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Why cutting the price of energy really matters

Fair energy illustration

‘I’d like to use my heating in winter and not just when people visit.’ That was only one of many comments we’ve had from the more than 203,900 of you who have signed our petition for fair energy prices.

This week the Government has written to the Big Six energy firms asking them if energy prices accurately reflect their costs after falls in the cost of wholesale energy.

Our analysis suggests standard variable energy tariffs have not kept in line with wholesale prices over the past two years.

The stories you’ve shared make it clear just how urgently action is needed. Here are just some of the comments from people who’ve told us how energy prices affect them.

Why cutting energy bills matters

Helen, from Southampton, said:

‘Gas and electricity payments represent over 17% of my income. I have a one-bed flat, do not own a TV, radio, toaster etc. and still my bills are too high for me to keep up with. I’d love to be able to shower and do the washing up every day, I’m terrified of the cost, so I don’t. How families with young children manage is beyond me.’

Garth, from Basingstoke, said:

‘I am retired and prices seem to rise at a greater rate than my pension.’

Alan from Blackwell told us that while he felt he was ‘a reasonably sophisticated consumer’, bills are incomprehensible and comparisons ‘nearly impossible’.

Kathryn, from Sheffield, said:

‘Although we check our prices every year there are a lot of older people who do not have the internet access we do and find it too hard to get the comparative information.’

What we think should happen

energy-billsWe did our own analysis of wholesale costs and energy bills earlier this year. We found that UK bills could have been £2.9bn lower over the last year (£145 per household).

We think it’s good that Ministers are acting, but we now need to see suppliers do the right thing and fast. Energy firms have totally run out of excuses for not cutting our bills. If they don’t play ball it will add weight to the case for the Competition and Markets Authority (CMA) to step in and force the energy firms to make bills fair.

The CMA is currently undertaking a wide-ranging investigation into the energy market to see if competition is working properly.

The Government’s Energy Secretary Amber Rudd said her focus is to get the best deal for consumers and the department is working hard to keep energy bills as low as possible.

How are energy prices affecting you? Have you switched suppliers and has this helped keep costs down?

Comments
Member

While I appreciate that Which? has recently filed a super-complaint about the pricing practices used by supermarkets, the energy industry is failing consumers in so many ways that another super-complaint is called for.

Member

Paul, I would also like to see energy bills lower. Would you explain exactly where you see the energy bills could be cut so we can understand where the savings will be made? Is it simply the link with wholesale prices?

Member

Hi Malcolm

yes,we want to see fair energy prices. Research we carried out in February found that the failure of retail prices to align with wholesale costs has cost consumers £2.9bn over the last year, an equivalent of £145 per household on standard energy tariffs.

Member

Can householders expect a refund or will energy prices be lowered to compensate for our overpayment, Paul?

Member

What we really could do with is a not-for-profit nationalized industry effectively controlled by a sensible government set on ensuring that everyone can afford to use reasonable amounts of energy.

If you see Sid, tell him…

Member

If the Which? analysis is proven to be correct by the CMA then consumers should receive £145 compensation for overpayment of their energy supply. After all the Banks were obliged to indemnify customers for their PPI `indiscretions.’

Member

The Which? analysis seems to concentrate on standard variable tariffs, not fixed price tariffs and states that “up to £2.9 bn” could have been saved (sounds a bit like broadband speed!).

Personally, I would like to see fixed price tariffs abolished – they just complicate matters – and have one unit tariff for gas, and one for electricity, from each company for the energy element in the bill and the associated consumption-dependent extras. Non-consumption-related costs should be dealt with separately and could lead to different offerings from each company to give choice, depending on your circumstances and consumption.

We need a real examination of all the costs involved to decide how to recover them from different types of consumers as fairly as possible. Hopefully the CMA will address this – have Which? made representations to them along these lines?

Member

Its going to be fun when TTIP is signed and all the foreign owned energy companies sue the Governement for lost profits under the ISDS provision.

What gets my goat is that Which? publish this:
Helen, from Southampton, said:
‘Gas and electricity payments represent over 17% of my income. I have a one-bed flat, do not own a TV, radio, toaster etc. and still my bills are too high for me to keep up with. I’d love to be able to shower and do the washing up every day, I’m terrified of the cost, so I don’t. How families with young children manage is beyond me.’

What the hell are Which? doing about her personal circumstances other than use it to evoke outrage? Where is the analysis of her income and expenditure? What are the suggested solutions for her one bed flat? Is there a structral flaw in the flat? Are the radiators working properly?

I campaigned to be a Trustee on the basis that Which? seemed to be lacking any practical application just talk and talk and appeals to various Govt bodies. Somebody is in trouble and what.?

Incidentally my energy bills are around 20% of my income and my rates a further 22% , my mortgage nearly 30 % .This just shows how misleading blind percentages are AND how annoying it is to have articles quoting them.