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Do you think the Big Six are out of touch?

energy prices

Our latest analysis of energy prices demonstrates the Big Six energy providers are out of touch with the market with the price gap between their standard tariffs and the cheapest deals on the market almost doubling.

In just a few weeks the Competition and Markets Authority (CMA) will publish its final decision on how to fix the energy market. You may remember that, with your support, we’ve been campaigning for the CMA’s investigation into the energy market for over the past two years to tackle the lack of competition, the sheer number of people paying over the odds for their energy and the limited protection for vulnerable customers.

Energy prices

Well our new analysis has looked at energy prices over the last two years since the CMA started its investigation. It reveals that the gap between the average Big Six and the cheapest on the market has risen from £182 to £329.

That’s a big gap, and it’s been increasing since 2014.

Yet, despite the significant savings available the official figures for switching rates highlight that there’s only been a small increase over the last two years.

So what’s going on? The CMA recently set out its initial thoughts on the energy market and how it intends to fix it, the report highlighted that the cost to consumers of an uncompetitive market stands at around £1.7 billion, a figure that’s rising.

The CMA proposed a range of measures including a central database of ‘disengaged’ consumers open to energy suppliers to contact each other’s customers; a ‘cap’ for customers who have pre-payment meters; a programme of testing by the regulator Ofgem and; the removal of some of the rules surrounding what tariffs energy companies can provide to their customers.

In our opinion, it isn’t clear how the CMA will judge its investigation and proposals as being successful.

Our call on the CMA

That’s why today we’ve set a challenge to the CMA ahead of its final report.

We want to see how the CMA will be evaluating the success of its remedies, as well as how it will make sure vulnerable people who’ve never switched supplier and are overpaying will get better outcomes and pay a fair price.

We also want to see energy suppliers step up and begin to work harder to restore trust in the energy market.

With almost 500,000 of you who’ve joined our call for fair energy prices, there’s a weight of expectation on the shoulders of the CMA. It’s time to deliver.

So what do you think to the energy prices you pay? Have you switched your energy provider recently? How easy did you find it?

Comments

Thank you Beryl! 🙂
I would still like a Convo devoted to how we can best help the vulnerable – not just in energy but other aspects of their life where they would benefit from more able people’s help and advice.

Guy Peterson says:
12 June 2016

No, they are totally in touch with a government that is prepared to clobber the poorest and make the rich richer. Why not charge the poorest people more to use a meter? Why not charge them more for buying small quantities, why not charge them more for almost everything compared to rich people? Because it is immoral. Cameron’s government is amoral and immoral. A public school Tory through and through. Will the EU referendum be his only legacy before he’s forgotten? Probably, then he will join the ranks of nondescript Prime Ministers.

bishbut says:
12 June 2016

I have a smart meter I wish to find a cheaper tariff but any other suppliers say they will not be able to use it until 2020

dieseltaylor says:
12 June 2016

This was dealt with on Radio 4 last week. i heard a repeat on Saturday and apparently there will be a body set up later this year which will pass the billing information between the respective companies. So if were with OVO with a smart meter then they would be required to send the reading information to whatever supplier yuo subsequently went to.

John myers says:
12 June 2016

This is not knew is it the government don’t mind every1 being stung 4 thier utility bills it’s the same with the fuel stations they think people fall asleep and don’t notice how much they stick on the price it’s not known as rip-off Britain 4 nowt to would be a good thing if some1 decided 2 ask why we are forced 2 pay standing charges that are reaching astronomical proportions if you aren’t a shareholder it’s tuff tit get on with it;we just keep on getting stuffed.

mr majer says:
12 June 2016

Just look what is happening now, petrol & diesel price going up every day & the government adding tax on it, & that tax stays on even when oil price going down. They think we will not notice

Christine says:
13 June 2016

I heard on the news that Npower had been fined millions for the exact trick they got hundreds out of me . I have waited to hear from them. They blocked my transfer to a company with a better tariff but as I had already paid £500 off of the debt I never really owed them, I refused to pay the remaining £200. They still have not contacted me about the original breach of rules they were fined for. Now they have refered me on to a debt collection company just as I am about to apply for a mortgage.

Louise says:
16 June 2016

Christine I would advise you to put a complaint in with the assistance of an organisation for example Citizens Advice Bureau and if you get nowhere go to the energy ombudsman.

Douglas King says:
13 June 2016

I just changed from First Utility (63% satisfaction) to EDF energy (one of the big 6, 55% satisfaction). I got through very quickly to their advice desk and am now saving £50/month. Pretty good from where I am standing (compared prices on the Which comparison site & EDF enegy where the cheapest for me).

In an item today [14/06/2016] on the BBC News website “UK inflation rate stays at 0.3%” it said “Among the reasons for low inflation are low economic and wage growth, and weak energy prices, which are still below half the levels of two years ago“. Is that really the case? If so people do not recognise or appreciate it.

I am very tempted to add the word ‘wholesale’ in there somewhere John.

That was my first thought, Beryl, but the article was about the Consumer Prices Index so I thought it must relate to the price of energy per unit as paid by the householder. I went into the Office for National Statistics website to see if I could find the origin of this reference but there was no mention of energy prices. There were various other upward and downward factors stated in the ONS release that contributed to the inflation rate but energy was not one of them. So I am perplexed, and wonder where the BBC got their information from. Indeed, energy does not appear as one of the items in the CPI basket of goods and services shown in a graph on the ONS website. I admit to being a bit out of my depth in looking at this data but I am convinced the phrase “weak energy prices, which are still below half the levels of two years ago” would have been part of the ONS commentary if it was indeed a significant factor. Curious, to say the least.

Further to my preceding post I have submitted a question to the BBC News website seeking clarification and a source reference for the information given.

John, CPI Domestic fuel components are published on the gov.uk website.
The indices go back to 1996 (as far as I can see) and I’ve abstracted these:
Electricity Gas
1996 62.5 43.3
2007 87.3 84.0
2010 100.1 104.6
2012 115.1 123.6
2014 129.1 138.8
2016 127.9 129

Thanks very much Malcolm. I could not see “energy” listed in a table on the ONS website which seemed to show the ups and downs of inflation on the goods and services in the basket.

I do not understand the obsession in these discussions with the “Big 6”. They are only “big” because we, the customers, choose to patronise them. Stop using them and they will not be so “big”.

I have just spent 3 minutes on Which? Switch checking how much a “medium user (12500 kWh/year gas, 3100 kWh/year electricity might pay in my area. This returned 178 estimated annual charges – from presumably all energy companies in my area. The most expensive were, as you would expect, standard variable tariffs, followed by 3 year fixed price, then 2 year and then the cheapest were 12 month fixed price tariffs.

You don’t, of course, look at 178 offerings if you want to know if change is worthwhile. If, for example, you want to pay as little as possible, just look at the first few – and they appear in order of cheapest first. Out of the first 16 offers, most were smaller companies but 3 “Big 6” featured – Scottish Power, npower and effectively British Gas (Sainsburys). Coop also figured. The cost difference from cheapest to most expensive was 10%.

So, the point I am thinking is, are we just choosing to knock the Big 6 because we like to moan at “big business” or are we really interested in getting the cheapest deals? Because all these cheap deals are available to everyone, and most people can find them and switch to them quite easily – if they want to make that little bit of effort. And Which? will give you these comparisons on line, or if you are not computer savvy, over the phone. and you can switch on line through Which? for many offers, or go direct to the company on line or by phone.

By all means lets try to drive energy prices down but, at the same time, encourage people and facilitate the process to switch to the cheaper deals. It seems to me having a good moan is one thing, taking direct action to improve your energy cost is a more constructive way of improving your own finances.

The vulnerable who can’t do any of this? We need to discuss ways to help such people, not only in energy but in other of life’s essential activities.

Just switched my dad’s gas and leccy. They claim he saves £530, yet on payments to be made, actual saving is around £168. OFCOM rules are a joke to allow this.

D. Bloor says:
16 June 2016

I have been an SSE customer for years, I have just changed tariffs with SSE as they say that the latest tariff will save me in excess of £400 a year. Now signed up to a 1 year Fixed Rate Tariff only so will be watching to see. As an 80 year old Widower Pensioner, mainly housebound with arthritis, heart problems and asthma I am a high user as I need to keep warm so I am finding all the high costs of my dual fuel increasingly difficult due to my poor health. I feel it will be coming to ‘do I keep warm or eat’.

Sound information and advice is given here for those who want to reduce their energy bills.
http://www.which.co.uk/news/2016/06/revealed-the-cheapest-energy-deals-for-june-2016-445600/

R Matta says:
22 June 2016

Regulations should be enacted that make price comparison easy by compelling energy companies to publish prices in the same format eg price per therm/kWh only, no standing charges or other addons. Simples.

But it isn’t that simple, R Matta. Suppliers have the right to offer several tariffs with different features, to set different levels of standing charge or absorb the full costs in the unit rate, to give different discounts [or none at all] for paperless billing, dual fuel, direct debit, and so on. And they can use fixed rates or variable rates, and apply exit penalties or let you change supplier for nothing. It all makes for a complex and confusing bundle of variables to compare, but, through filtering, some comparison websites do make it as straightforward as possible to select the most appropriate tariff to meet your circumstances.