a customer contact overflow combined with the crisis that causes their customer services to have huge work overloads, people not wanting to work for them, and this also costs tremendous amounts of money as they need to entice people to work for energy companies, to then train them thoroughly in the hopes that they won’t leave in 2 weeks for getting shat on 24/7 by customers. (and then the government wants to force them to answer in 15 days).
– I see a lot of people try to predict what they need to pay by looking at where gas and Elec are at the moment on the markets. But it’s far far far from that simple. Companies aren’t buying energy right now, that you consume right now. As stated, companies buy far in advance to secure having enough energy. That means that the company not only has to cover the current energy price, but also any other energy they bought at way higher prices on other moments. If you have a variable tariff, you need to look at the formula the company uses + the index that they follow, as there’s different price indexes that move at different speeds due to taking into account different data.
Anyway, it’s a highly complex industry. And while there is greed, as everywhere, i think here we are more dealing with the problem of a product that can not be stored, structural problems of a very fickle system, a total lack of communication from the authorities also, and we have to realize the energy industry doesn’t work like any other market.
Anyway, i just wanted to write this down to maybe give people a bit more insight. As it’s just such an opaque industry and it’s obvious nobody really knows how it works (heck even the people who work in the industry don’t know 90% of the time) and just soaks up half-baked stories. It’s time we reform all of this to be much more straightforward and transparent if you ask me. But till then, this is what we have.
And you have those reports saying natural gas is so cheap the price is negative. But hey there’s nothing fishy going on.