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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
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.

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.