British Gas is the second of the ‘big six’ energy companies to announce price hikes – 18% for gas and 16% for electricity. You may shrug and say others will follow suit, but could more competition solve the problem?
It’s easy to rant and rail when energy prices go up. I did so myself only a few weeks ago when Scottish Power announced a whopping 19% increase in gas and 10% in electricity. Usually I’d switch energy supplier in this scenario, which is exactly what I did.
But, as was pointed out in some of the comments in reply to my Conversation, that’s not the best solution. British Gas announced similar price rises today and I expect the other energy companies will soon follow suit.
Chris was spot on when he asked about my switch:
‘Yes but where are you going to go? All the other energy suppliers are soon going to follow in their footsteps. Good idea to always be on the cheapest tariff, and lock in for as long as possible, but gains are temporary. Switching is not the universal panacea to the problem of ever increasing energy prices.’
A very good point. As consumers we have a certain amount of power – we can vote with our feet and switch to a better company, make complaints when they do something wrong, or in extreme cases report them. However, it’s easy to feel overwhelmed in the energy market – why bother to switch when we know we’ll get the same treatment (and roughly the same prices) from another supplier?
New players in the energy market
One of the key solutions, I think, is to fill the marketplace up. The ‘big six’ all tend to raise their prices at roughly the same time. Many people are deserting the larger companies for smaller suppliers as they find they get a better service, even if they do have to pay a little bit more.
There was a lot of love given to Ovo and Ecotricity in reply to my Scottish Power Conversation. GoodHonestAdvice, who was switching to Ovo, said:
‘They will be slightly more expensive than if I were to stay with Scottish Power, but I am disgusted with the fact that Scottish Power has doubled its standing charge, which will hit low income and low usage customers most.’
And Organicrad11 praised Ecotricity:
‘As a customer of Ecotricity I know that I will not be ripped off, will not want to change supplier, will have my phone calls answered straight away by someone in the Stroud office (no call centres abroad), and above all, can use electricity in the knowledge that most of it is definitely from a low-carbon source.’
So do you think that these smaller companies could give us a brighter future? I personally like the idea of an energy market that’s much more competitive, where some companies might say “actually, I’m going to buck the trend and keep my prices stable now.”
They might make smaller profits in the short term, but I for one would be happy to be a long-term customer if my energy company was willing to stand out from the crowd.