Tuesday, 18 October 2011

Utilitarian Utilities - For the Greatest Good (Profits)

Today's gripe is with the private sector. I've decided I've been bashing the public sector for too long, and a bit of even-handedness wouldn't go amiss. So I'm going to look at utilities, specifically the telecoms and energy sectors and see how these consumer reliant industries treat their customers and why...

I'm told I'm due an upgrade. No, there is no cause for alarm for Mrs Law Abiding Citizen - it's not that type of upgrade. I don't normally leave matters of such importance as marriage and divorce to a telesales operator from O2. If I had the option I'm not convinced I'd leave matters of such importance as my mobile phone in their hands.

You see I'm far from impressed with my mobile phone operator. In fact the same goes for my mobile phone. I think I am probably not alone. Part of the problem is I don't know at whom to direct my vitriol - Apple or O2. I'm not sure if my iPhone drops signal or if my network drops signal. As they're different companies, they both seem pretty content to blame the other.

Unfortunately, I think I've been a customer of pretty much every provider and it appears a universal truth that they're all bastards. Indeed I stuck with Orange for so long in no way because they were competent - far from it - but because I was able on several occasions to say "I've been loyal to you so you owe me." It rarely worked.

I cannot be the only person who would like simply to scream at these huge and often useless companies about my phone hanging up a call and telling me the network is busy (which I knew - I was using it). If they spent a little more time investing in a proper UK-wide network signal rather than trying to put more computing power into their phones I would be a happy bunny. You see much of the time I simply have a very pretty handheld game and music playing calculator cum calendar. But I actually wanted a phone. Unfortunately I'm too hooked on the fleeting moments of real connectivity (and Baby Monkey) that I don't want to go back to my Nokia 3210.

That is also despite the fact that those old phones that actually made phone calls all still work, regardless of their being dropped eleventy times and being full of 10 years' of dust. If they could all stop trying desperately hard to make the first phone to be able to drive your car whilst simultaneously orally pleasuring you (an interesting concept) and remember that phones are primarily designed to call people, it might be a step forward. However, increasing network coverage is the job of the network providers, and as long as they're all comfortable offering only about 50% of the country proper coverage we're screwed. As long as none of the big telecoms companies decides to spend on improving the service, we the consumer, are stuck with a choice between several almost identically bad, identically priced network providers. There's no need for them to spend on coverage if their sales aren't suffering. So short of protesting with great no-mobile days, unless the Government steps in and makes those it allows to use our airwaves and ionosphere play fair for all, not much will happen.

Onto the energy lot then… Much is being made in the media, in between jaunts of Fox Hunting and Where's Werritty?, of the totally unexpected and almost simultaneous price hikes in all 6 of the large energy providers in the UK. Now I'm going to stop short of suggesting Government pricing guides and windfall taxes on huge profits. That's mainly because I don't think it would ever happen and I'm a free market kind of guy. It's just that I'm not convinced many utility companies really operate within free markets. A little more attention paid to pricing would help, but ultimately the system is not set up for smaller energy firms to be able to compete.

One simple example is the renewables sector which is being stimulated by Government funding. The Government pays out (or rather forces energy firms to pay for it who pass the cost onto us) Feed-In Tariffs for renewable energy producers to get money into the sector. Making renewables viable by subsidies to install costly new technology is meant to be the way to attract research and development money. This R&D then should provide ways of lowering the costs in the sector thus making it economically viable as a stand-alone means of energy production.

However, the electricity being produced is sold at a paltry few pence (3.1p typically) per unit, compared to an average of about 15p or so that we pay whoever for the juice to power our lights. The Government could vastly reduce the amount that gets paid out in subsidies (and therefore gets passed on to us) if it made the system pay small producers fairly. The logistics are more complicated with electricity storage and distance for electricity to travel being key concerns, but it is workable. There is just no appetite for it in the big 6 - it will provide real competition and make them stop fixing their identically artificially high prices. There won't be real competition in price until the market is properly opened up. 

So, Government intervention seems to be the only real option here. Well I'm sure npower and the rest are quaking in their boots at the toothless Ofgem and likewise for Vodafone and Ofcom. I'm not convinced anything can come of it, so seeing as we're in the realms of the unlikely, I have another suggestion…

We are constantly told (lied to) by our mobile and energy providers that they are doing the best they can to get you their utility at the cheapest price possible. They are at pains to point out which of their million tariffs suits you the best (seeing as we can all be pigeonholed). Yet when it comes to renewal it seems it is always cheaper elsewhere, often even on a different tariff within the same company. So if these companies really mean it, put their money where their mouths are. I'm convinced they live off incorrect tariffing. Unless you never put a foot out of line and remain in the very small bounds of your tariff, you get stung; be it having to call 0845 business numbers (we've been here before) which are never covered, or having to put a wash on in the middle of the day, rarely will you not get charged for going over and also have to pay extra for a utility limit you didn't completely use up.

If these companies really want to help us, why not abandon getting us to choose from the myriad of tariffs but pleasantly inform us each month which tariff they put us on - the one that came out cheapest for that month's usage. So, the month where your office phone line goes tits up and you use 6000 minutes on your mobile, you don't get a huge bill; you get the unlimited calls plan, but next month when it goes back to normal, you're back on 'penguin' or whatever they call a normal usage plan. I know that someone will point out that it's not in the utility companies' best interests to do that, but they can't have their cake and eat it.

If they want to be able to advertise that they're trying to help, then make them use my plan. Let poor old granny warm her cockles over the winter freeze without having to bankrupt herself, and not have to pay the same rate for lots of energy through a milder than expected February. It is clear enough we can't predict the weather or the markets, why must we insist that everyone predicts how much of each utility they are planning on using? If however they don't want to be honest and actually help us lower our prices; if they wish to say they keep their tariffs complicated and narrow to profit from our inability to stick to them, then make them drop the sanctimonious 'here to help' bullshit and just say they're 'in it for your money - trying to keep you just rich enough to afford to stay alive and heat your home'...

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