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Would it not be beneficial in the longer term for Shell energy to allow current Bulb customers to switch to them, now that Bulb has collapsed?
The UK government have allocated £1.7bn (of taxpayers money) to handle the 1.7 million bulb customers that they have effectively become responsible for. I am sure taxpayers would be more than happy if Shell took on that responsibility.....I'm not sure it necessarily makes good business sense in the short term.
Shell energy are in the business of supply to households - if they are not willing to expand their customer base, then why bother at all.
"- if they are not willing to expand their customer base, then why bother at all."
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Currently every customer that they add on price capped standard tariff will lose them money. The market is broken.
I am split. As a taxpayer I would like Shell to take on Bulb customers to stop me paying for them. As a Shell investor I would prefer dividends rather than subsiding the ex-Bulb clientele.
Perhaps things will look different next April when the fixed tariff is due a big increase.
Currently every customer that they add on price capped standard tariff will lose them money......
Currently every customer is losing them money.
"Currently every customer is losing them money."
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Yep, there aren't many people that will renew on a fixed term contract, even USwitch is recommending people go onto the fixed standard tariff. Something has got to give. Not many companies have unlimited resources...apart from Shell apparently!!
Not sure how the Shell Energy CEO would get it passed by the board..."I'm going to take on 1.7 million new customers who are going to cost us at least £250m (my estimate!!) over the next 5 months....oh, by the way, can you approve my bonus payable immediately in cash....please!!"
If I were Shell I would definitely be doing a deal with the Government to take on the Bulb customers.
They know they cannot keep the price cap in its current form and that the market has to be balanced between suppliers and customers.
As with all things the market will right itself and hopefully will help progress Shell power business in the future….
"Currently every customer is losing them money."
Probably, but not necessarily. The sale price to customers is below the *wholesale* price, but the larger companies (including Shell) will have hedged their positions to some extent and may also be trading around the structural position. As I understand it, one reason why some of the smaller players have folded is that they didn't have deep enough pockets to hedge properly.
I say this with no specific knowledge of Shell's hedging strategy for electricity, just that we have a large trading division that has considerable expertise and experience in this area for a variety of markets and commodities.
Usual disclaimer applies: this is my personal view and does not represent Shell, etc.
Right, Nevers, some of these new punters will stick, maybe all if they've nowhere better to go. Everyone needs household energy, candles just aren't the gear these days.
The consensus here seems to be that it would be good for Shell Energy to attract Bulb's customers but not at any price. So, as NSS says, there's potentially a deal to be struck with the Regulator. On the issue of hedging - I hope that RDS' expertise and resources will have mitigated the damage but, equally, I'm not expecting stellar results from that division this year. I think that people like me who have come to the end of their contracts and are now on the standard tariff will be looking hard at all the options when the cap gets raised next year. There's no guarantee that punters acquired now will stay with Shell - so the cost of taking them on needs to be strictly minimised: the time for 'offers' and 'discounts' to retain them is further down the track.
Boyobach, good points as usual. Shell could 'do a deal' with the regulator (although I cannot imagine what that would be!), spend millions on integrating those Bulb customers, then spend many millions more subsidising them over the winter months (when they use the most energy...all at a loss), then when April comes & the standard tariff increases dramatically they jump ship to another provider (if there are any left by then). Seems a strange way to run a business....but these are strange times.
Strange indeed Bald.
I think things will get much worse for consumers in April as the prices will be massively hiked up and the cap will have to be amended or replaced completely.
I don't see any companies offering sweeties to move until at least 2023 and even then Shell being a provider of the oil and gas and a supplier of the power will be in a great position to be very competitive.....
Im certain this will happen...Actually WTFDIK......
NSS