Fair price principles — Bulb Community

Fair price principles

edited June 2017 in About Bulb
Historically suppliers have been fast to increase prices and slow to decrease them. This is as rubbish as it sounds and means that customers lose out. We don't want to be like traditional energy companies. We want to be nimble, efficient and fair. We've written up our pricing principles so you can hold us to our word.

1. Just one tariff
  • We have one single tariff so if you’re with us, you’re always on our best deal
  • We don’t charge exit fees – you’re free to leave us at any point
2. Fast down, slow up
  • We review our prices every week
  • When costs fall by more than £20 per year, so will your tariff
  • If they rise, we work hard to limit cost increases to you and always give 30 days notice
3. Radical transparency
  • We show how our tariff compares to all other suppliers on our homepage
  • We explain what we’re doing in plain English, not industry jargon
  • A real person is on hand to answer any questions you have

And there you have it.

If you ever think that we're not adhering to these, please let us know and we'll have to do some soul searching.

Comments

  • How does wholesale price work? Is it independent of source or unit operating costs? I as this as I can't quite work out why renewable energy prices change in line with nonrenewables. I understand that oil prices will have an effect to a small degree due to the constraints of operating practices but for renewable energy this should only be a very small impact. As the initial capital expenditure has already been invested this will not rise so I fail to see logic in linked pricing per unit. Is this a per unit price dictated by governmental departments or supplier and to what extent do subsidies affect this? Thanks
  • edited November 2016
    It has a bigger impact than you'd think @eco_rik

    When non-renewable sources become more expensive than renewable sources, the buyers who don't care about the source end up buying the renewables. This drives up the price of renewables. The renewable generators sell their power for the best price they can get for them. And in the long run it's really good that they can do that. It makes renewables much more enticing to investors.
  • Firstly, I'm staying. I still think you are some of the good guys, and I think you have a more sustainable strategy than most of the new entrants. But, for the first time, I'm slightly disappointed on your transparency on this. Firstly using the headline wholesale price is the classic "big 6" line.... when actually wholesale costs represent only about 40% of the total cost of bill. Secondly, the "average" price goes up 5.1%, but beware averages..... in my case the bill goes up >10%
  • @Rog

    You are right about wholesale costs making only a portion of the bill and this is why we have announced on average a 5.1% increase when wholesale costs have gone up by 21%.

    In the price rise email we have sent to all our members we have made sure they are tailored to all our members, so in there you will see how prices have changed, specifically for you.
  • thanks DanP . I dont argue about the wholesale cost rise, but just be more honest in the way you "sell" the change .

    "This means your energy will cost £XX.XX more each month despite wholesale energy costs going up 21% since February". Its not despite at all.

    Also, how, if we all have the same tariff does my bill go up >10% when prices have gone up 5.1%? ....
  • @Rog

    Depending on your usage and region the amounts can differ. 5.1% is the increase for the typical home which uses 3100 kWh of electricity and 12000 kWh of gas.

    The below table shows how the tariff differences vary based on region and metering setup. It is worth noting that the increase effects gas prices more than electricity and 2 rate meters more than 1 rate meters.


  • @DanP at Bulb
    Given that the commodity is the same price for everyone in every region, why are we getting different increases in different regions?
  • edited June 2018
    .
  • Rog said:

    thanks DanP . I dont argue about the wholesale cost rise, but just be more honest in the way you "sell" the change .

    "This means your energy will cost £XX.XX more each month despite wholesale energy costs going up 21% since February". Its not despite at all.

    Also, how, if we all have the same tariff does my bill go up >10% when prices have gone up 5.1%? ....

    We used the word despite because although prices went up by 21%, we are increasing prices by less than that. Sorry for the confusion.

    Your % change is different to everyone else because everyone uses different amounts of energy and different proportions of gas and electricity, but everyone has the same standing charge. Because we didn't change our standing charge, this portion of your bill stayed static while the unit cost portion of your bill increased.

    So, someone who uses little energy, and therefore the unit rate is only a small part of their bill will see a smaller proportional change. Meanwhile, someone who uses a lot of energy will see a larger proportional change.
  • I was all set to join Bulb, because although not the cheapest, the extra was worth payig for green energy. But with recent price increases, the extra is now getting on for £400 per year for me, on an e7 tarrif, using 22,000 kwh per year, 85% of which is at night rate. That is too much of a premium for me to pay, and I think that Bulb's claim to be "one of the cheapest" rings a lot less true now than it did. It is certainly far from true in my case. Many oether suppliers are cheaper including Eon.
    (Incidentally, many people don't realise either that E7 tarrifs are innately more green, because they limit the need for the most inefficient and most-polluting quick-start Gas-fired power stations. Instead they are seen wrongly as outdated.)
    I see the point that rising prices for renewables means that investing in renewables becomes more attractive, at least while prices remain high. But at the same time, if it puts off customers like me who want to buy renewable energy, isn't that a bad thing?
    Plus, if renewables,track the volatile market prices of non-renewable sources, that has a lot of market uncertainty and prices can go down as well as up. Wouldn't it be much better if the renewable suppliers offered much longer-term contracts for companies like yourselves, at very favourable rates? This would give them the certainty they need in order to invest for the future, and give you and your customers the U.S.P. of a stability of pricing that non-renewable companies relying on volatile market prices couldn't offer, and drive up customer demand for renewable energy, via specialist companies like Bulb.
    The question is, what is most desirable? That the renewable companies can get unpredictable periods of higher prices from energy companies who are buying only on price, or that the renewable companies can have a close, predictable, future-proofed, focussed on long-term growth rather than short term profit, and mutually beneficial relationship with specialist companies like yourselves, and through you, with customers who want to buy renewable energy?
  • @DanP at Bulb thanks for the responses. It seems that the implications of what you're saying is that Bulb's lower rates claims are effectively skewed to lower consuming households....... which as @22000kwh suggests has the unintended consequence of driving high carbon users away from you.
  • @22000kwh

    We want to make things as simple as possible here at Bulb and that is why we only offer one tariff. This one tariff also allows us to pass on any savings to our members when the prices go down. Longer fixed tariffs do not allow that to happen, which we think is unfair.

    Did you enter your consumption figures into our website as a day/night split? Was it this quote that was £400 more expensive?

    @Rog

    In this case, we have seen the wholesale costs of energy increase therefore we have to increase our prices otherwise we would be losing money. This does mean that it affects higher consumers more, but this is the only area of the bills that we are able to effect. The rest is set by the government/distribution costs.

    Another point is, ideally we do want to promote our members using less electricity as reducing our consumption as a country is a major way of us reducing our impact on the environment.
  • I did enter all my details properly, including the day/night split. So the almost £400 higher annual price is a correctly calculated figure from your site.

    Regarding encouraging people to use less energy, we have no access to Gas, so 22,000 kwh is our annual usage for a 4 bed house, all energy needs, including all the charging of our electric car. We have state of the art highly efficient Dimplex Quantum storage heaters, we have LED lights, and altogether take care to use our energy wisely and carefully. So we don't take any criticism on that score.

    I see that there are no responses so far to my wider point about the relationship with suppliers, and long-term vs short-term relationships and contracts with suppliers. I'd like to hear from Hayden Wood on this please.
  • @22000kwh What exactly is it you would like to know about relationships with suppliers & long-term vs short-term contracts?

    We buy our energy 3 months in advance which means we are protected against short term spikes but if there were longer term decreases we are able to pass them on & follow trends in the wholesale market.
  • @DanP at Bulb
    Am I missing something with my earlier question?

    "Given that the commodity is the same price for everyone in every region, why are we getting different increases in different regions"
  • @LeeWood

    It turns out in some regions we were not as good value compared to other suppliers and other regions we were much, much cheaper than the average. We have worked to spread these costs and to make our tariff more consistent across the whole country.
  • @DanP at Bulb
    Prior to the price change:
    Cheapest region Yorkshire 845
    Expensive region sweb 930
    Difference £85

    After the price change:
    Cheapest region Yorkshire 870
    Expensive region Sweb 990
    Difference £120

    Haven't you made the tariff less consistent across the country? :confused:

    I understand trying to make yourselves more competive compared to other companies. But doesn't giving larger, non cost reflective, increases to some customers go against principal 2? I.e. some of us have gotten much larger increases than you needed to do, to improve your competitive position?
  • @22000kwh What exactly is it you would like to know about relationships with suppliers & long-term vs short-term contracts?

    We buy our energy 3 months in advance which means we are protected against short term spikes but if there were longer term decreases we are able to pass them on & follow trends in the wholesale market.

    I thought I had been clear.

    1. I was suggesting that forming a different, much longer-term relationship with your suppliers would be better for the environment and for your customers and potential customers, and I asked for comments on my suggestion. I refer you back to what I wrote.
    2. I specifically asked for comments from Hayden about this matter.

    So why has Hayden not responded - he contributed to this thread earlier.
  • LeeWood said:

    Given that the commodity is the same price for everyone in every region, why are we getting different increases in different regions?

    Hi @LeeWood, sadly this isn't true. Energy doesn't cost the same amount in each region. There are a whole bunch of factors that cause energy to cost different amounts in each region such as the distance of homes from generators and the density of homes in the region.
    22000kwh said:

    1. I was suggesting that forming a different, much longer-term relationship with your suppliers would be better for the environment and for your customers and potential customers, and I asked for comments on my suggestion. I refer you back to what I wrote.
    2. I specifically asked for comments from Hayden about this matter.

    So why has Hayden not responded - he contributed to this thread earlier.

    1. We absolutely want to create long-term relationships with generators. That's definitely one of our goals.
    2. I'll see if I can track down Hayden for you. He doesn't have time to be as active in the Community as he'd like though, which is why people like Dan and I have a job :) His calendar is perpetually full of important meetings.
  • Purely from my perspective as a customer of Bulb.

    I thought DanP had answered your query regarding short/long term contact with suppliers? I think what he is saying is that if Bulb entered into a long term supplier relationship and the price went down they would not be able to pass on these reductions as they would have already bought the energy at the higher price.

    I'm not sure whether your particular energy profile is typical of most customers of Bulb?

    As I read it you are totally electric on economy 7 using annually 18700 kWh during the night and 3300 kWh during the day. On this basis there are other cheaper energy companies because their night rate is better than Bulb (the converse is their day rates are higher than Bulb).

    There is a cheaper energy company when I inserted your usage into two comparison sites, it also offered 100% renewable energy, if I was you I would go with them.

    The pendulum swings back to Bulb favour if the percentage day to night usage changes but still using the same amount of energy.



  • I agree that my energy profile is probably not typical. But this is partly because Bulb's pricing model means they are not a good bet for people like me. But my money is as good as anyone elses, and customers like me provide as much business as maybe three or four other customers, but with only the costs of dealing with one customer.

    "I think what he is saying is that if Bulb entered into a long term supplier relationship and the price went down they would not be able to pass on these reductions as they would have already bought the energy at the higher price."

    At the risk of repeating myself, the point is that the cost of production for renewables is FAR more stable than for fossil fuels. The only reason that their prices fluctuate is that they take advantage of market volatility caused by the fossil fuel suppliers. In other words, there is no need for prices of renewables to go up and down, they just do because they track the prices of fossil fuels. Hayden discusses this in his Blog. He also says he thinks this is a good thing. I disagree.

    My point is that if Bulb entered into a much longer-term relationship with suppliers, this security of custom and of future income for such suppliers would benefit the suppliers, and would allow them invest for the future and to reward Bulb with better prices. Just like you get better rates on investments when you lock your money in for five years, rather than instant access.

    The Big Picture here is that this provides a USP that Fossil Fuel suppliers can't touch. They are irrevocably locked into a volatile market. My proposed strategy has the potential to benefit every player in the renewables market: suppliers, resellers and customers - at least those customers who are willing to take the risk of buying into a long-term fix.

    As for the point that fixes are unfair because they end up being too low or too high compared with what everyone else is paying:
    1. This is a risk that anyone who goes for a fixed price contract, mortgage or whatever, goes into with their eyes open, and are prepared to take
    2. If the price is lower at the end of the fix than that for non-fixed customers, this is the just reward for the risk taken, and the benefits that this provides through the supply chain.
  • Do these no longer apply? Prices have dropped by over £20 looking at the latest blog: https://bulb.co.uk/blog/wholesale-energy-market-update-december

    9% drop of ~£475 cost => ~£45 decrease
  • edited January 15
    @LeeWood, it doesn't state that it's just taking wholesale costs into consideration, so it's possible that the actual yearly average costs per customer have not gone down by £20.

    I suspect we'll get a decrease soon though.
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