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A big week for energy – and the battle continues

Newspaper and coffee

What a week. The Prime Minister promised energy companies would be forced to give customers their lowest tariff; Parliament scheduled urgent questions; and Ofgem promised to reform energy tariffs.

We’ve been campaigning on energy for a number of years, so we’re delighted that our demand to tackle tariffs has finally made it to the top of the political agenda and newspaper front pages.

Our executive director Richard Lloyd wrote to the Prime Minister earlier this week calling for an urgent independent review of rising energy prices to help us determine whether the energy companies’ reasons are justified. And as we tuned in to watch Prime Minister’s Questions we were bowled over by his bold commitment.

Prime Minister should keep his promise

Now some commentators are happily branding the government’s commitments to get people on to the lowest energy tariffs as a ‘shambles’. But I’m sure the rest of us will be delighted to see the PM acknowledging that the energy market is not working for consumers – and that he’s committed to making sure we all get the best deal.

His promise has since been followed up with new commitments from the energy regulator, Ofgem. It has promised to simplify the bewildering array of complex and confusing energy tariffs. And it’s come up with proposals that may make it easier to find the cheapest deal.

Thousands of you got behind our call for Ofgem to tackle tariffs, emailing its chief executive to demand action. And Ofgem has admitted that it has gone further with their tariff proposals due to your pressure – so a big thank you from me and all of our energy team.

Keeping the pressure on

We also know that there is still work to be done. Firstly, we need to make sure that the pressure is kept on the politicians and regulator to act. We want no rowing back from the promises made in Parliament. We ran a quick poll on Facebook to find out if you thought David Cameron should keep his promise and so far the vast majority of you have said yes.

Next up, we need to make sure that the detail of these commitments is worked through. One of the key things for us is the ability for you to compare energy tariffs at a glance by quickly looking at the unit price and immediately finding the cheapest.

So the key questions are – will Ofgem’s proposals really allow us to quickly compare deals? And will the PM’s promise mean that we all get the best deal?

We’ll be studying every consultation document and piece of legislation to make sure that the final proposals stack up and are in our interest. And if they aren’t, we’ll keep campaigning until they get it right.

Fair prices we can trust

Finally, we know that this is still only one part of creating an energy market that really works for consumers. That is, a market that gives us fair prices we can trust.

We’ve called the events of the last week – ‘big moments’, ‘big statements and ‘big step forwards’, but the battle for a better energy market doesn’t end here. This is a golden opportunity to secure changes that Which? has been campaigning on for years – let’s hope the politicians and the regulator can now deliver.

Comments
Profile photo of frostyballs
Member

We’re on a fixed tariff with a cost penalty if we move to a different tariff. Come the time when energy companies have to simplify their tariffs and show their cheapest tariff – presumably we will still have to pay the penalty if we move to a different tariff.

Member
Billy Q says:
24 October 2012

Not necessarily. It can be specified to make the change when your contract time has expired even though you have agreed to the new tariff while still within your current one. Just hope that no later changes move against you!

Member
Andrew R (Plymouth) says:
20 October 2012

The best thing the government could do would be compel all providers to submit (by sealed bids) a tariff to the Energy Regulator. This tariff would be then published and would have to be fixed for 1 year.

Energy providers would have to do this 4 times each year. Smaller providers could limit the customers they take on (as they would be forward buying energy options in the market).

This means four times a year, the consumer could pick the cheapest tariff and then switch for a 12 month period……………..an open free market would be created overnight.

The providers would be free to issue any other tariffs they liked but there would have to be one statutory “benchmark” tariff. There needs to be a minimum “fixed period” for the market to work. At the moment it is like taking your car to a fuel station that advertises the price of the first litre of petrol but then as you fill up the tank prices are switched at the discretion of the garage!

Member
Tricia S says:
20 October 2012

I’ve just looked at the Ofgem link and it looks like bad news to me. I’m with ebico which means I don’t pay a standing charge and just a single rate per unit used. This is perfect for me since I keep my energy usgae low and with other suppliers, the standing charge was a very high proportion of my bill. But Ofgem’s proposals are that every supplier has to have a standing charge. Why??? This will increase my bills not decrease them.

Member
Andrew R (Plymouth) says:
20 October 2012

Sorry Tricia…..I agree with Ofgem. There should be a standing charge as there are fixed costs providing electricity and gas (I will suffer too as I am a landlord who has two meters just providing stairwell lighting and power to the fire alarms with an annual charge of £ 30 per property).

If there is no standing charge low users are being subsidised by others. As I said I will suffer too but charges should be fair (not just spread about people in an arbitrary manner)

The cables, the meter, the reading charges, the National Grid all need to be paid for regardless if you use 1 unit or 10,000 units.

Ofgem should make all companies charge the same standing charge to make the unit comparison really simple. If my suggestion above was adopted I bet all prices would be 15% cheaper at least.

Profile photo of ChrisGloucester
Member

Andrew R,
You say “If there is no standing charge low users are being subsidised by others. As I said I will suffer too but charges should be fair (not just spread about people in an arbitrary manner)”

I could not disagree with you more.

Having a standing charge means low users are subsidising high users. How on earth is that fair????
In a world where we’re all told we should be using less energy how is it right or fair to penalise rather than reward those who actually do manage to use less???
Fixed costs currently covered by the standing charge should be included by making the unit price a little higher. Then high users pay proportionally a little more while responsible low users get the benefit of their efforts to be more energy efficient, which to my mind is the way it should be.

What makes it fair for suppliers to recover fixed costs regardless of how much of their product they sell anyway. No other normal private business gets away with charging for fixed costs before they actually sell anything????
I suppose you’d thing it fair for Tesco to ask for a standing charge as you enter the store regardless of whether you buy any groceries, after all they have fixed costs too???

Like I said I completely disagree with you.

Member
Channel Hopper says:
25 October 2012

My understanding is that the ‘Standing Charge’ is the cost of bringing the energy to the consumer through wires and pipes, and then the cost of the product (gas or electricity) is charged per Kwh used. Many suppliers confuse the billing by charging two bands – e,g, 1st x000 at one price, and the remainder at another rate. They then bill the consumer quarterly, so that it take a 1st degree mathematician quite a few calculations to find out the overall price per Kwh. This, I believe is to confuse the user so that he can not compare his/her price with other suppliers, thereby making it a risky business to switch. David Cameron is on the right lines, but I suspect the ‘Big Six’ will find a way to make sure that they retain sufficient profits – why not! after all they have to ensure that the industry is viable or we might wake up one day, put the kettle on – NO RESULT! Why not reduce all the advertising that flows through our media – who pays for that? – the Consumer of course. I suggest we all support the smaller companies who have got their cost base at a low level . Why do we need 400 energy tariffs Nationally?

Member
brian craggs says:
4 November 2012

IF u let me know what u want from the supermarket i will drop it u off at your house NO CHARGE for time or petrol.

Profile photo of dave d
Member

Regarding the main topic of this convo: Cameron’s “Shambolic” announcement: I apologise to regulars who will be divided into two camps – those who agree with me and for whom I am preaching to the converted and those who believe in a capitalist free-for-all and disagree with me. Both camps will be sick of me saying this but here goes:

No government, of any political persuasion, will ever willingly bring the energy market properly under control because the energy companies carry far too much political influence to allow it to happen,. In other words anything that harms the energy companies’ profits will result in the Big Six, helped by most but not all of the rest, bringing down the government who makes the change.

To be utterly blunt and more political that I’d like, this is Thatcher’s fault for selling off the nationalised energy suppliers. When they were nationalised they were far from perfect BUT every single adult in the country effectively owned ‘shares’ in them because they were funded by our taxes (including those paid by the unemployed and pensioners before anyone says that they paid more because they were in work) AND there was only one set of prices for the entire country, which everyone had to pay the same, regardless how able they were to identify better deals or how rich or poor they were.

If you want a fair and transparent pricing structure, renationalisation, with all it’s many other failings, is the only way to get it, but no government will ever do it.

Member
Robert says:
21 October 2012

Does anyone realise that the price increase by British Gas next month will be much greater than the 6% announced?
I am on Online Energy and have been informed by BG that this tariff will increase by 7% but there is a very sneaky sting in the tail. BG is altering its Tier 1 and Tier 2 rates by reducing the Tier 1 and increasing the Tier 2 rates. Because the reduced Tier 1 rate is charged on a lower and fixed volume of units used this is more than made up for by the increased Tier 2 rate being charged on the higher variable volume of units coming at the start of the winter period when usages will be at their highest.
I have calculated my increased energy cost based on last winter’s actual usages for gas and electricity and the resulting percentage increase will be over 9.5%. I use my own accurate spreadsheet for checking my monthly bills and therefore know my figures are accurate.
I am surprised that I have not seen anyone else pick up this sneaky way of increasing prices by BG. If BG had increased both Tier 1 and 2 by 7% then my calculation shows an actual cost increase of just over 7% (the difference being the fixed discounts for dual fuel and direct debit payment).
BG is obviously not being truthful because in no way can 9.5% equal 7%. I guess it would argue that the summer period will show less of an increase but by that time we could see another change in prices. Even if prices were to come down, there is nothing to say that the Tier 1 and 2 rates could be varied by different percentages ie. Tier 1 rate increase and Tier 2 rate reduce when usage volumes are less.

Member
Andrew R (Plymouth) says:
21 October 2012

Hi Chris from Gloucester – Andrew from Plymouth responding!!

Ok you have won me over …………(actually along with arguments from the two later comments which made me change my mind). I will point out that there are some other businesses that charge a fixed cost per month like BT (British Telecom), Vigin Media, Sky and of course the Electricity and Gas companies. They all charged like this prior to privatisation. Perhaps this “civil service” mentality has messed with my brain and brainwashed me into thinking that this method of charging is correct.

Actually, now you come to mention it, Council Tax is just like that. A big fat fixed charge to cover numerous services that I don’t use. Perhaps I like your method more and more!!!

To be serious for a second, I now agree that in order to gain a really simple pricing model all units should be priced per Kw hour (I liked your Tesco example about fixed costs!!)

Do you like my idea of a 4 x times a year sealed bid with a 12 month “lock in” – I think that’s a good idea even though I do say myself!!

Member
Andrew R (Plymouth) says:
21 October 2012

Oh and I would just like to congratulate Robert for his proper analysis about Tier 1 and Tier 2 tariffs……………this was the real clincher for me to change my mind.

What really depresses me is the “low calibre” of Journalists these days and the low calibre analysis of newspapers. In the past Robert’s analysis would have been headline news but it seems that no reporter can do GCSE maths these days (even though they got an A* in GCSE maths).

I am of a free market outlook, but I hate to see a botched privatisation. We actually have cheaper energy prices than many other countires. Having said that, I don’t like to see a market rigged to benefit the big six.

It is not working and if they hired me you would have an instant free market overnight!! Free markets work by the way………………we just need a proper market, not one invented by idiots!!

Profile photo of ChrisGloucester
Member

Andrew,
Good of you to reconsider your views on the standing charge.
Yes plenty of people seem to blindly accept the principle of a standing charge which really is a throw back to the old format for state owned utilities.
But to my way of thinking standing charges and multiple tire unit pricing are just marketing tools to make the cost of energy from any given supplier appear more competitive than is really the case. Roberts comment above clearly supports that point of view.

Yes a form of standing charge does exist in telephone line rental and I don’t think much of that either.
However I think council tax is a bit different, it’s tax, and all tax is a charge to run the country loosly based (very loosely somethimes) on the ability to pay. Comsumption tax (VAT), which I also don’t like because it penalises the poor most, being the big exeption.

Your idea of a “4 x times a year sealed bid with a 12 month lock in” is most certainly better than we have now but where we will differ is in that I think re-nationalisation could work.
Not the nationalised untility model of old that was rubbish because there was no accountability or competition. A modern approach could be to just buy the existing energy supply companies and allow them to continue to compete but the state takes all the profit and could, as “the shareholder” cap profit levels in favour of better prices.
And of course we the electorate could help set the cap on profits through the ballot box.

You might agree with that idea you might not, but one thing most of us I’m sure will agree is that what we have now is certainly not a free market, and is certainly not working.
Something pretty radical, rather than tinkering around the edges, is I think most definately required..

Member
Robert says:
22 October 2012

Thanks Andrew for your support. It is nice to see that somebody followed my argument. The difficulty is that most people do not want to go into the detail but that is where the devil resides.
Just for information. BG’s actual Online Energy Tariff changes are – Gas…. Tier 1 -7.8% Tier 2 +12.3% Electricity… Tier 1 -11% Tier 2 +16.3%. BG has summarised this as 7%.
I e-mailed a copy of an extract of my spreadsheet to Ofgem last week. I received a reply which claimed not to understand the point I was making and that I was free to switch supplier. I guess that says it all about Ofgem’s position. I turned 69 last week but with my O level maths I make sure I understand these sneaky practices. Who at BG thought up this price change? I guess someone looking for a pat on the back and a nice bonus no doubt. Perhaps I am being too cynical.

Member
Gary says:
22 October 2012

I think the easiest and most fair way around this is to Nationalise our energy supply, far too many suppliers around who are simply lining their fat wallets, whilst the public are forced to make choices of feeding themselves or having their home warm in winter time.

Member
Howard says:
24 October 2012

I think it’s about time we all accepted the fact that we are getting screwed by these companies. Energy use goes down (Price goes up) still making great profit no way out. I believe there needs to be several campaigns.
1. Everyone switches to one company, that will cause a problem.
2. Once that campaign has finished we now do the next one, for one day per week we all switch everthing non essential off, go to bed early, they still have to store the energy so if no one uses it it will cause mayhem

It would need a nation wide protest and someone to organise it but I am sure it would make these companies realise that we are not prepared to accept being ripped off anymore.

Member
brian craggs says:
4 November 2012

I fully agree,they are ripping us off purely and simply to line the pockets of those running the companies,none of these other remedies are neccessary,just make them bring prices down when costs come down,they put them up in winter,do not bring them down in summer then put them up again in winter, thats equivalent of three price rise in 1 year. If they do not take heed slap a profits tax on them

Profile photo of wincey
Member

Robert, Chris, Andrew and all make valid points about various systems but the word that constantly comes up is “fair”. There is little, if anything, in this life that is, or can be, completely “fair”. To take the Tesco illustration, they do not charge an entry fee to cover their fixed costs because it is not practicle and even if they did it would not be “fair” – we shop once a fortnight, many people shop twice a week. The latter would pay four times as much as we do probably to spend four times less on their actual purchases.
Similar arguments are put forward about old people, (like me) paying for care. If I can sell my home to pay for my place in a care home, (god forbid I should ever need it!) why should I be subsidised by less well off people paying for it out of their taxes so that my children can inherit my home? I don’t agree with Dilnot, his system is still not “fair”!

Member
brian craggs says:
24 October 2012

Because thats how and why the National Health Service was set up ,and why- so that we all pay whilst we are working,and looked after when we retire.If it needs more money we should pay more whilst working not when we retire,but the waste and faking benefits should stamped out,and if you have looked after your hard earned wages you should be able enjoy it in retirement.SO ENJOY IT WINCY,now I will let you get back to the energy debate (which I am enjoying reading.Wallop the people running the energy companies robbing us blind to line their own pockets,so that the working man can have more money to spend on goods,so creating more goods made, and more jobs created.COUNTRY OUT OF ITS MESS!

Profile photo of Rford
Member

I think it is time that everyone realizes that the reason for high fuel prices is not just because the energy companies are being greedy, but that the reduction in CO2 that the Labour Government signed our country up to and the GREEN Production of Electricity, that was part of this E U bill, has been the main reasons for above average price increases.
I applaud David Cameron for what he has said this week but, there is only so much that he and the Government can do, apart from abandoning the E U bill and leaving the E U, but that’s another problem.

Member
A J COLEMAN says:
24 October 2012

Fundamentally there is no reason why energy should not be supplied at the same cost up and down and across the UK.
During the war I worked briefly in a local electricity company supplying a town.The engineers were enthusiastic about the grid.The national distribution network yet to be constructed.
Accepting power factor loss and distribution costs,there is no reason whatsoever that a mean,average ,uniform change cannot operate over the whole of Britain including Scotland.
Exclude the money making element,the profiteers.230 VOLTS AC 10 p per KWH,everywhere.
No rate fixers,One Firm ,UK Power. Gas the same per therm ,no problem Mr Cameron ,takes guts.
You marched to war against my advice,do something different now.PARLIAMENT?

Member
Peter says:
24 October 2012

I have just looked at this conversation for the first time and confess that the standing charge part of the debate has me in two minds. On balance I think a standing charge is not unreasonable but the costs it is supposed to cover are the same for all suppliers so why the variability? And why not express it as a monthly rather than daily rate, after all this how most of us pay it; and wouldn’t it also make for a more stark comparison? BT, the TV suppliers (Sky, Virgin, etc), all seem to be able to do this so what’s the problem- even the water companies seem to be able to do it, but then they do each have a monopolistic position.

Profile photo of derrickchung
Member

Debates, comments, rising blood pressures is of no help. simple a British utility company that is owned by this country with interest for the people of this country, without the priority for profit. As is they are mostly foreign owned and and these sky high prices does not apply in the countries where ownership is based, ie France had only allowed a 3% rise whereas this country was forced to pay 8-11%. Ofgem and other regulators are just another burden. good riddance if they go

Member
Andrew R (Plymouth) says:
25 October 2012

Actually Derrick, the reason why the French only went up 3% is that they generate nearly 100% of their power with Nuclear. Heating is also generally electric. Nuclear is almost all fixed cost (let’s not get into that debate though) and they are pumping out nearly no C02 (which I don’t think is important – yet – the jury is still out on that issue).

I will be posting more on profit margins later as I have done some research – it seems that much of our price rises are down to paying for Windmills and Solar Panels (with a feed in tariff of 40 pence per Kwh). Somebody has to pay for all of this expensive nonsence which doesn’t work very well.

Member
john doherty says:
24 October 2012

Any tariff that is offered by the energy companies will still have its profit margins as part of the formula.What is the point of forcing them to provide their “cheapest rate” to all, when it will make no real difference to our overall charges?

Profile photo of KevinOGorman
Member

Does any of this make any difference? It’s the same old reasoning every year as I head towards fuel poverty in my later years. The issue is of course to get the lowest tarrif but would this break the Cartel? There is no choice in the market! I need to get renewable self generated energy to lower my bills either by solar or geo thermal. My Bills are £3,000 PA for Gas and Electricy right now and they are increasing or doubling every 5 years. What chance have any of us got to enjoy retirement with this happening. What a shambles privatisation of utilities has become. I’m already planning to leave the UK and to rent abroad rather than pay circa £8,000 in fuel bills by the time I reach retirement in 10 years. I have a nihilistic opinion of the UK political parties and do not believe any of them are serving the population well. I bet the politicians don’t pay for fuel bills..they are probably on expenses!!!

Member
N from N Lincs says:
24 October 2012

Like others here I think the electric pricing is a mess it’s almost impossible to compare deals as there are with and without standard charges. With no charges you pay extra for a set number of units BUT all the providers use different numbers. It should be standardised.

I have another moan, what about those using oil fired heating. Nobody protects us from greedy suppliers. Last winter when the freeze set in and people needed oil the price went up in some cases by over 25% real robbery. However some did maintain prices I ended up buying 100litres in 20 L containers and it still worked out less per litre than 500 litres with the robbery squads.

Profile photo of Ed Vaughan
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I am fed up with the results of this Privatisation of the Electricity Industry. Simply a dream, or notion in Margaret Thatchers head at the time as a way of reducing the Public Sector Borrowing Requirement.
Take it from me, there is more than one way of skinning a cat. Ever since we were landed with many separate Electricity Companies there has been a mess as they tout for business. Has anyone ever sat down and worked out how much unnecessary cost is created as the mass population keep swapping and changing their Providers?
Re-Nationalise and control costs and labour costs. That’s where Mrs Thatcher messed up. So we are doomed . . .they can’t nationalise now because nearly all the companies are foreign owned. Was that ever in Mrs Thatcher’s vision?

Profile photo of crazytrucker
Member

Ed I am in total agreement, this mess we have now was a Thatcher wet dream with no thought of the consequences, even an elder statesman of the Tory Party condemned her at the time for selling off the family silver, and whatsmore way below its market value. She gave no thought that almost all our utilities would end up in foreign hands thus making re-nationalisation difficult not impossible if only this and the previous administration had grown a pair and snatched it all back into ‘our’ hands.
When we had British Gas and Eastern Electricity we all new where we stood as regards tarrifs, nationalisation can work and it was much easier for a Governmment, any Government to curb the utility companies exccesses, now it’s all greed, greed and keeping shareholders happy. I remember lambasting my mother for buying shares in BT/Gas etc. When she died they were worth nowt, or next to nowt!
Thatcher only cared for the here and now, as Cameron will not keep his promise to curb the excesses of the utilities because when he gets booted out of office at the next election he will be looking for soft jobs on the boards of said companies.
Personally, economics is not my strong suit and l cannot make sense of the array of tarrifs that we have at present, 158 is it? Therefore I am too frightened to switch in case I end up with a worse deal somewhere else? I have an email sitting in my inbox from my supplier, headed ‘Price Increase’, l’m dreading opening it!

Member
Robert says:
25 October 2012

As a pensioner a question that bothers me at this time of energy price increases is what figures are being used to calculate the Retail Price Index which affects all our pensions. In my case British Gas has announced gas and electric increases of 6%. However it has informed me that my Online Energy tariff is increasing by 7% for both fuels. In reality the true cost for the forthcoming winter period will see my bills rise by over 9.5%. I have to query the accuracy of a system which has to contend with these varying versions of a price increase. For me, this is just one greedy step too far on the part of British Gas and I am in the process of switching my supplier. I have lost trust in BG and can’t see my ever considering it for my energy needs in future.

Member
Victor says:
25 October 2012

The whole energy “market” is contrived and mainly benefits the utility companies, who are masters of obfuscation and devise schemes and tariffs to benefit themselves. There are many losers. Everyone pays for the extra staff employed to run this market. Taxpayers pay for “sustainable energy development. Rural dwellers who mainly do not have mains gas and thus lose out on the lower prices obtained on discounted dual fuel tariffs. The standing charge, which was always used by the companies to top up their profits, disadvantages those who use least power either by choice or necessity. Prepayment meters which charge a high premium on those who, mainly, are unable to meet their fuel bills suffer double jeopardy by having to pay “up front” and then by being charged a premium for so doing. We should have a National Utility Company charged with supplying fuel at the keenest price while making modest profit for the country. Finally, we also pay a surcharge on our bill for electricity produced from wind power which along with the tax take tends to go to those with the means to finance these expensive and inefficient machines, and the clout to obtain planning consent. Welcome to the wonderful world of electricity.

Member
Alan says:
25 October 2012

I have just discovered another crafty move by British Gas. I decided to opt for their cheapest tariff, and then discovered that as an over 85 year old, I could get a £30 annual discount. However, I found that this ‘benefit’ did not apply to the tariff that chose, but to the second cheapest one. Guess the difference in price between the two – you got it – £30.

Profile photo of b martin
Member

Cameron’s statement implys that for domestic electricity consumers each supply company will end up with one standard 24 hour tariff and one off peak tariff for each of the 14 U K regions. One only has to watch David ‘Pinocchio’ Cameron when he speaks to see his nose get longer with each word.

Member
David b says:
25 October 2012

The easist way to achieve lower energy bills and a fair way of pricing is To remove entirely the massive “green” tax which loaded on to the energy bill of evry user no matter what the earn or whether or not they pay income tax. The whole set up is one big scam

Member
David Buckley says:
25 October 2012

The quickest and easiest way to lower energy bill is to remove the “green” tax which is loaded on to the price of every powr unit used. Everyone is charged this tax irrespectivbe of their ability to pay andit is used to subsidise the costs of the useless windmills. The whole scheme is a scam

Member
David Buckley says:
25 October 2012

Get rid of the “green” tax on every unit of power used to subsidise those installing windmills etc

Profile photo of KevinOGorman
Member

All the comments are valid but missing the point. These companies will continue to raise prices above inflation every year and increase their advertising budgets to encourage us to switch to them by massive TV advertising. Politicians will all tell of the virtue of switching to find the lowest tariff so we are to blame for not shopping around. We either need to find an effective, alternative domestic generation system to offset these abusive price rises and pressure on our spending power or we will need to support a political party who will do something about it. if there is one! Certainly Labour, Conservative and Liberals politicians seem incapable of devising a strategy with the consumer in mind but this should not surprise any of us. Is there an effective political party out there willing to grip this issue and make a difference to the UK population. I have switched to another company but it’s still hopelessly expensive albeit £200 less so….Big deal!!

Member
Michael Farrer says:
25 October 2012

If we really want to save energy surely one of the best ways to discourage use would be for the utility companies to make the first units used (on my bill the first 187 kWh for electricity and the first 482kWh for gas) cheapest and the following units more expensive rather than the other way around.
Surely by forcing the companies to give customers the chance to be put on the cheapest tariff we wll see the companies putting up the prices for everyone for who is going to opt to be on a more expensive tariff?!

Member

I have no faith in any of these promises. At the end of the day, the companies will always find a way around any rules and conditions and they are only interested in making as much profit as possible. Fairness to consumers does not come into it.

Member
Steve says:
26 October 2012

I so agree Joe.Profit is the only motive and excuses will be found to put prices up and rarely reduce for long.The major excuses I keep seeing is the cost of wholesale gas which is somehow linked to oil prices so why blame wind and solar energy costs.We have to look at the longterm energy solution for when fossil fuels run out and risks with nuclear energy.In the meantime duplication of costs by so many companies doing the same thing, plus advertising and huge rakeoffs for directors so much extra money comes from our pockets.

Profile photo of malcolm r
Member

So far most of these comments go over the same ground that has been covered in other conversations – “The energy market is broken”, “Could you beat our tariffs”, “Angered by British Gas…..price rises”. Standing charges, green energy, nationalisation – surely it’s time to put the constructive comments together and get views from the suppliers and the regulator so the arguments can be other than just one sided. Which – shouldn’t you be doing this as par tof the conversation?

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Member

Comparing business costs of electricity and gas with household tariffs (exc. VAT, so what the suppliers charge) might be interesting. Not that easy to find the business tariffs – all I’ve found is an indication of unit costs without other charges. Perhaps business users could contribute their tariffs?
It looks as though the units may be around 20% cheaper. On the basis that business users should be able to negotiate better deals than householders, because they use more and are subject to time/usage restrictions, is this reasonable? I wonder what actions business users are taking to get “fairer” pricing – and what about our Local Authority and Government establishments – what do they pay?

Member
victor parry says:
4 November 2012

the Prime Minister,s promise to make the energy companies apply lowest tariffs to everybody is useless. they will simply make their highest rate their lowest! They already act as a cartel What we need is the regulators to enforce lower prices, not just for domestic use, but for the benefit of the.whole economy of the country.

Profile photo of peter o
Member

WELL-INTENTIONED CAMPAIGN WON’T FIX A MUCH BIGGER PROBLEM.

On their own, David Cameron’s on-the-hoof policy proposals simply won’t work. If the energy companies are forced to switch their customers to the lowest tariff “available” then the utility companies have many devious work-around tactics at their disposal – for example, they will be encouraged to obfuscate tariffs and confuse the public even more than they do at present, or they will be inclined to adopt predatory pricing strategies, such as discounting consumer energy prices temporarily at sign up.

There are two fundamental issues that must be addressed: 1) we need a simplified pricing structure for all domestic energy users in the UK, and 2) we need to encourage more consumers to switch energy suppliers.

The consumer already benefits from a simplified pricing structure when buying energy from a petrol station. Just a simple pence per litre tariff exists at all forecourts and the consumer can easily shop around. Pricing domestic energy isn’t quite as simple as this but it doesn’t need to be as complicated as it is at present. As an Ovo Energy customer, I am pleased to say that Ovo is setting the gold standard by simplifying their tariffs.

The second issue is all about overcoming the resistance of the consumer to switching suppliers. The utility companies can do a lot to help here. All energy bills, whether monthly, quarterly or annually, should contain precise data for the electricty and (where applicable) the gas energy consumed (in kWh) over the billing period. When 12-month fixed contracts are due for renewal, customers should also receive a reliable estimate of the total spend on energy over the previous year, with a break down of the total cost of the standing charges and the energy consumed. The calculations issued with statements should be spot checked by an overseeing body.

A simple, hassle-free energy switching process, aimed at those who have internet access as well as those who do not, needs to be explained clearly to the public. Only when consumers are armed with the right information will they feel encouraged to exercise their free choice and switch.

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Member

In general Peter l agree with everything you write except for the aversion to switching suppliers.
I’m one of those, basically because l do not understand, nor can l comprehend the plethora of tariffs that are being thrust at us. The last check I did meant only a saving of £20 per annum, and to be honest I could do with a spare £20 but it just didn’t seem worth the hassle, and besides i would still feel that I was being ushered into an even worse deal than the one I have now!
I’m not stupid, l have a degree, just not in economics!

Member
Andrew R (Plymouth) says:
18 November 2012

Ok let’s ignore all of the comments about people who distrust free markets, perhaps they should pop off to ex-Soviet Russia where goods were allocated by queing. I would also point out that (in the past) we had some of the cheapest energy prices in Europe due to competition.

I agree that that we need to radically simply tariffs and get rid of “Standing charges” wrapped up in more expensive initial units. My mind has been changed by contributors in this debate. One clear tariff allows simple comparison.

The regulator is clearly useless and has been useless for decades (which is a great shame) all markets with only a few suppliers are not properly free and need some ground rules setting.

Much of the increased costs of fuel is due to subsidising rich people at 40 pence per Kwh to have solar panels on their roofs, paying for windmills and other trendy stuff (barmy green policies).

The solution is to force companies to provide the advertised tariff for 12-18 months after a consumer switches with no price rises allowed (akin to filling your tank of fuel in a garage at a set price). The companies can buy forward, hedge or just take the risk themsleves so no great economic barrier to this policy.

It would also be interesting to have “tracker tariffs” where there is a margin over a monthly wholesale price.

Suddenly the market would work overnight, it would be worth switching (for 18 months even I’d do it) and we could get rid of all of the useless staff in the energy regulators office. It is depressing that it takes 6 people on “which” to thrash out a workable solution and all of these overpaid quangos with staff on £ 150,000 per annum can’t sort it out in decades!!!