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Dear Prime Minister, the energy market is broken

Pound coins on energy prices

Energy companies have hiked prices, but are their reasons really justified? In this letter to Prime Minister David Cameron, we call on him to commission an urgent, independent review into the energy market.

Dear Prime Minister,

Today marks the anniversary of the Energy Summit you held that promised action to help people to keep their energy bills down.

One year on, and with winter fast approaching, more than 20 million households are facing inflation-busting price rises as four of the UK’s largest energy companies put their prices up yet again.

With the average energy bill already rising 13% since last year, it is no wonder consumers tell us that energy prices are one of their top financial concerns.

After the Energy Summit, you said “we are making energy companies be competitive” but there is little evidence of this. 75% of consumers are on the most expensive tariffs and the level of switching continues to decline.

It’s time to face facts: the energy market is broken.

People are questioning whether they are paying a fair price for their gas and electricity. The energy companies blame wholesale price increases but even the regulator has found that prices don’t fall when the wholesale price drops. The sector is dominated by a handful of big and powerful players who are seemingly unaffected by the normal competitive pressure of price and customer service.

They also blame the cost of implementing your government’s environmental and social policies for the price rises. Yet, as your own Energy Department has said, there is no hard evidence to back this claim up.

Claim and counter claim are played out in the media but consumers deserve the truth. Ofgem’s proposals to change the retail energy market, expected shortly, are necessary but not enough.

Urgent, independent review into the energy market

So today we are calling on you to launch an urgent, expert, independent review into the rising cost of domestic energy bills and whether competition among energy suppliers can be made to work more effectively in the consumer interest. We want an independent review to look at whether the reasons given for the recent price increases are justified.

We also believe a review must identify what reporting measures should be required of energy companies, relating to both the wholesale and retail markets and the costs of social and environmental policies, to increase transparency and give consumers confidence that everything possible is being done to keep energy prices in check.

The review must also consider whether the regulator should now be required to better protect the majority of consumers on expensive ‘standard’ tariffs by introducing a fair cap on ‘standard’ prices.

Until we see greater transparency and prices presented clearly, consumers will continue to distrust the energy market and remain unable to drive genuine competition through moving to the cheapest tariffs.

The time for action is now. Warm words alone are not enough to keep consumers from the cold this winter.

Yours sincerely,

Richard Lloyd, Which? Executive Director

Comments
Guest

I agree that an urgent review of energy prices is essential. However in the meantime I would urge everyone to insist on having a smart meter installed, as we did nearly a year ago by Eon. Our monthly DD was about to increase to over £200 but since the smart metre arrived it is currently only £140! I didn’t think we were especially wasteful but think about it – what else do you buy that you don’t know the price you’ll have to pay for it until 3 or sometimes 6 months later? We now know quickly and easily what we spend on gas and electricity EVERY day – and a traffic light system warns when our consumption is high. And the best bit is that if everyone reduces consumption by even a small amount the energy companies will suddenly have spare capacity and may have to reduce prices to attract more custom. Like the banks we need to hit these greedy companies where it hurts most – customer numbers and sales turnover!

Guest

I’m not convinced that we need smart meters or traffic light systems to warn us when we are using too much energy. Looking at your costs, I think you have further opportunities to save energy.

Guest

Smart Meters do nothing at all to save energy and only very naive consumers will “learn” how to save using one compared to existing metering.

However. Smart Meters WILL cost all users and tax payers Billions of £ to implement, will restrict the ability to switch suppliers even further and have insidious and potentially very dangerous flaws built into them.

Smart Meters are not, and can never be, the solution to saving energy or reducing your bills.

As for £140 DD per month for dual fuel – that seems like a hell of a lot of gas and electricity compared to the National Average. Possibly very good for your household but hardly a ringing endorsement for Smart Meters I’m afraid.

Guest

@Dave D, Smart Meters will only cost customers money, as the energy companies are being made to fund it themselves ( thru what they charge us ), I don’t think there’s any extra Government money in it for them.

And if anything it should make switching easier, if not no change, as part of the reason it hasn’t happened yet is all the companies have to agree on the same model of meter. So part of the issue with price rises is possibly down to energy companies have spent money training their “sales staff” to install their own preferred meter, which is 99% probability not the one they’ll end up with.

Guest

Sadly as yet there is no legislative obligation for a single standard of SM to be used and there is a government commitment to fund the SM programme. See convos on SM’s for plenty of details.
Crucially , though, SM’s cannot possibly help us to reduce our bills (unless you count the fact that they will all be capable of disconnecting our gas and elec without warning which I suppose could count as some sort of enforced saving)

Guest

And of course once the SM roll out starts, I’m betting the number of distraction burglaries will rocket. “Hello Sir/Madam, We’re here to install you’re new meters, can you show my mate to the Gas meter while I pretend to work on the leccy one…”

Guest

Hello – re smart meters

They could help people control their energy use and it’s great that you have saved money. There are a few things to think about re smart meters.

Most smart meters that are fitted at the moment are not likely to be fully spec, in terms of having the final agreed technical standards. This will mean that you will probably have to have another one installed before 2019. While this may not be too much inconvience, the more early ‘smart’ meters rolled-out which aren’t compliant, may push up the overall cost – which will come out of our bills.

Also, the cost on the monitor is not likely to be the accurate cost. Mine says ‘for illustration only’. Be careful not to rely on this figure if you are budgeting or making sure you are on the best deal. Which? is pushing for this figure to be accurate.

Good to hear your experience and keen to hear from anyone else.

Guest

I’m not sure how much use a smart meter is, but I am sure that they are not good value for money at the huge price estimated for installation across the UK.

I’m not going to turn off my fridge (except when I go on holiday, of course) and I’m not going to turn off the freezer. I don’t know how much electricity my gas central heating uses, but cost of gas is a bigger concern. Apart from lamps, which are marked with their power consumption, almost everything else is plugged in. I have can test the consumption of individual plug-in appliances using a simple plug in meter that cost £9.99. I know that appliances consume power in standby mode (and can measure how much), and that they consume no power if unplugged.

I have no objection to people having a smart meter but I think they should pay for it.