I found this amusing.
The CEO of one of North America's largest energy retailers has this to say about the price of electricity.
Taken from here: http://www.thestar.com/Business/article/191105
King has long argued that Ontario electricity prices are too artificially low and that conservation campaigns will have limited success unless users of electricity start to pay its true market value. It also constrains the growth of distributed generation, including renewables such as solar and geothermal. "If centralized generation (such as coal, nuclear and natural gas) continues to be subsidized, it's very difficult to make those distributed generation products competitive and compelling for households."
Now consider what his company does. His company charges users a fixed rate that is higher than the going market rate for power. They lock their customers into this higher rate for terms of several years based on powerful threats that the price of power is going to go through the roof and they will not be able to afford it.
Until now, it's my understanding that this has always been a losing proposition and that the market rate for power has always been lower than what people pay with these retailer contracts. If that is incorrect, some please cite a contradicting source.
Now consider what would happen if this guy were to be taken seriously on this.
If the price of power were to rise, like he wants it to, he would finally after all these years be able to claim that clients of the energy retailers had actually saved some money. Then they'd be able to sign up countless more suckers for these plans, showing that someone had actually benefitted in some way.
For him to position himself as an environmentalist is laughable. What he is, is a scam artist and this is just another ploy in his scheme to cheat people out of their money.
Allegedly.
To be fair, everything in that particular quote block is true. The government does heavily subsidize electricity cost to residential users. I am also for forcing people to pay the true cost of electricity. Take the money used to subsidize electricity, and give tax breaks to the poor so they can still afford to pay the increased bills.
People do tend to get tricked into signing these long-term contracts. Although not a lot those company says is actually untrue, what the companies do is make the locked-in cost greater than the average the companies themselves expect to pay over the term of the contract. Which is, of course, how they make money. The way the consumer wins is if the commodity (electricty or natural gas) spikes in price way more than what the company expected + margin. Of course, the contract prices spike up as that happens as well, so when your contract is up, you get to lock into something much more expensive next time around.
What some people like, however, is knowing exactly how much they're going to pay, even if they pay a little bit more for that "convenience." That is, of course, their perogative.
You're basically repeating exactly what they say, which is all well and good. That's how they sell it.
Consider though, that in all the years they've been saying this, the price of power has never spiked above their contract price for any length of time long enough to incur a savings to their customers.
On top of that, power bills are somewhat unpredictable by their very nature since they're based on consumption. So people still don't know what they're going to pay each month. They only know that one component of it, multiplied by their consumption, will be a fixed number.
If you ask someone whether they'd like a varying bill based on their consumption multiplied by a fixed amount each month, or a varying bill based on their consumption multiplied by a varying amount that has historically ALWAYS been below that that fixed amount, which do you think they'd choose?
They sign up because they are misled into believing they will save some money, and nobody ever has.
This entry wasn't written to imply that Mr. King was lying. It was written to point out that I believe he is saying what he's saying with ulterior motives and that the end result, if people listen, is that I will pay more for power and his company will scam more people.
Have we not sorted out yet that there's always an ulterior motive when someone's speaking about the economics of the field in which he is employed? Media Studies 101, people.
Weasel gets a big "duh" for his beliefs. The reason these contract companies work is because they never present the entire story, and people are too ignorant/lazy to get the whole story themselves.
King never plugged buying an electricity contract in the article. Everything he said was true, at face value, with no missing data. True, he'd probably like to use the resulting upswing in electricity prices to fuel his company's sales, but anybody who doesn't do due dilligence doesn't have a lot of sympathy from me.
Mantra: nobody ever tries to sell you something without getting something out of it. The question is, are you going to get anything out of it. Only you can get the true answer. (Cynical? Maybe. But it's self protective too.)
They do more than simply not presenting the entire story. They also sometimes lie to you outright and use coercive tactics to pressure people to sign up without getting the whole story.
You may not feel sorry for the ignorant, but I believe that letting the fraudulant take their money because they're too stupid to understand what's going on is wrong. I hate bad people while I am more or less just indifferent or sometimes sorrowful toward stupid people.
Sure. But I haven't seen any fraud done. Of course, I don't tend to give their sales people enough time to tell me any lies, but I can state I haven't encountered any such fraudulent attempts.
Not that there aren't any complaints any such-and-such ombudsmen, etc. I think the entire concept of retailers is a little retarded, because as companies, the reason of their existence is to profit: so, you either buy at-market, or you buy from a company who is also buying at-market, but also trying to make a profit. Common sense for the win. But having fraudulent sales people (and not all of them are – I don't think it's a corporate policy, per se), doesn't absolve customers of their responsibility to inform themselves and verify the accuracy of any claims made. These sorts of things are reported on every couple of months, it's not like it's a new scheme.
Buying from a retailer is really more of an insurance policy than anything else. And it's not outside the realm of possibility that a customer might actually save money that way, it's just that the cards are stacked.