I\’m not sure about this

British households are having their "pockets picked" by foreign energy firms to subsidise customers in their own countries, the Government’s new consumer champion has said.

I\’ve no doubt that they would like to (any firm would like to pick the pockets of its customers) but I\’m not sure that I can see the mechanism by which they can.

Britain’s energy bills have risen more quickly than on the Continent, where governments have manipulated markets to protect customers.

OK, but I still can\’t see how this affects us.

Mr Mayo said households were suffering because foreign companies — often owned by the state — faced no competition at home.

"Closed and protectionist European energy markets end up picking the pockets of consumers in this country," he said.

I\’ve no doubt that both those things are true as well….that some companies have no or little competition at home and that rigidities in the markets do cost our own consumers dear.

But it\’s that first bit that I\’ve got the problem with. Just how are these companies charging us more to subsidise their home consumers? In the UK they are in a competitive market so they cannot just charge what they wish.

So how does this mysterious process work, anyone know?

 

5 thoughts on “I\’m not sure about this”

  1. “In the UK they are in a competitive market . . ”

    Is it a “competitive” market? If the companies agree – even tacitly – not to compete in the UK (or not to compete too much: you know, like the major supermarkets don’t really compete on price) then it isn’t competitive. I’ve certainly seen no evidence that it happens but the presence of large price differentials between markets where transfer of a commodity product is unhindered (and cheap) speaks of some anti-competitiveness activity somewhere.

  2. the presence of large price differentials between markets where transfer of a commodity product is unhindered (and cheap) speaks of some anti-competitiveness activity somewhere.

    Yes: it’s in France and Germany. Retail consumers there are paying below the market price due to state intervention; while retail consumers here are paying the market price.

    I’d be very surprised if wholesale or MEU rates were significantly different between the UK and France or Germany.

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