Strangled by fake competition

For your own good of course

Lately I have been telling the tale of how I have been trying to get a better deal on utility bills. Gas and electricity and so on. First for a friend and then for me. It has taught me just what a disgraceful con the whole system is.

In my previous article I covered how the British energy industry got to be how it is. To recap, the system is based upon contrived competition. There can be no such thing as real competition in such huge scale capital intensive industries. But the previous solution of taking the whole thing into public ownership was perceived to have failed.

Whether that was a fair assessment, and what to do about it, are different issues, for another time maybe. I want to focus on the ‘solution’ we have got. Namely, fake competition.

Basically to avoid having one enormous monopoly supplier, public or private, the government creates a fake playing field. This consists of a small number of supposedly ‘competing’ energy suppliers. In reality however they are not competing to serve customers they are competing to strangle them.

Because all these suppliers supply the same energy from the same wells etc through the same pipes etc, there is not really much for them to compete in. So they make their money by fleecing their customers instead. And cutting the back office, their administration. It is hard to see anything else they could compete in.

The main function of their backoffices is their marketing and public relations, designed to give you the impression that they are so much better than the rest, to hide the reality that they are just the same as all the rest.

Therefore the most successful utility company, which in the private sector means the one that makes the most profit, will be the one that has the sleekest (ie worst) administration. And tells the biggest porkie pies. All of which will result in the worst customer service, and/or the most efficient strangling of the consumer.

And they are not incentivised to do the boring stuff, like keeping the stuff flowing in all weathers. Texas, one of the warmest places on earth, with one of the highest energy stocks on earth, recently froze in a bad weather snap that their energy system could not cope with.

In effect, the system ‘works’ because it is a perverse reversal of the normal claims for competition. Competition is supposed to be good because it makes suppliers compete to treat their customers the best so as to get more customers in the long term. However in this rigged market, being a loyal customer marks you out as a sucker. Ripe for exploitation. The competition is to exploit not to impress.

If you don’t like being exploited you do have the right to take your business elsewhere. Which the more switched-on customers do. Leaving the less savvy to be feasted on by predatory suppliers. The poor the unintelligent the vulnerable. Ripped off by design.

So some of us get to minimise our utility bills. And we are told what smart and savvy consumers we are. And not to worry too much about the rest. They can look after themselves. They’re not as smart as you are. If they get ripped off its all their own fault.

Next time I’ll deal with how they get us to buy in to all this.