I think the reasoning goes that basically all the companies will end up charging to the price cap as they're not making money.
When I say not making money that's the "distribution to consumer" bit not making money. All the profit is taken out upstream in a tax efficient way.
But if you're a company that only supplies then your stuck between a rock and a hard place. That's why so many of the little guys that were touted as evidence of competition have vanished.
That's why so many organisations have been structured into stand alone companies rather than one large old fashioned company. That way you can shape where the profits/costs/taxes go to maximise the earnings.
The standing charges are going up to recoup the losses from the companies that went bust.
The deal was the others took the customers and outstanding charges on. They got whatever money wasn't in the kitty plus they had to honour the customer balances.
Your account might have been in credit to the tune of a few hundred pounds.
You kept the "notional" credit when you were moved to a new supplier.
But that money didn't actually exist, it was gone when the company went bust.
Your new company is recovering that via the standing charge.
The alternative at the time would have been to tell everyone that whatever money/credit they thought they had was gone and they had to start with zero at the new supplier.
The scheme to keep the existing balance with the new company and recover via the standing charge avoided facing the consequences straight away and spreading it over a longer time period.
When I say not making money that's the "distribution to consumer" bit not making money. All the profit is taken out upstream in a tax efficient way.
But if you're a company that only supplies then your stuck between a rock and a hard place. That's why so many of the little guys that were touted as evidence of competition have vanished.
That's why so many organisations have been structured into stand alone companies rather than one large old fashioned company. That way you can shape where the profits/costs/taxes go to maximise the earnings.
The standing charges are going up to recoup the losses from the companies that went bust.
The deal was the others took the customers and outstanding charges on. They got whatever money wasn't in the kitty plus they had to honour the customer balances.
Your account might have been in credit to the tune of a few hundred pounds.
You kept the "notional" credit when you were moved to a new supplier.
But that money didn't actually exist, it was gone when the company went bust.
Your new company is recovering that via the standing charge.
The alternative at the time would have been to tell everyone that whatever money/credit they thought they had was gone and they had to start with zero at the new supplier.
The scheme to keep the existing balance with the new company and recover via the standing charge avoided facing the consequences straight away and spreading it over a longer time period.
