Question

We had a fixed term contract to supply energy. Why didn't Pure Planet have contracts in place?

  • 6 January 2022
  • 6 replies
  • 63 views

I don’t quite understand why energy suppliers (and therefore us) have ended up in the mess they have.

When they sell fixed price contracts to consumers, aren’t they duty-bound to have future contracts that support those? We would have faced penalties if we’d tried to leave early so why aren’t we being compensated for their INcompetence? In a commercial world, there’d be lawsuits all over the place.


6 replies

Userlevel 7
Badge +11

They may well have hedged for the fixed deals, but much of the cause of their demise (and the other 25 companies who went under) was they were forced to sell energy on the variable contracts for less than they were paying, because of the price cap.

It is unfair, Ofgem should have allowed all contracts to run their course, and indeed with one company (bulb) that has happened. However looked at in the round, consumers will always end up paying for the screw up that is government energy policy.

The irony of your comment here is only going to become apparent in April.

 

Badge +5

@worldwiser @woz ‘s reply is not quite correct. In the case of Pure Planet it seems it only hedged for fixed contracts into the early part of this year, which is what I am sure it said somewhere in these pages. Until reading that I had always assumed there was a secure hedge in place that protected the margins for those on fixed contracts. Plus the increase in gas costs is not the entire reason for the collapse of many companies but has been the final straw. Nearly all already had financial issues that I am sure would have surfaced at some time whether or not the price went up as it did. Ofgem has simply allowed companies to be set up that appeared to be inherently weak from the start and others allowed to continue despite having massing balance sheet losses and massive trading losses. In a nutshell the energy industry has not been properly policed by Ofgem.

The concept of the cap emanated from when Labour was in power.

Userlevel 7
Badge +11

@worldwiser @woz ‘s reply is not quite correct.

@G4RHL Which part is incorrect?

Badge +5

@woz By suggesting “they may well have hedged for fixed deals”  We all thought that but they hadn’t and where they had, only for a very short time ahead. Plus the demise is not entirely caused by the raw price increase. 

Userlevel 7
Badge +11

You have a point, I forgot to mention the other reason for multiple failures was/is the existence of a secret paedophile cabal manipulating the global markets using 5G radiation. It had little to do with (not planning for) huge increases in global energy prices and an unworkable price cap. 

The point of the original poster is that consumers get a bad deal here, they contracted for fixed price contracts and had the rug pulled from under them. That balances are protected is very laudable but still leaves (most) consumers who had a fixed price contract, in a worse position than they would have been in, were the contract allowed to run it’s course.  That is true irrespective of whatever mechanisms were put in place by the supplier to mitigate supply cost variations.

There is a large element of be careful what you wish for here, the stricter regulations which Ofgem will inevitably  put in place to regulate the suitability/robustness of potential energy companies will lead to much less competition and much higher prices.
Ultimately it is ALL of the consumers who pay for the failures, so one way or another consumers will be screwed. 

 

 

 

 

 

 

 

 

Badge +5

@woz Agree. It is always us that pays for the shortcomings of others in the energy field. I doubt whether the big producers have made any losses out of this, no the doubt contrary.

Reply