A big week for energy – and the battle continues

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!

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.

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.

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.

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.

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.

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?

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.

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?

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!!!

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.

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.

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.

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.

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.

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

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

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

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!!

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?!

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.

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.

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?

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?

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.

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!!!