/ Home & Energy

It’s make or break time for energy suppliers

Energy prices up

The results are in. The outcome of the long-awaited energy market assessment was released today and it’s good news for the 45,000 of you who backed our Fix the Big Six campaign. But we haven’t won yet…

Ofgem has decided that the energy market should be referred to a full scale competition inquiry.

The assessment found that retail profits increased sharply between 2009 and 2012 with little evidence of increasing efficiency from the suppliers.

It also expressed concern that the structure of the market means that it doesn’t work for the good of its customers.

We hope that this provides an opportunity to quickly address and resolve the underlying problems of a fundamentally broken energy market. We know that energy prices are consistently at the top of consumer concerns, and we know that levels of trust in the energy industry are at disastrously low levels – just one in five of you think your energy provider will act in your best interests.

A competitive energy market?

The inquiry has to take a long hard look at a structure that allows big energy companies to keep a stranglehold on vast swathes of the market.

The practice of buying and selling energy to themselves should be brought to an end and this can only be done by separating the supply and generation parts of their businesses, just as SSE committed to doing yesterday. This would add a level of transparency to the market and would provide a much greater degree of confidence that we’re being charged a fair price for the energy we use. Plus, SSE’s action proves that suppliers don’t have to wait to be forced to act – they can do so on their own right now.

Rebuilding trust in the energy market

The process of rebuilding trust in a market that has taken all of us for granted will take time, but this is a crucial first step. It’s good news that the regulators have listened to the tens of thousands of people who have supported our Fix the Big Six campaign. We now need the investigation to work quickly to expose what’s really happening in the energy market and confirm where competition is lacking.

We’ll be working hard to ensure your voice is being heard throughout the investigation, and we’ll continue to argue for radical reforms to ensure that the market works competitively for everyone – especially for the millions struggling with spiralling bills.

What do you think about today’s announcement? Is this the start of a journey towards an energy market that works in your best interest?

Comments
Gordon from Worcesrershire says:
27 March 2014

Great news on the coming report but disapointed that it’s going to take 18 months before any action is taken!

The fundamental issue is the structure of the tariffs and I know that Which? is on the case here. It is beyond me why the Regulator will not force the suppliers to have a single, per unit, tariff for each fuel without a standing charge. That way, comparison is absolutely simple. The TCR that I am reading about in this month’s magazine only serves to provide the suppliers with yet another smokescreen.
It is now impossible, as far as I can see, to find a tariff that does not include a standing charge. This discriminates hugely against those least able to afford their energy.

Ronald Ranger says:
27 March 2014

There must be a general election coming If not for that why did they not do this in 2011 when it was first called for
If they mean it do in the next 9 Month

Ross says:
27 March 2014

I see that SSE is “fixing” their prices. Can we assume then, that a reduction in the cost of wholesale gas is imminent?

Bob (British Gas with provider SSE Customer) says:
27 March 2014

The SSE announcement is, as other posters have stated, is a sugar coated bitter pill regarding shelving of infrastructure investment and 500 redundancies.

I’m also waiting to see how much SSE had to cough up in total for the Christmas time power outages of which they had to pay to some 40 thousand homes, 19,000 in our area.

Thanks got to effect their bottom line and forgive me for being cynical but the bad news they threw into the announced price freeze may allow them to cover the power outage payment cost.

no matter who you are with energy bills go up when they feel like,never down when the whole sale price goes down that’s when they make MORE profit,

Edsen says:
27 March 2014

What have “Ofgem” been doing all these years, obviously not a lot. It takes the secretary of state to instigate an investigation into the power companies. I suggest they get rid of this quango and save even more money. I can recall a time before privatisation when all the tariffs I can remember were “economy 7,” also a separate rate for manufacturing and companies and a domestic rate, which was so easy to work out with mental arithmetic. So why are there so many tariffs for one commodity.

Edsen, The reason for having so many tariffs is to create maximum confusion for customers thereby reducing the number of customers who locate the best tariffs. This will help to increase company profits.

Jenny says:
27 March 2014

Good for WHICH in the news!

Annual kWh used is what we need to know. Then we can work out how to use less if we want.

Cut out all those ridiculous extras put in to confuse – standing charges, fixed price, capped, etc.
Bills should show Readings, kWh used, Price, so we can easily compare this year with last year.

Jeremy Taylor says:
27 March 2014

Jenni, OVO Energy bills tell you exactly what you want. Their website will compare your usage with similar properties, forecast what you will use in the future based on current usage. you put in your meter readings monthly if you wish and can adjust your direct debit on line. I thoroughly recommend OVO. My bills today are lower than 3 years ago.

laurie says:
27 March 2014

the review will take to long and is an excellent excuse not to invest in new production capacity as who knows what the outcome will be-too little and to late-get ready for industry to nslow down for homeowner demand.
simple straight forward understandable tariffs with clear unit costs for cash,credit,direct debit with no standing charges and the more you use the more you pay.market forces would then allow you to calculate your own savings and decide to swith or not,with CAB explaining it if you need help and the company refuses to clarify the simple system.
how we pay for new urgent generating capacity has been a predictable problem these last 10 years and is now at crisis point-fantastic timing -well done the government.
if all else fails fall back onbyour own resources as good state help is out the window.

John Adams says:
28 March 2014

Ed was right people power won i have been with Ovo 3 years just signed up for fix for further 2 years and believe me it is not loyalty it has been common sense, i have learned to check prices of all insurances as well.

Although this investigation is long overdue and is most welcome, (providing the results actually achieve something!), there is a little bit of my cynical brain that keeps asking, ‘Is the timing of this & the length of time it will take, just a political ploy to kick the subject into touch until after the next election?’

steve linsdell says:
28 March 2014

Have no fears this review will cost the tax payer quite a few millions and some unheard of lord or dame will be paid an unbelievable wage on a part time contract to in the end do very little to break up these quangoes as the government of the day makes to much money in the way of Tax please do not forget that as the profits of all energy,water and telecom. firms has increased hugely over the last few years so has the amount of tax revenue collected by the government yet I never hear of a demand to review these charges. It is time for the government of the day to step in and do something for the good of the public instead of only thinking about profit. One comment I direct to the Prime Minister is that if he has the power to take this country to WAR within hours to protect our society why can he not do the same NOW as society is now at WAR with these greedy money grabbing firms

I think the Government is only going to do a cosmetic exercise it will not do anything to the Energy Co’s.
In my opinion our Government is as bad as the Energy Co’s. they pay lip service to everything but actually never take the action that is needed to make these people act responsibly and with integrity.
Where has INTEGRITY gone? If they sort that one out perhaps we will all be able to live our lives as we should be able to, without the need for organisations like WHICH to try and look after our interests.
Bob Mawson

Alan says:
28 March 2014

In concert with a few other comments here I suggest we also need a “FixOfgem campaign”
The current campaign has only served to get Ofgem off its backside and forced them to make the right noises, which had they been more honourable to their role in society should have been making in the first place. Makes one wonder what we pay them for.

John H says:
28 March 2014

Well done Which? good start. How about finding out some more info that is not generally available to us so we know what we should actually be paying for our energy. What sort of KWh & standing charges are paid by other EU consumers, in France and Germany etc. How do we compare with them? Also, if it’s true these countries are building cheaper coal fired stations as stated by one of the political parties, will we then be at a further disadvantage on prices, as our government stands tall waving the green energy flag. If so, it will be we as end users who will be paying the extra cost, as unlike MP’s, we are not able to get it back (among lots of other things) on an expense claim. Going green is good. But being green is not advisable.

John H, data for Sept 2013 for a medium user:
– gas cost: UK is cheaper than Germany and France – about 80% of their cost. Out of 25 European countries we are 8th cheapest – around 76% of the average Eu price (estimated).
– electricity cost: UK is cheaper than Germany – about 60% of their cost – but more expensive than France – they are about 90% of UK cost. Out of 27 European countries we are 15th cheapest, around 90% of the average price (estimated).

John H says:
30 March 2014

Thanks for the info Malcolm. Food for thought.
I wonder if any suppliers to the UK market are supplying the seven cheaper countries?

Good question John H – which reverts back to previous debate which makes the interesting comparison between household income v energy costs. It was generally accepted that any household paying more than 10% of income on energy costs was into energy poverty. How this relates to prices v consumption is not clear which is why we need more transparency in order to establish where our money goes and whether we are subsidising other countries.

ALL THE BIG SIX HAVE STANDING CHARGES & BRITISH GAS ONLY PUT ON STANDING CHARGES IN THE LAST 14 MONTHS I HAVE ALL MY BILL RECEIPTS TO PROVE IT NO WONDER THERE IN PROFIT ALL THE TIME, & WHILE I,M AT IT ALL PHONE COMPANIES SHOULD SCRAP LINE RENTAL, AND THE TV LICENCE FEE SHOULD BE SCRAPPED ALSO A REAL POCKET LINER FOR IT,S EXEC,S DRACONIAN TAX I CALL IT WHEN IT CARRIES SUCH A HEFTY FINE, ESPECIALLY WHEN FAMILIES ARE SO HARD PUSHED IN THIS DAY & AGE, GIVING OUT 6 MILLION CONTRACTS TO THE LIKES OF JEREMY CLARKSON & THE LIKE, RIP THE PEOPLE OFF BRITON !

Phil, of the 6 main suppliers, based on Which?’s April tariff report, for high electricity users the cheapest are those with a standing charge, some are cheaper for medium users, but for low and extra low users generally a unit-only tariff is cheapest. There is choice, depending on your annual consumption.

tony barrett says:
28 March 2014

Well done Which.Great news for the down trodden consumer.The end in sight for rip off brittain.

jack sharkey says:
28 March 2014

Why cannot we have a consumer energy charging formula tied to the profits of the energy
companies? Their profits are obscene and unjustifiable.

Mrs Judy Sedgwick says:
29 March 2014

I have to take account of Feed in Tariffs and so many companies can’t deal with them themselves which means that I have to deal with another company as well. Currently I have my gas and electricity with Utility Warehouse and, although not the cheapest, my FITs are taken in account every month (I read my meters each month and give those readings on line to UW). That way my electricity is kept up to date and especially during the summer I have a sizeable amount of money returned to me each month. Many other companies only read meters six monthly and therefore hang on to my money for a length of time; not a good idea.

Banks pay compensation for mis-sold insurance.
We should all get compensation from their profits purely because they charge too much.