price cap and windfall tax

[wraymond]

ACS: Where did that explanation come from! Agreed, the profit does look large. And oh boy it is.

I’ll bet my house you’d go a long way to find an ‘average’ user’s house. Yes, it’s a maximum price all right, and it gives the supplier guarantees of future profit maintenance and a predictable regular growth ceiling. Exactly what they want. It's called stability. Note: the opposite of market fluctuation!

It’s also got a guaranteed period of review. That guarantees future ‘growth’ supplement. That, taken together with the correlated inflation of the share price (from which directors and investors enjoy substantial guaranteed returns on their investments) is a pot of gold only available to corporate investors or investment trusts with their billions.

The so-called ‘Cap’ is a fraud and it is decided and imposed by contacts with the investment markets. The ‘Cap’ is a deliberate misnomer and should be replaced by a floor rather than a ceiling. That would describe a more accurate picture of a company’s real market value.

As things stand, and for all other purposes, it is phoney. If it wasn't ring-fenced by government decree, it would be banned.

[torque2me]

Originally Posted by grivas

No wonder the rest of the world think the British political system is a running comedy, the Americans apparently, tune in to watch PM's question time because they think its a soap opera!.

I've always been under the impression it was

BoJo is good at the big picture but useless on anything after that. It is important to pick people that are good at covering one's own shortcomings in the team. He has failed to recognize his shortcomings (which we all have) and thus leads a disfunctional No.10.

I think Tony Blair would be a close second for being economicaL with the truth.


Kev

[another_clean_sheet]

Originally Posted by wraymond

I’ll bet my house you’d go a long way to find an ‘average’ user’s house. Yes, it’s a maximum price all right, and it gives the supplier guarantees of future profit.

Wrong. It is no guarantee of future profit. A large number of companies went bust as the wholesale price of energy plus overheads was more than the price cap and they did not have the reserves to see it out to the next review.

[edwardmk]

Originally Posted by another_clean_sheet

Wrong. It is no guarantee of future profit. A large number of companies went bust as the wholesale price of energy plus overheads was more than the price cap and they did not have the reserves to see it out to the next review.

Agree. A price cap is a nonsense. Usually used in failing or unbalanced economies, more common historically a 'solution' in communist countries. As suppliers costs rise above the price cap, they go bust or wisely cease trading. However, it may also be effective for a monopoly provider to squash competition and increase profits.