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PP starting to look expensive


I've had an alert email from money supermarket saying other suppliers are more than £150 pa cheaper based on my usage - some >£200. Loads of 'em including SSE and British Gas.
What's going on - why are PP not passing on the fall in wholesale prices. If we pay what you pay then you are paying too much and it makes whatever hedging strategy you have been doing looking I'll advised and, frankly, poor.
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Best answer by LurgidBanana 8 February 2020, 00:57

Thanks for strutting your stuff. But are you a paid stooge or just an acolyte?
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hi banana

by definition a hedging strategy cuts both ways so I disagree with your comment about it being ill advised- if you can predict the prices without the benefit of hindsight you may as well not bother buying the energy, just make a profit on the bets and retire.
The savings will vary according to area, but there is no penalty for switching out.
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Sure, a hedging strategy cuts both ways and there is no crystal ball. But some hedge managers perform better than others - it's true in the world of investments and I'm sure it applies to electricity buying too.
​​​​​​​Thanks for the reminder that there is no exit fee - looks like I'm heading that way
LurgidBanana;44041:
Sure, a hedging strategy cuts both ways and there is no crystal ball. But some hedge managers perform better than others - it's true in the world of investments and I'm sure it applies to electricity buying too.
​​​​​​​Thanks for the reminder that there is no exit fee - looks like I'm heading that way


Hi LurgidBanana,

That's the joy of comparison websites.....they supply the "basic" information for you to decide. The choice is always in your hands.
​​​​​​​PP have no exit fees and don't tie you in to a fixed contract......so switch away at your pleasure.....good luck.
Hi, iv'e been with PP for nearly two years. At the time of changing to PP they were the cheapest on the market. A comparison yesterday showed that 10 energy companies are now cheaper than PP including 5 prices from the big 6 energy companies. The top saving is £106 year. PP say they are non profit making on the gas and electric prices and pass all savings to their customers. Is this true in the current pricing war going on? In their defence, i have had no problems at all and i like the way i report each month to them via the app, but price is price and sooner or later i will have to leave PP although i don't want to. Come on PP make your customers even more happier this Christmas with a reduction in energy prices.
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Today's Sunday Times article is very relevant to this conversation. Here's some of the most revealing extracts:


Energy supply giants muscle out minnowsali hussain
With cheap deals taking their toll on upstarts and more small firms set to fail, the ‘big five’ are atop the best-buy lists again



Big companies are dominating the energy supplier best-buy lists for the first time in more than a year, as smaller rivals struggle to offer cheap deals and stay in business.
Deals from new suppliers traditionally top the best-buy tables as the fledgling firms seek to build their market share. However, they have now been muscled out by a “full-blown punch-up” between the big five energy providers — British Gas, Eon, EDF, Scottish Power and SSE — over prices.
These suppliers are capitalising on increased public concern about poor customer service from smaller companies and the growing likelihood that people will switch, particularly in the winter.
Anna Moss, retail manager at Cornwall Insight, an energy market analyst, said: “Knowing that the market has seen several suppliers exit, larger firms may be making concerted efforts to attract customers back who are now wary of unknown brands.”
Eight small firms have gone bust since January — most recently Toto Energy, which acquired 134,000 customers in just three years. Some were unable to sustain the loss-leading deals they offered to attract customers; others were unable to cope with the huge influx of customers, leading to a downward spiral in service.



Ellen Fraser of the analyst Baringa expects a further 10 suppliers to go bust in the next few months, including some middle-sized firms desperately seeking to raise capital from investors.
She added: “It’s not that the larger firms are offering much cheaper deals — it’s more likely the smaller firms are losing the appetite to undercut their bigger rivals in the way they did.”



Big companies have been notably absent from the best-buy lists since October last year, according to price comparison website theenergyshop.com. Last week, however, they were back on top.
“We’re seeing a full-blown punch-up between the big five over price,” said Joe Malinowski, founder of the site.
“While price competition is of course great news for consumers, the longer it goes on for, the worse the outlook for smaller energy suppliers.”
The market share of small providers has dropped from a peak of 10% in 2017 to 8% today, according to official figures.
Comparison sites favour the big boys
A search last week using five comparison websites — GoCompare, uSwitch, Confused, Moneysupermarket and Compare the Market — found Eon topping most results, with its large rivals not far behind. The company recently acquired Npower (turning the big six into the big five in the process).
Some smaller suppliers do still offer cheap deals but are reluctant to pay to appear in comparison sites’ default search results, as it can cost them a typical £60-£100 per referral for a dual-fuel customer. Instead, they only appear if a customer asks to see deals from the whole market (typically by ticking a box).
On uSwitch, for example, deals from Scottish Power and Eon appeared as the two cheapest on a default search last week. However, by clicking on the option to show all deals, some smaller firms appeared offering slightly cheaper tariffs.
Where a smaller provider does pay to appear on the default results, it is often not for its cheapest deal. For example, People’s Energy has a commercial relationship with GoCompare, where search results showed a deal costing an average of £957 a year. On rival comparison sites uSwitch, Moneysupermarket and Confused, People’s Energy offered a deal costing £844 a year on average — if you selected the whole-of-market option.
Green, another new energy firm, offered a tariff costing £921 on GoCompare — about £100 more expensive than its cheapest deals, which can only be found on other comparison sites when you click the whole-of-market option.
Green’s boss, Peter McGirr, said this is because he is able to offer cheaper deals directly rather than via comparison sites.
Some smaller firms — including Octopus, Together Energy and iSupply — are millions in debt but are backed either by multibillion-pound parent companies (Octopus) or the public sector, the Swedish state in the case of iSupply, Warrington council with Together Energy.


https://www.thetimes.co.uk/article/energy-supply-giants-muscle-out-minnows-tdkm2q7bs
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Interesting read stephenrand, troubling times ahead for some energy providers particularly when 'privatisation' is a possibility. I think it would be prudent if a Pure Planet senior member of staff or one of the founders, update the community as to the commercial viability of Pure Planet (obviously without sharing private information) & an update of current market energy wholesale prices. For me, I switched to Pure Planet because they were competitive and, most important for me, they were a British company employing 'local people'.
Pure Planet are still competitive, but not the cheapest, but I am trying to see a bigger picture.

Regards
David j;44194:
I think it would be prudent if a Pure Planet senior member of staff or one of the founders, update the community
Regards


Hi @David j
Yep, we hear you.
We're about to publish our latest blog post on the wholesale energy market.
To be fair we should have done this a while ago, I know I've been promising/teasing it to other Members here in the community.
The plan is to publish the blog post later today.
As soon as it's live, I'll update the community with a brief summary and of course I'll link to it. 👍
Hi all

We've just published our latest blog post about the wholesale energy market.
I've posted a summary in the community here.
To read the full detail check out the blog here.

​​​​​​​👍
So, basically PP are trousering the benefit of lower wholesale prices to offset higher other costs. I always knew that the 'you pay what we pay' strapline was marketing puff.
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Can you clarify, how does that statement stand when prices are rising?

LurgidBanana;44463:
So, basically PP are trousering the benefit of lower wholesale prices to offset higher other costs. I always knew that the 'you pay what we pay' strapline was marketing puff.
Yes I agree PP are not keeping up , I posted that mse energy club informed me of a potential 150 pound saving.
just looking now and utility point just up 19 fixed would save me £157 and peoples energy £189.
so pp sort out your pricing now or I'm going.
​​​​​​​And yes it is all about price!
LurgidBanana;44463:
So, basically PP are trousering the benefit of lower wholesale prices to offset higher other costs. I always knew that the 'you pay what we pay' strapline was marketing puff.


Hey @LurgidBanana

On our website there's a list of everything that's included in our Membership fee, and in our Members' rate, to keep our business model open and transparent to our Members. 🙂
Our Members' rate covers:


  • The wholesale cost of your energy and transporting it to your home
  • Renewable certification (REGOs)
  • Carbon offsets
  • Government levies (so, in the blog post this is referred to as 'ROCs')
  • Settlement fees
  • VAT

While our Membership fee covers:


  • Maintenance of your meter
  • Our people and support
  • Our operating and systems costs
  • Our low profit margin
  • VAT


So, in short, our Membership fee is what covers our running costs. 👍

As highlighted in our blog post,

as we’ve grown, we too buy forward hedges and have used these to provide as much stability and value as possible. In practice, having one tariff means our Members are always on our best rate... You never pay more than we pay for the energy you use. Our Members’ rates are based on wholesale prices, with zero markup.
Just initated a switch away.new gas price is 2.17p/kwh electricity 12.88p/kwh
standing charge the same that's 28% and 5% cheaper than pp prices just for info.
which is significant.
pp are offering £30 credit if switching to them via mse, shame they don't try and reduce rates and retain customers.
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Good Luck Petrodollar and (sorry if you know this) remember its industry standard that it can take up to 6 weeks for your final bill.
For the record I'm not an eco snob, infact far from it.

​​​​​​​Have a great weekend
Userlevel 7
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All the best Petrodollar.

​​​​​​​Missing you already.......
Nadal ... could you please clarify whether the joining incentives are paid from the members rate or the membership fee?

Also, I believe the wholesale cost is about 35% of the total cost generally - is that about right? And if so, as gas wholesale prices have collapsed (due to higher LNG deliveries, unseasonably warm weather and strong wind generation) what other costs have gone up so massively that you aren't able to reduce your gas rate? And how are your competitors able to do it but PP can't.
​​​​​​​Thanks
Hi @LurgidBanana

The Member's rate is a pass through rate, based on wholesale costs.

The Membership fee is our standing charge equivalent, and includes our operating and systems costs (along with meter maintenance, people costs, low profit margin and VAT).

Our recent blog about wholesale prices includes information about non-energy cost increases, including transportation costs and policy costs (more detail in the blog👍).
Thanks, but you haven't clarified who pays for the joining incentives for new customers. Is this an operating expense which feeds into the members rate?
Userlevel 7
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Hi lurgidbanana.

i think you will find it comes out of their profit margin.
Userlevel 7
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hi Lurgid
may I ask why you're asking, and have you asked the same question of every other energy company which pays an incentive for new customers, (list available from every comparison website).
I'm opening a discussion here by the way not being confrontational.

PP's model like most energy company works on scale, the infrastructure costs aren't directly proportional to the number of customers. The more customers they get the better the business, and the more sustainable it is. I think you'll find that's common in very many businesses.

Paying the incentives is a business investment decision, wherever it comes from.
I'm not sure why you're asking. Are you suggesting that they should not pay incentives and reduce the membership rate with the money they haven't paid out? If so how do you see the business developing?

PP like it or not is a business not a charity, and as such is subject to some hard nosed business decisions, one of those is that in order to grow they have had to take the decision that to compete they have to offer an incentive. Personally I think the £50 incentive is too generous and sends out the wrong message, but that's only my opinion. But then I also think the energy market is at best imperfect and at worst broken.

I think it likely that the biggest problem they have at the moment is not where the incentive comes from, but loss leading competition.
​​​​​​​Your thoughts?

LurgidBanana;48000:
Thanks, but you haven't clarified who pays for the joining incentives for new customers. Is this an operating expense which feeds into the members rate?
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Well as its a discussion, then in the best part i have to agree with our wozza. Im not a fan of the incentive but it is on par with other suppliers and no different than tesco clubcard, nectar points, bp points etc etc etc. Companies who dont have loyalty schemes and bonus points of some sort tend to struggle in this day and age M&S for example no loyalty scheme and sales are constantly down. Even costa coffee now give me loyalty points unlike starbucks. Guess where i get my coffee to go now?
​​​​​​​its not perfect but it works as for the 99% its all about the money.
Where I'm coming from is this ... I'm struggling to understand how the members rate for gas hasn't reduced despite wholesale gas prices at ten year lows and halved in the last year. And still plunging. Btw I have an MBA and many yrs experience as a senior mgr in the finance dept of a major bank, so I know a thing or two about managerial economics.
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Yes, other costs may have gone up slightly, but the wholesale price is the largest component. The only explanation I can see is that PP are locked into expensive gas contracts through their hedging - perhaps more so than competitors.

I would just like proper transparency instead of marketing slogans 'you pay what we pay' ( yes, but are you paying too much given current wholesale prices) and 'you are always on our cheapest rate' (which is also your most expensive rate).
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LurgidBanana;48064:
Where I'm coming from is this ... I'm struggling to understand how the members rate for gas hasn't reduced despite wholesale gas prices at ten year lows and halved in the last year. And still plunging. Btw I have an MBA and many yrs experience as a senior mgr in the finance dept of a major bank, so I know a thing or two about managerial economics.
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Yes, other costs may have gone up slightly, but the wholesale price is the largest component. The only explanation I can see is that PP are locked into expensive gas contracts through their hedging - perhaps more so than competitors.

I would just like proper transparency instead of marketing slogans 'you pay what we pay' ( yes, but are you paying too much given current wholesale prices) and 'you are always on our cheapest rate' (which is also your most expensive rate).


I think quoting your area of expertise is meaningless!
Thats of course if you believe that every economist gets its right, knows their stuff to the point of predicting market turns and a crisis.
If so, let me know and I'll get another yacht.
If your that confident, why don't you start your own energy company with all those skills.
As far as Major Banks go then if you believe in that mantra....well thanks but no thanks.
Go long, go short, deal or no deal you have a choice.
Thanks Strutt, but you haven't shed any light on anything. Are you a PP stooge or do you just love them so much that you lurk in the community to disparage anyone who dares to question things

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