Living in Norway currently it is absolutely crazy to me so many electricity companies trading middlemen making money just by trading they don’t don’t produce or supply just pure middlemen. I heard of some scamming companies too. I just said no to a fixed price binding contract which would have been a disaster. Now I have the cheapest prices of the year so far! It is completely non Norwegian from my experience. Everything else is so monopolizes and controlled here.
> they don’t don’t produce or supply just pure middlemen
They produce liquidity and price discovery, which are extremely important. Most energy companies don't know what the "efficient" (market clearing) price for power is and also want to mitigate the risks they inherently face by supplying these markets. Speculators allow natural longs like energy companies to hedge risk (reduce their risk) so that they can focus on the things they're good at: building, maintaining and operating power generation and distribution. If you're not an expert trader, which most utility CEOs are not, how can you invest in projects for the next 5, 10 or 50 years without markets that allow you to lay off some of the price risk of the good you're producing (power). This dynamic is what is facilitated by so called middlemen. They are absolutely essential, even if there are spectacular failures like this from time to time.
It's not a scam, but you're correct that they don't produce anything physical. Their point is to mostly converge disparate markets. So if they notice a separation between day ahead and real time prices, they can make money off of that while helping to plug a hole in the market as that could be the result of bad data...etc. There is an on-going debate as to whether their involvement (most of the financial only players are banks) is really that helpful as it can cause other issues if they do a bad job and cause divergence.
Electricity provider market is an extremely dodgy one, e.g. in Germany one is receiving random scamming calls trying to make the victim change the electricity provider. One such scheme was revealed some time ago - someone incorporated in Germany and Switzerland, then hired German speakers somewhere in Serbia where the scamming call center was located. Plenty of dodgy entities profit fortunes while electricity cost for individuals regularly increases.
Happens in the US, too. About twice a year I get someone on the door here in NYC who says they're from ConEd (they're not) and want me to know I'm missing out on a huge discount that is mentioned on my energy bill but is somehow opt-in. It's all nonsense, but what they actually want to you to do is sign up for an ESCO, i.e. a third-party energy provider. These ESCOs are always more expensive than ConEd (which already gets its energy supply from some efficient bidding market), and basically amount to a scam. ESCOs work in other countries such as Scandinavia, but not as implemented in NY.
