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Will government get tough on energy? We quiz Chris Huhne

Chris Huhne being filmed

Yesterday, Secretary of State for Energy and Climate Change Chris Huhne made a big splash speaking at the Lib Dem conference. We caught up with him beforehand to question him on key energy issues…

Q. The cost of energy is UK consumers’ number one financial concern, and prices are set to increase again this winter. What action can the government take to stop a new wave of people falling into fuel poverty?

We’re doing three things. First, improving competition and encouraging new entrants, so that market pressures keep prices down. Consumers can help themselves by shopping around for the best deal – even though it’s easy to switch supplier, only 20% of people do, and Ofgem has found that there can be big gains: up to £200 annually.

Second, bringing in the Green Deal to allow households to insulate their homes properly at no upfront cost (energy savings of up to 40% are possible). Third, reforming the electricity market to ensure the UK moves away from gas (world gas prices are currently rising sharply) and on to clean and secure renewable sources at home.

Q. Consumers are confused about which tariff, let alone which supplier, offers them the best deal. Suppliers claim simplification of the pricing system will stifle innovation and competition. What’s your stance on reducing tariff complexity and improving comparability?

I’m putting pressure on energy suppliers to make it clear to their customers when they’re not on the cheapest possible tariff. The Energy Bill going through Parliament at the moment will give me the legal powers to force them to do this if they won’t do it voluntarily. In the longer run, I’m interested in seeing what else we can do to simplify tariffs while maintaining competition.

Q. Do you believe energy companies when they say price rises are largely determined by factors beyond their control?

Up to a point; recent price rises are mainly driven by rising world gas prices – which is why our plans for electricity market reform, which will get the UK off the fossil fuel hook, are so important.

But as well as that, studies show that the market, dominated as it is by six big suppliers, is not as competitive as it could be, and I’m looking at ways to improve competition; our market reform plans will also encourage new entrants and help to keep prices down. I’m putting pressure on energy suppliers to make it clear to their customers when they’re not on the cheapest possible tariff.

Q. What next for the Green Deal?

By the time your readers see this, I hope the Energy Bill, which sets out the financial framework for the Green Deal, will have become law. We then need to sort out the fine details of the scheme as quickly as possible so that Green Deal packages can become available from our planned start date of October 2012. The Green Deal has the potential to cut most people’s energy bills permanently and significantly, and I’m looking forward to working with Which? and others to make sure everyone knows about it and takes up the opportunity.

Q. Do you have plans to take advantage of public subsidies, like feed-in tariffs and the renewable heat incentive, and generate your own electricity at home?

In fact I was a very early adopter; I installed a wind turbine before the feed-in tariff was available, and as a result I’m not entitled to claim it! I’m now aiming to put in solar panels as well.

What do you think of Chris’s responses? Is there anything else Government should be doing to make our energy more affordable? What are your thoughts on the Green Deal?

Comments
Member

* Reversing past legislation that reduced the storage capacity required for the UK’s energy needs would be a good start.
It cannot be right that those who took the decision to allow storage capacity to be reduced to just 5% of our energy needs, are not called to account for their actions.
The people of the UK are paying, in part, to buy back energy that we originally bought and sold for a lower price, to be stored in other countries, then purchased back when we need it, of course for a higher price.
What does the minister has to say about what has been/is being, done about this?
I have heard not one word on this subject from his office.

* When British gas were increasing their prices this summer, their chairman stated one of the three main reasons for their rise was down to “lower consumption”
Proof from the horse’s mouth of what every person in the UK has known for years – the less energy we use, the more the energy companies increase the price, to maintain their profits.
At a time when we, the taxpayer, are funding the energy saving trust and in part, the money given to them by the energy companies and the energy company’s own “energy saving schemes” – via our bills and taxes – that the energy minister doesn’t have a comment to make about this is staggering!

* Energy saving government initiatives from the past government and this government, are said by the energy companies, to be pushing up the prices of bills.
It’s all well and good for the energy minister and the Department for Energy and Climate Change to point to their belief that this will save Billions in the long term, but this is all it is, belief.
Do “energy saving measures” work?
In my personal experience, it is a resounding NO!
British gas supply our home with gas.
After various calls over months, their staff could not explain how they arrived at their prices charged.
Their staff are not even permitted access to the weekly changing Calorific Value that is used in the calculation of the amount of gas you get per unit on your meter.

When the actual units of gas being used are examined, the results are frightening.
Over the past four years, our home has had the following “energy saving measures” installed;
– Extra layers of loft insulation
– Replacement of a G rated back boiler, with an A rated “energy efficient” boiler (that does not have a pilot light burning 24 hours a day)
– Room thermostat fitted
– TRV (Thermostatic radiator valves) fitted
– Cavity wall insulation fitted
– Exterior render (2 coats) added and the outside of the building sealed
– Double glazing through out

In addition, the gas fire has been removed and we have one child less living here for the past four months – which accounts for at least 100 baths of hot water saved, not to mention lower gas use for cooking, heating, cleaning, etc.
British gas sent me a statement out in August 2011, telling me clearly that our gas use had actually INCREASED!

I asked how this was physically possible, the response was to have the phone put down on me three times, one call wasn’t even logged on account notes, incorrect call logs, and two staff whom insited that the units of gas used on the statement were not accurate. British gas billing are trained to be evasive.
Finally, a senior billing member of staff conceded that the gas units on the statement were accurate.
We went through each “energy saving measure” individually, the conclusion at the end of the lengthy phone call from British gas was…… “We don’t know, all we can do is wait until we have next year’s gas use figures are available!” – They advised this last year as well.

The energy companies openly state that initiatives they have to bring in are pushing up the cost of bills, yet the minister and his department have no comment to make or action to take. Why not?
With the exception of insulation, the vast majority of energy saving measures leave the home out of pocket, in bills and over the life of them. Why is this? What are the government doing to address this?

* OFGEM – what is going on?
It is of no use compiling a study and reviews that will run months after record price rises and bills have landed.
Why not ACT to stop price rises until after their work has been done?
If the “regulator” (and I use that term loosely) does not have the powers to do this, then what is the minister doing about it?
What is the government’s view on this?

Every man and his dog, can see that energy companies are deliberately confusing the public over how tariffs are made up and how charges are presented in statements and bills.
When energy companies are put on the spot, they simply do not have an answer.
If their own staff do not understand how bills are calculated or what charges are made up of, then how are we as customers supposed to work it out?

Since coming to office, the responses from the energy minister have been sadly lacking any reality.
Vague statements, no direction, no action to deal with the issues and hardship that people will be dealing with over the next four or five winters, shows that the minister is clearly out of touch with what is actually happening in reality.
I know this is not the place to post it, but it has to be said, rather than give the same vague answers to the energy companies actions, over and over again, he would be better off considering if he is the right person to hold the position as our energy minister!

Member
Wheezy_alan says:
26 September 2011

I do not know to which years you are referring, but the winter of 2007/8 was exceptionally mild. Could that have a bearing on your experience?

Member
freezing cold says:
18 October 2011

Frugal ways – Your experiences almost mirror mine, I have so much insulation in my home that it keeps the heat out in summer and we open windows to let the warm air in! My new condensing boiler froze up last year (no pilot light). I used less gas but paid more, in order to keep profits up the price of gas is increased proportionally to the fall in consumption.

Member

I was at the Lib Dems’ conference and it was clear that energy is a priority for many people who were there. It was good to hear the right messages from Chris Huhne but I feel that consumers will want to see action. Promises will not help to pay our bills this winter. Straight after Christmas, when we get our high gas and electricity bills, I really hope that we have seen some leadership from the government to demonstrate that they are trying to make sure that we are getting a fairer deal when it comes to energy. The first step is sorting out how suppliers put together our bills by forcing suppliers to give us clearer and simpler tariffs. Yesterday I was in the supermarket and could work out exactly how much I was paying for a bag of apples as the price included per kilo and per pound. The info on the price label meant I could easily compare the price of one apple with another. It’s ridiculous that I can’t do the same with my gas and electricity.

Member

I cannot believe that OFGEM allows energy companies to bill my household, for a product and service, that the company supplying it, doesn’t have a clue how to calculate the price of or work out how units are used!

The energy companies know exactly what they are doing, if what just one bill really was made up of, was leaked to the press from them, there would be an outcry. There can be no other explanation why, in my example, British gas do not give certain information of what a bill is made up of, to their own staff.

I am not a fan of switching (as everything that can be switched is currently at record high prices) but I wonder exactly how much of my bill is to pay for those that do switch?
Switching generates around £60 to a referral company/website for domestic customers, often over £100 for a business customer switch.
These payments do not come from energy company profits – they come from customer’s bills.
Why should I pay extra on my bill based on the actions of others who chose to switch supplier?

Energy companies blamed oil prices – soon as this was clearly not the cause of price increases, we got the troubles in North Africa and Japan, again this was questioned and quite rightly dismissed for the fantasy it is, the latest line seems to be that transporting the energy is going up in price – when it is pointed out that transco increases in charges don’t come into effect until 2012, there is no reply!
And so it continues….. one day, an energy company will be forced to reveal what makes up a bill/tariff/statement.

This government talked about standing up for the family unit – allowing the energy companies to introduce record price rises on the back of their huge profits, financially punishes every single one of the family units they vowed to protect and help get on.
OFGEM and the government need to ACT NOW!

Member

I agree with all the comments above – we are only asking for a equal playing field to compare like for like. The present system is set up to deliberately confuse the consumer and as far as I can see could be very easily corrected if the government would stand up to these companies and just bind them by law to simplify and make clear – how much a unit of gas or electricity will cost £? no matter which company it is. Never mind the standing charges, the 1st 500 or whatever units are X amount then after that the cost is Y amount – good god – you need a degree in maths! Introduce legislation and get this sorted asap.

Member

Funny you should say that – our investigation proved just that! We asked 36 people to try and calculate a bill based on the info on the company websites and one one could do it. The group included an accountant, an engineer and a solicitor. Read more here:
http://www.which.co.uk/campaigns/energy-and-environment/tackle-tariffs/our-tariff-investigation/

Member
Ian Savell says:
23 September 2011

This constant claim that consumers could save money by switching tariff but are lazy is too simplistic. If you shop around to buy a TV you know that if shop A sells for £300 and shop B sells for £400 you can directly save £100. If you buy a mobile phone, in general the same applies. You select the phone you want and the free minutes and choose the cheapest deal which is fixed for as long as you keep the phone.

With power, you go to the trouble of switching, usually because your supplier A has just raised prices so it is more