The eternal attraction of cushy deals + the easy life

“Nicolas de Warren, president of the French Union of industrial companies with high consumers of electricity, calls on the government to appoint a mediator between the Union – which wants a deal for for cheap electricity – and stated-owned EDF.  “EDF appears to be in a form of denial of the current situation and the very serious loss of competitiveness suffered by French industry [...]. If we do not reach a conclusion quickly, [there are] risks of plant closures and the relocation of production,” he warns. According to him, the main point of divergence between EDF and industrial companies is the methodology for defining the cost of nuclear production.”

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I’ve recounted the following story before.  My commercial career was spent in companies that expected to make their own ways in the world, & never looked for subsidies[1].  One day I found myself dealing with ICI (deceased), that blue-chip paragon of British Industry, where I discovered their attitude was “why do a hard day’s work when you can lobby government instead?“  Soon, I encountered more firms like that and, aside from initial revulsion, I realised there was an entire slice of the ‘commercial’ world I didn’t know existed, and needed to understand.    

This entitled sense of “always look for the easy life, we deserve it” soon hit me again in a slightly different variation.  In the firm I was working for we had cannily acquired a long-ish term contract for purchasing gas at a deeply discounted price, from a seller for whom the gas was more-or-less an unwanted by-product.   It wasn’t an outright distress sale – they were a perfectly viable going concern – but if they’d wanted to get top dollar for it, they’d have needed to set up, in a hurry, an entire new, specialised commercial department, which doesn’t even sound easy and in practice would have been extremely difficult.  Getting shot of the whole lot in one go, for a price they found acceptable, was just fine by them.  The deep discount was the price they were willing to pay.  To give a rough indication: if market price at the time was 100, we settled for 85.  A bloody good deal for us, and they were a willing seller.

Somehow, word of this deal got out (it always does).  So then I get a delegation of senior managers from big industrial companies based in the area where we’d be taking delivery of the gas (some for our own use, some for onward sale).  Their pitch was as follows (and I’m not making this up):

“Now look[2].  We all know you’ve bought a big slug of gas at a price of 40.  You’ve got to share this windfall with us.  We’ll offer you 50.  You’ve a moral obligation to sell it to us.”

Where they came up with ’40′ is anyone’s guess.  I politely replied that their numbers were way off-beam: that we’d be delighted to sell them gas; and that they’d pay something based around market price[3], like anyone else.

“But whether it’s 40 or 45, it costs you much less!  You must sell it to us at cost-plus.  What’s ‘market price’ got to do with it?“  

Tempting as it was to give them a little lecture about how house prices have nothing to do with the cost of bricks, I decided it was best to draw the meeting to a close with as little emotion as possible.

Nothing changes.  I suppose you can argue that EDF, as a state-owned monopoly, is in a slightly different position.  But the attitude remains the same:  what’s mine is mine, & what’s yours is up for negotiation.  Now hand it over. 

ND

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[1] Sometimes they had subsidies almost thrust upon them, but that’s a bit different. 

[2] They didn’t quite add “you devious London ba-astards“, but that was the tone.

[3] After several months when they’d calmed down, we did indeed do a deal for them.  It was at market price, minus half the transportation charges they’d been paying to get gas delivered through the grid.  Given that we could deliver direct, locally, this was the logical win-win arbitrage.  A perfectly good deal for them, as they ultimately recognised.  We got there in the end!  – shame we had to go a fraught round of SillyBuggers first.