11Sep/083
It wasn’t a joke
Energy firm EON UK, which is owned by German power giant EON, apologised after one of its senior executives joked that a harsh winter would mean "more money for us".
He joked about something that was entirely true? I don't understand why all the news media have blithely accepted that it was a joke. This wasn't Ratner making a tongue-in-cheek remark that might have had true words hiding behind the jest; this was just a reasonably fair reflection of what this person really thinks.
If it really was a joke, can anyone explain how a harsh winter won't mean more money for EON and the other private energy firms?
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September 11th, 2008 - 12:07
"Can anyone explain how a harsh winter won't mean more money for EON and the other private energy firms"
Energy suppliers are directly exposed to gas price fluctuations; they pass on rises (and falls) in energy prices to consumers over a much longer timeframe than the spot market.
So harsh winter -> spot price up by 50% -> consumer prices stay at current levels -> private energy firms make less money.
(except Centrica, because it also owns the North Sea's biggest gas field.)
September 11th, 2008 - 13:04
Yes, but surely if there’s a harsh winter, people use more energy? So even if the profitability of each unit is less, the amount of units used is more, isn’t it?
September 11th, 2008 - 16:13
True, so it depends on the margin they’re currently making and the weather elsewhere in Europe hence wholesale gas prices (ie if the UK has a bad winter but everywhere else is roasting, UK utilities will probably make more money, but if the whole of Europe freezes then the decline in margin might well outweigh the rise in volumes…)