Energy bills: do you stand to overpay by £400?

In the case of food I think I can tell the brands or sources I prefer. It doesn’t need any supermarket to tell me how to decide. The assumption here is that LIDL and Sainsbury’s offer equal quality. I don’t shop at either but think the assumption should be backed up with evidence.

I think there is such a vast difference in the range of stock between the two stores and the actual shopping experience is very different in each. That explains the preference in many cases. Even if things are more equal there is also the question of distance; Sainsbury’s and their direct rivals have the prime sites.

The components of energy bills in the 57% that are not actual energy are quite regressive on the less well-off. They probably cannot afford to use as much as they would like to so they get little averaging benefit from the tapered or tiered rates at the tariff margins and end up paying the highest unit rates of all.

It works for more than just some of the people. And, according to the CMA, many others could – are quite capable- but just don’t bother because they don’t regard the savings as a sufficient incentive to do it. I use Which? Switch each year to check my best deal. It is easy and quick, as is switching. What is missing is properly publicising this to enable people to take advantage. Which? could advertise this on TV – but don’t.

However, I keep suggesting abandoning the cheaper fixed price tariffs and using the subsidy they require to bring down standard variable tariffs. Then most of us would be on these. However unless we want a monopoly, there will always be a number of energy suppliers so, like buying anything else, if we want the best deal we’ll need to shop around – or get someone to do it for us.

We see money spent on Gaz and Leccy – stupid cartoons advertising dubious smart meters. A pity the same money and effort is not put into showing those who don’t already know the ease and advantages of shopping around.

I want to see energy supply run primarily for the benefit of the public and not the shareholders of the companies in the industry. I’m with Sophie.

I have also been amused by the fact that the irony of using dumb cartoon characters to promote ‘smart’ meters is totally lost on the organisation [Smart Energy GB] whose burden in life is to get us all hooked up. Most of us have probably been getting Gaz and Leccy under control for years without charging billions of pounds to do so. In fact I am still not sure who this campaign is aimed at.

This could be why the smart meter roll-out is so expensive, John. I wonder if it is ever mentioned that we can decline to have smart meters installed and that they might not work properly if we switch supplier. Never mind, we can then have a new ‘free’ smart meters installed and the cost will be shared by all customers.

If I had my way, those struggling to pay their bills should be given smart meters in the hope that they could help these customers and anyone else who wants one should pay.

I wonder if Which? has any views on the high cost of the smart meter roll out.

Which? receive payments from some suppliers if you use the Which?Switch site to switch suppliers.

I do not know what “for the benefit of the public” really means. Do you want energy nationalised, so we all pay the same? Subsidies? It would be useful if you could expand your proposals so we can see what they involve.

Energy is one of the less expensive parts of most peoples budget, compared to housing, food and, for many, commuting. If we want to reduce people’s expenditure we might get better results by examining these perhaps.

We have discussed this at length, Malcolm, and I have made it clear that I don’t want energy nationalised. As I have said repeatedly, we could sell energy at a fixed price and retain the benefits of competition elsewhere in the industry.

If you and I switch to the cheapest deals then our energy price is subsidised by those who pay more, as has been pointed out by others. Those paying more include many people who don’t have much money. I want to put an end to exploitation of the poor.

So you would support scrapping the subsidised or low-profit fixed term fixed price deals and reduce SVT prices accordingly that most people would then be on?

Being “poor” does not automatically mean you do not have the intelligence to look after your finances. To suggest they are is a little demeaning. I know many people who are far from well off but shop wisely and choose their energy supplier appropriately. It is part of the wider population – some of them poor and well off alike – who do not switch. I suspect you really mean the “vulnerable” and I have suggested elsewhere it is the vulnerable people – those unable to look after their own affairs – who need our help and support and we should address dealing with that issue.

I am focusing on the problem rather than suggesting how it is resolved.

“Being “poor” does not automatically mean you do not have the intelligence to look after your finances. To suggest they are is a little demeaning.” I find that unpleasant. 🙁

I have given many reasons why people are too preoccupied with other matters to think about energy costs. Two days ago I learned that the chap at No. 36 is likely to go into a hospice, having spent the past two years losing the battle against cancer. Yesterday afternoon, the ambulance turned up. Perhaps his wife should now focus on sorting out a cheaper energy supplier, but I suspect that she will spend as much time as she can with her husband.

I have given many other true stories about why people can be preoccupied with family and other issues in our discussions, Malcolm. I doubt that any of them were poor or vulnerable (I can differentiate between these categories) but why should we allow any company to exploit its customers because they have not played the switching game.

We should differentiate between the vulnerable who cannot help themselves, and require our extra help, and those capable of running their own lives. And we need to focus on solutions to the problem; only then might we make progress.

There was nothing meant to be unpleasant in pointing out the poor are likely to be just as capable of looking after their affairs as anyone else.

I have proposed one means to improve (in my view) the fairness of energy tariffs. See above; maybe you would give your view? However, we will still need to choose what is best for our needs – a regular SVT, an off peak tariff, and which supplier; so we will still need to do some shopping around, just as most of us do for a lot of other things.

Why is it right that companies should be allowed to charge some customers significantly more than others for an essential service, Malcolm? To my mind, it does not matter how much money a person has. I have focused on energy because, unlike food etc. there is no quality issue when discussing electricity and gas prices.

Would you be happy if companies charged some customers ten times what they charge other if they could get away with it? I think it might be useful to control the excesses of our capitalist system.

I have made the same point in a different way by offering a solution. The cheap (subsidised) deals are the fixed term fixed price. Scrap those and reduce the SVTs appropriately. That is a possible solution, and it is solutions we need, surely? Would you like to join in a campaign to do that?

There might be no quality issues, but different companies buy their energy from different sources, in different ways and at different prices. They therefore have different costs.

I want to see an end to the large price difference that results in some people paying considerably more for their energy. How this is achieved is up to Ofgem, the government and the companies.

It’s a valid point that different companies use different energy sources. Maybe there is a need for standardisation. A simple example is that diesel used as road fuel contains biodiesel and petrol contains ethanol – as specified by the relevant British Standards, I believe.

The large differences in my experience exist because of the difference between fixed price fixed term tariffs, and standard variable tariffs that seems to subsidise them. I am proposing we simply stop this.

How do you standardise energy when it comes from different sources – wind, diesel, coal, wood pellet, gas, hydro…… Companies that invest in different methods need to have a return on that investment, and the electricity will cost different amounts. Gas comes from different sources. And companies buy in different ways – some use spot pricing, some will buy 1, 2 or 3 years ahead. Many will do the same with the dollars they need to purchase the raw material. So, as I see it, whilst the products might be the same they cost the suppliers differently and part of the ability to offer more or less competitive prices to consumers stems from that. Government can distort this by subsidies and guaranteed payments of course, and does, but there remain underlying cost differences.

If we all pay the same price for energy then the companies can choose whichever sources they want and it need not concern the consumer.

Many food essentials cost much the same in different supermarkets. For example, 2.26 litres of milk generally costs the consumer around £1.

Milk – not universal. It costs more than this to produce I believe.

If you pay the same price to all energy companies, the larger ones who invest capita;l in generation and storage, then those with cheaper supplies would make bigger profits. We wouldn’t like that (would we?).

Like minded people who feel strongly about this can always form a cooperative and share out the profits. The advantages of a capitalist world is that no one is precluded from making a business. i wouldn’t like that to change as, whilst it might not be perfect, I haven’t seen a more perfect model.

It’s a long time since I’ve been in a supermarket that charges more than £1 for a bottle of milk.

The answer to the problem of larger companies using their buying power to make bigger profits could be to limit the size of companies. Some of the biggest problems in society relate to large multinational companies. Maybe we could charge everyone the same price for energy and allow companies to tender to supply no more than a fixed amount, say between 5 and 10%.

I suggest we think about people less fortunate than ourselves. 🙂

“I suggest we think about people less fortunate than ourselves.
We do. We simply may have different ways of approaching it. I have proposed a number of times the “vulnerable” should receive special attention and help from us all – Ofgem, for example, has required energy companies to do this.

We might regard dairy farmers as less fortunate than ourselves if they have to sell milk at less than the cost of production.

By people less fortunate than ourselves I include the poor, not just the vulnerable. Rich or poor, I don’t believe it is right that the energy companies are allowed to charge some of their customers much more than others.

I was speaking to a farmer two weeks ago and he said that paying more for milk does not necessarily mean that farmers are paid more.

Some supermarkets have beneficial agreements with farmers.

I have made a proposal that would, I believe, provide better energy tariffs. Suggesting solutions is a way to progress.

When we talk about the poor I am happy to help those who have, or have had, no options to improve themselves or their lives. However, we need to look critically at who deserves our statehelp,which often means our money. Individuals, of course, can give money and help to whoever they wish.

Don’t assume that the farmers benefit very much if we pay extra for milk. Marks & Spencer may pay the farmers a few pence more but I believe they charge the customer 29p extra: https://www.fginsight.com/news/news/how-much-do-supermarkets-really-pay-dairy-farmers-14277

The citizens of this country deserve not to be exploited by the energy companies, be they rich or poor. I suspect that if we asked the public, the majority would prefer that everyone payed the same price for energy rather than having the current complicated system.

If M&S give the farmers a fairer price then of course they will charge the customers more. If customers are prepared to do that than all well and good.

Competition gives us all (except the “vulnerable”) the ability to seek out the most competitive deals in whatever we purchase – if we choose to bother. Many may not be that concerned about saving money as the CMA report found. Perhaps the evidence that the majority would prefer the same price for electricity and gas could be provided. I firstly doubt that they do, secondly do not want minority mantra imposed on others, and that “same price” might well prove more expensive for a large proportion of customers than they currently pay; I doubt they would relish that prospect.

Artificial devices imposed on markets do not work, in my view. We have a competitive market(around 48 energy suppliers) where you can find your best deal very easily through, for example, Which?Switch. What is being suggested is that because some choose not to engage with this market (put those unable to, the vulnerable, aside because I have repeatedly said we should help then by separate methods), many of whom simply cannot be bothered, we must therefore remove this freedom of choice.

How many other essential purchases – water, food, rent, insurances, fuel- should we apply this principle to?

Let’s leave the vulnerable out of this discussion because we and I hope most other people agree that they should be supported.

I don’t believe we have tried selling energy to all consumers at the same price, so we don’t know how it would work. From what I have seen, business is good at adapting to new legislation.

I have mentioned real examples of people who have been preoccupied with illness or family problems and someone in the early stages of dementia. They are not going to engage with the energy market. I would prefer that they are not exploited by the energy companies and simply paid the same as those of us who have engaged.

The only time in my life when I’ve had much contact with poorer people was when I lived in a rented flat while settling into a new job and house-hunting in my spare time. I found that the landlord’s meter in the all-electric flat was set to charge four times the permissible rate. I checked two of the other flats in the same building, and they were the same as mine. The landlord claimed that it was a mistake by one of his contractors and said that he would give us all a refund. At the time I was amazed that the other tenants had not realised that they were being overcharged but have since heard many tales about unscrupulous landlords.

I don’t see any of the individual examples supporting the proposed “single price”. They seem like vulnerable people who need separate protection.

We have commercial companies generating and buying energy in different ways from different sources at different prices. These companies have different operating costs. Hence they can offer us different consumer prices and we have the freedom to choose the one that best suits us.

Now we want them all to charge the same. This means some will make bigger profits than others – do we want to do this? Featherbedding profitable companies is not what i want to see.

Who sets the “price” and who alters it as world prices change? I doubt any government department or regulator has the knowledge or expertise to do this competently.

We spend more on food than energy. So do we impose fixed prices on all shops and supermarkets for the staples that all need? Or perhaps, if “unfortunate” enough not to live near a cheap shop, provide free transport to another outlet to take advantage of lower prices.

I have suggested a way to make, in my view, tariffs fairer. Perhaps commenting on this would move us forward. We will not have a universal energy price.

https://corporate.marksandspencer.com/plan-a/our-stories/about-our-farmers/milk
I presume other supermarkets have deals with dairy farmers. They may well be selling milk at a loss, of course.

Malcolm – I have explained that I am keen to discuss energy because there is not the complication of quality, which would be a factor for other essentials. You pointed out that energy can come from various sources costing different amounts, but there is no need for this to be the case. Rather than having different companies using different proportions of green energy, for example, the companies could be told what proportions to use. I mentioned diesel and petrol as examples where this system is already in use.

I put the needs of citizens of this country before the wishes of companies that are there to serve our needs. The government, via Ofgem, should be making the rules, in my view.

We could have a cooperative that tries to achieve your wishes – that might show the commercial companies how its done?

I’d like to see evidence of successful economies that avoid the use of competitive commercial organisations.

I would certainly be interested to see how a cooperative fared, though I don’t believe that this option is yet on the cards.

I am not opposed to competitive commercial organisations as long as their operations do not create problems. In the case of energy, companies are allowed to charge some customers significantly more than others for energy. I see this as exploitation, and in many cases it is exploitation of poorer people and not just the vulnerable.

I’m certainly not seeking nationalisation of energy but I believe that it is still possible to have competition within the industry while selling the same product for the same price to everyone. I am keen to narrow the gap between rich and poor as well as discouraging waste and raising awareness of environmental issues.

Using your term “vulnerable” Don’t forget those that “pay as you go” with cards. They do not have a clue what rate they are paying for their energy. Those who top up by £10 are usually topping up again the next day. (We run a store). This definitely needs looking at.

Paperless billing. Just found a flaw. My current supplier has bizarrely claimed my annual usage has increased, I say bizarrely because its based on estimated meter readings. To back up my case I went back to my annual statements, a couple of years though I failed to download them, the account is closed and the information is lost.

Bob, the question I ask is “why should there be a best deal” from a particular supplier, other than deals tailored to your particular circumstances – such as off peak? I think we should mostly be on standard variable tariffs, reduced in price by abolishing the artificially low (I believe) fixed price one year tariffs. Your “best deal” would then be determined by shopping around the different energy suppliers.

Ofgem have dealt with prepayment meters to ensure for most they can get appropriate tariffs (if my memory serves me right).

Colin, my supplier is OVO Energy. I made my first direct debit payment before I received any gas or electricity. The direct debit is set high enough to leave me with a credit balance each month. I am on a cheap fixed tariff & paying up-front.

Use Which?Switch to find your best deal then switch direct to them. I would investigate a company that turned you down for a tariff – presume it was a fixed price fixed term? This is what I’d suggest will give you the best result.