Price watch - Are Bulb trying to pull the wool over our eyes?

The new price watch blog post includes a new graph as always, comparing the wholesale price of energy against an average customer’s bill.

However it’s got a very short timescale on the x-axis this time, and if you compare against the last graph, it makes you wonder why we haven’t seen a price decrease yet.


Bulb previously committed to lowering members’ prices as soon as they could save the average member £20/year.

I get that there’s volatility, but based on the last graph and the fact that there’s been no decrease for quite a number of months now, it seems like we should be due a drop somewhere in the order of £100/year.

Yes @mowcius, I agree with you on this.
The UK Natural Gas Futures price has reduced by over 50% since October 2018 (from over 60 pence/ therm to less than 30 pence / therm currently). Bulb’s reduction in prices nowhere near reflects this.
Aren’t we due a price reduction by now?

https://www.theice.com/products/910/UK-Natural-Gas-Futures/data?marketId=142676&span=2


I think this blog is a case of “The lady doth protest too much, methinks”. The April volatility in Gas wholesale prices was a 6 day spike which I think was in part due to a maintenance shutdown of a Norwegian pipeline for 2/3 days. The pre spike price was at a 3 year low and was back at a 3 year low 7 days after the spike peak, 13 days in all, and has been heading south ever since. Gas wholesale prices have been below 2017 prices since March and future prices are currently below 2017 prices until November.

Electricity prices have also fallen but slower. They have since late March been pretty close to 2017 levels and certainly below the levels which caused 3 price rises in 2018.

I think the growth in customer numbers through the second half of 2018 forced Bulb to buy a lot of energy in the face of rocketing prices and giving referral fees and paying exit penalties comes at a cost. Add to that the spiralling costs of the smart meter rollout and its problems and I think Bulb may not be feeling as flush as they would normally with falling wholesale prices.

Must admit that the explanation in the blog doesnt really feel satisfactory when prices have historically gone up so much

I have to say I wasn’t entirely convinced. Looking here, wholesale electricity prices are below where they were at point in 2018, and bulbs prices are are actually higher now than they were then.

I know that policy and network costs exist, and are generally rising, but Bulb aren’t being entirely transparent about them (bundling everything together). There are cheaper energy tariffs on the market for us at the moment and I’m currently debating switching. I do appreciate being on a green tariff, and theoretically I don’t have to muck about changing tariff every year (although maybe not, as bulb does seem to have drifted away from being the most competitive). But the bigger that gap between bulb and the cheapest supplier the harder it is to justify not switching.

At the end of the day, bulb isn’t obliged to cut its prices, it can charge what it wants. There aren’t that many suppliers undercutting it, yet. I suspect if Bulb saw a lot of customers leaving it would cut its prices fairly quickly, such is capitalism.

@ThatGuy

For me, the most I can save is around 13%. That’s with a few small minnows, I’m content with the energy tariff I’m on. If the prices start to fall a lot more for another green tariff from a green supplier I’d be interested in switching.

For me, I’m not going to switch to shell (see my thread on it) , and I wont be on a green tariff from a brown energy supplier either.

Bulb are starting to look very expensive compared with the cheapest suppliers. They’ve fallen below British Gas in the latest customer satisfaction survey (Not even in the top 10), and my Smart Meter is still ‘dumb’, 2 months after install.
Getting hard to recommend sadly.

:#

eon:
Unit rate 2.850p per kWh
Standing charge 18.89p per day

bulb:
Unit rate 3.418p per kWh
Standing charge 20.44p per day (£74.62 per year)

Breeze Gas

3.1p KWh, 10p a day Standing Charge.

Bulb

3.7p KWh, 20p a day Standing Charge.

Hi all

Thanks for the conversation here on wholesale costs. We publish an Energy price watch on our blog around every three months so we can be transparent with our members on what’s going in the energy market, so we’re glad to see these conversations. We think it’s useful to communicate what’s going on in the wider energy world so we can explain any change to your energy bills.

We still practice the Fair price principals that we set in 2015. We’ll always drop our prices by £20 a year when the cost of supplying energy drops by that amount. We’ve done this nine times so far. However, a fall in the wholesale cost of energy does not directly translate into a fall in the cost of an annual bill. The cost of supplying energy also includes regulatory costs, meter maintenance, and everything to do with supplying your energy. In the last few months, these other costs have increased for Bulb. This includes the cost of the Renewables Obligation (RO) and the government’s energy efficiency scheme, the Energy Company Obligation (ECO) that bigger suppliers like Bulb have to pay. So while wholesale costs make up a large chunk of your bill, they aren’t the only influence on the price of your energy. Before our next update, we’ll look at how we can better communicate changes in these other costs.

On the graph, we last updated you in February so there was another graph between the two posted here:

The graph in each blog reflects the time period we’re talking about. We discussed the record breaking trends throughout 2018 in the December price watch which is why we used a graph with a longer x-axis. The most recent graph was to illustrate what’s gone on since our last update in February.

We’re sorry if the inconsistency between x-axis has made things unclear. We certainly don’t want to cause any confusion. If you have suggestions for how we could improve this, let us know.

If you have suggestions for how we could improve this, let us know.
Use the same scales each time with the same relationship. Don't just cherry-pick scales to make the lines look nice and close.

If this means that the gap between the lines gets bigger, so be it. Explain why this is the case and what Bulb’s increasing costs have been.
If it’s because you’ve been spending money on smart meters or eco measures then say so. If it’s because you’re spending money expanding into new markets abroad then say so.

Back to the orginal comparison though. Are you saying that right now Bulb’s yearly costs have risen by £90-100 per member since the lows of 2018?

With regards to the Renwable Obligation, I was under the impression that all energy suppliers are obligated to purchase ROCs whatever their size, so this cost should only have increased by a few pounds (https://www.ofgem.gov.uk/environmental-programmes/ro/energy-suppliers)

I can’t find a newer document on the cost of ECO obligations but this document gives some idea. I imagine that’s most of the increase.

With Bulb’s meteoric growth, the actual management costs of each customer surely is going down though due to economies of scale.
Unless due to Bulb’s seriously poor management of some issues you’ve had to take on more staff in support than would otherwise be required, negating any savings…

On the Renewables Obligation, all other suppliers are being asked to pay extra to cover costs of suppliers who have gone bust without paying their fair share:
https://news.sky.com/story/failed-energy-suppliers-could-leave-172m-bill-for-households-11745850
Personally, Bulb are still the second cheapest (Elec only in Southern) for me…

Thanks for the feedback @mowcius . The last thing we wanted to do is cause confusion.

We’ll continue to use graphs to illustrate the wholesale costs in our energy price watch blogs but be consistent with the length of the x-axis. And where we can, explain any significant changes in our costs that will affect your monthly bills.

Wholesale costs have decreased by around £85. Most network and policy costs have increased this year. And there are other network and policy costs that we didn’t have at this time last year.

For example, in winter 2018-19 Bulb was pleased to start offering the Warm Home Discount (WHD). This is a social obligation on energy suppliers to provide financial support to members in low income, vulnerable situations during the winter when they really need it. And this year we will also be offering ECO (which stands for Energy Company Obligations) for the first time. This means Bulb is going to fund the installation of energy efficiency measures in people’s homes. This helps people lower their bills, and is also good for the environment.

Where we can, we absorb the costs ourselves but we do have to pass some of these to members to remain a sustainable business.

We dropped our prices twice last winter saving our members around £22 on their annual energy bill. Once there’s more certainty in the markets and wholesale costs remain low, we’ll be able to lower our tariff.

Bulb’s international expansion is achieved through a small, dedicated team which minimises the cost to the business. Our core focus is providing our members with a fair deal on energy in any country we operate in.

All companies are obligated to purchase renewable obligation certificates. The cost of ROCs have increased but this is the same for all suppliers. Not just Bulb.

We focus on more efficient ways of serving our members. Better and more intuitive technologies help our Energy Specialists solve our members’ queries much quicker. We strive to continuously make improvements in this area, and pass cost savings from economies of scale to our members, as we did last year.

We’ll continue to use graphs to illustrate the wholesale costs in our energy price watch blogs but be consistent with the length of the x-axis. And where we can, explain any significant changes in our costs that will affect your monthly bills.
Can you be consistent with the relationship between the two x-axis scales as well? They seem to change every time just to make the lines closer together and that's what makes it seem like you're trying to mislead people.
We’ll continue to use graphs to illustrate the wholesale costs in our energy price watch blogs but be consistent with the length of the x-axis. And where we can, explain any significant changes in our costs that will affect your monthly bills.
Can you be consistent with the relationship between the two x-axis scales as well? They seem to change every time just to make the lines closer together and that's what makes it seem like you're trying to mislead people.

Yes, we can be more consistent with this too. :slight_smile:

I don’t really understand the charts or the £85 quoted. I can see the charts showing Wholesale Gas Costs though. Looking at prices for Gas in three months time (Which is the period in advance Bulb say they buy)

https://www.theice.com/products/910/UK-Natural-Gas-Futures/data?marketId=142833&span=3

And to make the numbers easy, use 20,000 Kwh as a typical user. (29.2 Kwh in a Therm roughly).

Wholesale Cost Jan 2018 20,000kwh x 1.55p = £310. Amount charged to Customer at Jan 18 prices 20,000kwh x 2.54p = £508. Margin for Bulb/Wholesalers/VAT etc £198.

Wholesale Cost Oct 2019 20,000 x 1.25p (Yes, prices are down from 18 months ago) = £250. Amount charged to Customer at today’s prices 20,000kwh x 3.77p = £754. Margin for Bulb/Wholesalers/VAT etc £504

So for a typical customer, the difference between Wholesale Costs & Amount Charged over 12 months has gone from about £200 to £500.

So someone, somewhere in the chain is making a lot more money.

If you switched to a low cost supplier at around 2.8p per Kwh (And I’m not saying you should), then the margin reduces from £500 to £310.

Every business exists to make money, but these numbers suggest that Bulb are increasing their margins considerably, and the Chart posted doesn’t reflect this. I refer you to the title of this post!

no bank account and no sort code what sort of company is this

no bank account and no sort code what sort of company is this

Hi @taffie22 ,

They are a normal modern-day company - they accept payment via Direct Debit for the vast majority of payments as it is easier, cheaper and quicker: helping them keep their costs (and therefore their prices) low. Non-direct debit payments require manual intervention (so staff costs increase) and then opens up the possibility of ‘bad debt’ and having to chase payments.

My bills are beginning to become astronomical. I shall surely be USwitching if I find there isn’t a gas leak in my apartment. I cannot possibly use the amount of gas they’re charging me for.

Blathers, Are estimates being used , are you sending your readings in within the 2 day time frame?