Energy Company Shares Did Anyone Short Them Before Ed's Announcement?

[interestrateripoff]

http://www.independent.co.uk/news/uk/politics/the-heat-is-on-milibands-energy-price-pledge-knocks-950m-of-centrica-shares-8838578.html

Shares in British-Gas owner Centrica tumbled by 5.0% today as the market reacted to Labour leader Ed Miliband’s shock announcement yesterday that he would freeze energy prices if elected in 2015.

On hearing the news, the group warned yesterday that it “would simply not be economically viable for Centrica to continue to operate” in the face of such a freeze.

Investors took Centrica’s comment to heart today, sending its shares down by 18.60p to 378.10p.

SSE, the utility formerly known as Scottish & Southern Energy, also suffered, as its shares fell by 83p, or 5.3%, to 1,497.0p.

Considering this was likely to be the effect of such an announcement I wonder if anyone had shorted the shares prior to Ed's great speech or sold what they owned?

[Eddie_George]

Labour will never get in. If you read The Times, the hate for Miliband is immense. I can't imagine The Telegraph being more right-wing!

I'm sure the Sun has a similar view. There'll be another one of these come 2015:

[swissy_fit]

http://www.independent.co.uk/news/uk/politics/the-heat-is-on-milibands-energy-price-pledge-knocks-950m-of-centrica-shares-8838578.html

Considering this was likely to be the effect of such an announcement I wonder if anyone had shorted the shares prior to Ed's great speech or sold what they owned?

Probably the Labour Party, they're short of funds, a few big spread bets will have funded them for the next couple of years.

[fluffy666]

Centrica balance sheet..

Given that the pre-tax profit was about £2.5 billion they can probably handle an 18 month price freeze.

I'd add that the solution to energy costs in the medium to long term lies in more capacity generally than trying to cap costs.

[scrappycocco]

Wasn't he some kind of energy person in the previous cabinet, love to see his achievements in that post? The guy has just lost the plot, what does he think energy grows on trees in people's gardens.

[byron78]

Presumably this is an indication they think dividend payouts to shareholders will be smaller as a result of an energy cap (thoughts)?

[interestrateripoff]

Presumably this is an indication they think dividend payouts to shareholders will be smaller as a result of an energy cap (thoughts)?

That should help the pension deficits.

[The Masked Tulip]

As Labour will not get re-elected when will energy company shares be a buy after today's dip?

Let's hope Labour keep sprouting about this on the Sunday politic shows.

[Butthead]

Edit - hadn't spotted there's a thread on the policy point in question.

Edited September 25, 2013 by Voice of Reason

[Wurzel Of Highbridge]

Centrica balance sheet..

Given that the pre-tax profit was about £2.5 billion they can probably handle an 18 month price freeze.

I'd add that the solution to energy costs in the medium to long term lies in more capacity generally than trying to cap costs.

Hmm-mm, how about nationalizing the energy companies for the good of the UK citizens. Ohhh

[Venger]

Centrica balance sheet..

Given that the pre-tax profit was about £2.5 billion they can probably handle an 18 month price freeze.

I'd add that the solution to energy costs in the medium to long term lies in more capacity generally than trying to cap costs.

Perhaps if Labour hadn't done a total shakedown on the banks in 1997-2000 (sometime around then), with its Windfall Tax, they wouldn't have started recklessly chasing/lending for a property/debt mega bubble. With Labour taking all the glory for prosperity, outlining all the new billions to be spent on educationx3 and everything else. Quite apart from their other stupid giveways including Winter Fuel Allowance (non means tested).

Actions 'Caring Ed' is suggesting he'd do have many hidden consequences.

Pension fund investment manager probably were going to take their profits from Centrica or others, gauging many market conditions including US taper. Now we've got THE FEAR of Labour dictating things to companies and involving themselves heavily in markets.

He's sure going to get a lot of money going to other parties coffers. I'm worried he'll target me next, deciding what we can price at. Ed the market decider. Edit to add: Some might say, over-and-over, he has acted in a reckless and provocative manner.

Edited September 25, 2013 by Venger

[byron78]

Perhaps if Labour hadn't done a total shakedown on the banks in 1997-2000 (sometime around then), with its Windfall Tax, they wouldn't have started recklessly chasing/lending for a property/debt mega bubble.

I don't think that logic really works, given there was a global debt/property bubble.

Unless Labour peed off a group of international bankers so much they decided to blow up the world of course (doubtful).

In other news, Gordon Brown single-handedly sank the Titanic.

[byron78]

Centrica balance sheet..

Given that the pre-tax profit was about £2.5 billion they can probably handle an 18 month price freeze.

I'd add that the solution to energy costs in the medium to long term lies in more capacity generally than trying to cap costs.

That's where I'm at with it.

They're still going to rack in billions even if prices are frozen for a bit. No chance they'll shut that off, but they'll undoubtedly squeal.

If any company does twitch/threaten black outs, a well run one will step in and use it as an opportunity to pick up customers.

I certainly would in that situation.

Edited September 25, 2013 by byron78

[porca misèria]

Big deal. Ignorant journalist fails to notice Centrica went ex-div today. Yes it was a big fall, but not 5%.

On the other hand, SSE's fall of more than 5% comes without any mitigating circumstances. The market is pricing in the risk of a government raid on utilities.

(FWIW, I think part of Miliband's proposals could make sense, subject to big caveats about not messing it up. Splitting generation from retail sales might have legs, though it won't bring prices down).

[Sledgehead]

Porca's (valid) comments aside, if instead, SSE and Centrica had been allowed to do a 5% rights issue, instead of Red Ed being allowed to open his gob, they'd both have ~£1bn extra in the bank. Even if they'd have subsequently returned these funds as a special dividend, the shares would still only have declined to around where they are now. Spending the money on investment and maintenance would have made for a more valuable company, and so have led to a less dramatic decline than we have seen today. It would also have raised the prospect of less investment spending going forward: something which would have meant cheaper bills going forward, and not just for 20 months.

Milliband basically just wasted a couple of billion in sentiment. Pretty dumb.

[stormymonday_2011]

That's where I'm at with it.

They're still going to rack in billions even if prices are frozen for a bit. No chance they'll shut that off, but they'll undoubtedly squeal.

If any company does twitch/threaten black outs, a well run one will step in and use it as an opportunity to pick up customers.

I certainly would in that situation.

Yes I think the energy companies may come to regret those mutterings about blackouts because that should not happen in a properly functioning market providing a resource is available. If they can not supply energy without government guarantees for building storage facilities and maintaining infrastructure then it might suggest that Millibands claim about the market not functioning could have some basis in fact. If the British taxpayer has got to underwrite such investment then I don't see why they should not own the assets themselves and keep the profits from their use. As mentioned on the other thread it is a bit odd to read pundits in the Daily Telegraph and elsewhere defending 'privatised' utility companies such as EDF which are in fact over 80% owned by foreign governments. If the French state can own a share of the British energy market then why can not the British government do likewise

Edited September 25, 2013 by stormymonday_2011

[Venger]

If any company does twitch/threaten black outs, a well run one will step in and use it as an opportunity to pick up customers.

I certainly would in that situation.

Telegraph (today). The risk has increased. Well run ones step in? What, until you're the next to be Millibanded with some restriction on how you do business, or some windfall tax that should rightfully go to shareholders, back when companies were well run? Would the Labour clones cheering the Windfall Tax in 1997 in the run up to elections have voted for a windfall tax on their own savings, or would they like one brought in now on the value of their homes. 50% of the equity to Gov. Windfall taxes grr. Shakedown.

Business and people are going to live in the here and now, trying to maximise their wealth, or get it out of here, with THE FEAR of what new control every aspect of your lives overiding of market disciplines policy that Labour might come out with.

Top Centrica shareholder Neil Woodford accuses Labour leader Ed Miliband of 'economic vandalism'

Centrica’s largest shareholder has accused Ed Miliband of “economic vandalism” and said that energy companies should pull investment out of the UK, putting the country at risk of the “lights going out”.

[Venger]

Don't get me wrong, says Miliband; it's only gas and electricity prices I want to control. But what then happens when bread and other food prices start to rise by more than people want? Pretty soon it will indeed be the price of tomatoes that Miliband's Labour government will be controlling.

.....

Price controls will ultimately only end up stifling both consumer choice and growth. Red Ed, is I fear, just reverting to type. Unbelievably, he still doesn't seem to get that you cannot have rising pay and living standards without wealth creation and growth. These are things you cannot legislate for – by freezing prices, or confiscating unused land. They have to be earned.

http://blogs.telegraph.co.uk/finance/jeremywarner/100025613/ed-milibands-speech-summarised-get-out-the-flares-its-back-to-the-seventies/

Makes me want to leave for Germany too, or elsewhere, as I've read a few times from others recently. Our politicians, and the policies we already have. Delusional.

[Executive Sadman]

Labour will never get in. If you read The Times, the hate for Miliband is immense. I can't imagine The Telegraph being more right-wing!

I'm sure the Sun has a similar view. There'll be another one of these come 2015:

Of course labour will get in. Even though Brown was far more hated than Miliband, Camoron still couldnt secure a sound victory against him. Add the fact that this election many lib dem voters will return to labour, and many tories will defect to UKIP, a lump of coal could lead labour and they'd still get in. What he says doesnt matter.

[@contradevian]

I think Miliband has done a good job rattling the energy co's and sending their share prices tumbling. We are being held to ransom by a bunch of foreign rentiers.

None of this would be happening if we still had the CEGB or if the original privatised structure had remained in place, with a separation between the power generators and retail.

Now we get all the Tory scare mongering. Well all the right wing nut job 'free market' economics have been a total and utter disaster for this country and its time we ran this dump for the benefit of the people. not a handful of rentiers, bankers and CEO's.

[BalancedBear]

I would be very surprised if a nationalised power industry would produce power more cheaply than private companies. No matter what, there is still some competition. If there was no competition, prices would probably be even higher.

Energy is still relatively cheap. Huge amounts of energy are wasted and most people could save loads just by being less wasteful. The reason most people don't is that they don't think that a few extra lights left on actually cost much to run, which in all fairness, they don't. Many people probably waste enough food each year to pay for their entire utility bills.

[byron78]

I would be very surprised if a nationalised power industry would produce power more cheaply than private companies. No matter what, there is still some competition. If there was no competition, prices would probably be even higher.o

Energy is still relatively cheap. Huge amounts of energy are wasted and most people could save loads just by being less wasteful. The reason most people don't is that they don't think that a few extra lights left on actually cost much to run, which in all fairness, they don't. Many people probably waste enough food each year to pay for their entire utility bills.

Aren't 75% of the world's oil resources state produced?

Think only 10% are produced by private companies.

[BalancedBear]

Aren't 75% of the world's oil resources state produced?

Think only 10% are produced by private companies.

Probably correct, and a large proportion of them are in a cartel called OPEC to influence the oil price. They certainly are not producing oil as cheaply as possible. This may however be a blessing in disguise, as otherwise there would be even less incentive to wean ourselves off oil.

[MarkG]

Now we get all the Tory scare mongering. Well all the right wing nut job 'free market' economics have been a total and utter disaster for this country and its time we ran this dump for the benefit of the people. not a handful of rentiers, bankers and CEO's.

Uh, we're talking about the UK energy market here, which has nothing to do with a free market.

You know, the UK energy market where the government refuses to let new power plants be built, blocks cheap gas, subsidizes windmills, then pays companies to keep diesel generators sitting ready to provide power when the windmills can't. Anyone who claims it has anything to do with a free market is either ignorant or lying.

[Venger]

22 August 2014

Friday newspaper round-up

The Daily Mail The boss of one of the UK's biggest energy companies has blamed Labour's threatened price freeze for his group's failure to cut bills, despite the recent slump in wholesale gas prices.

Paul Massara, chief executive of npower, [...] said that cutting bills would be too risky because the supplier would be unable to raise them again in response to rising costs if Labour won the election next May and implemented its promised 20-month price freeze.