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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.


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.

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!

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!

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.

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.


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.

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?

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.


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.

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.

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!!

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!!