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Give customers simple prices & end energy market confusion

Man standing outside a large maze

As another winter of inflation-busting energy price hikes bite, how do you feel about your supplier? Are they top of your Christmas card list? I very much doubt it!

When it comes to trust, the energy industry has just dropped to an all time low. More than half (54%) of the public now say they don’t trust energy companies, putting them second only to car salesmen in the low trust stakes.

It’s no surprise that people feel like that when you look in more depth at the recent price rises. You’ll have seen the recent headlines announcing average increases of 7, 8 or 9% depending on which supplier you’re with. But actually, where you live and how much energy you use could mean that you’re facing a much bigger increase in your monthly bill.

Take SSE customers in the North East. If they’re on the standard dual-fuel tariff, paying by cash and are also low-energy users, they are facing a whopping 17.15% rise for their electricity. Or think about Npower customers in northern Scotland. Low-energy users who pay by direct debit are facing a 15.91% price hike for their electricity, rather than the 9% average.

Energy price rises worst affected regions

It doesn’t have to be like this. Steps can be taken by the government to make competition in the energy market work and keep prices in check. And following the Prime Minister’s commitment in October to force energy companies to move people on to their cheapest tariff, we’ve finally got an opportunity to make this happen.

Single unit price for energy

However, this requires the government to go a step further with its proposals and introduce a single unit price for energy. This will ensure that prices can be easily compared at a glance, like on petrol forecourt displays, allowing people to find the cheapest deals with ease.

Why is this so important? Well, prices will only be kept as low as possible if there is more effective competition between suppliers in the energy market. And there will only be price competition if people can compare their current deal against other offers and easily switch. As things stand, the Prime Minister’s promise should help you get the best price from your existing energy supplier. His promise does not guarantee the cheapest price on the market or a fair price.

And what about switching? We know that some people have found the process frustrating and time-consuming when it comes to moving to another tariff. Switching must be made quicker and easier.

This is why Which? has set out how this can be achieved in a new report called ‘The Imbalance of Power’. Call it our Christmas present to the government and the energy suppliers to help them sort out our broken energy market.

Let’s hope they read it over the holidays and come back in the New Year resolved to ensure that we all get a fairer deal.

Comments

AQ, Street lighting is not that big a consumer – the last figure I have is that it was 0.73% of total UK electricity consumption. Much of this is consumed at times of low demand (after midnight) when the (predictable) load is quite useful to the generators.
Efficiency – the orange sodium lights were the most efficient, but are now being discontinued in favour of high pressure sodium, metal halide and LEDs. Recent visual research has shown that at low light levels the eye responds more to bluer light than redder, which has lead the move towards whiter lights.
Modern street lighting is very well controlled to ensure light goes where it is needed. In residential areas this includes towards house frontages for security and crime prevention. Switching off at midnight is an option, but is not helpful in areas where people are out and about late at night.

Malcolm – yes I figured that street lights would not account for high consumption in the greater scheme of things. However, having lived in a rural village in France for 3 years, where the lights switch off at midnight, it made a pleasant change not to see the streets lit up in the dead of night, though I admit that if you are out very late, a torch is essential. I think it is a real shame that street lighting in the UK (and some other countries) is as much for crime prevention as for safety – a sign of the times.

AQ, I live in the sticks without streetlights and it is very nice to have dark nights! Unfortunately urban street lights have always been seen as a crime-prevention measure – nothing new – but also to help pedestrians avoid obstacles.

David, grants for insulation tend to be for the elderly or disadvantaged – including your nuisance phone calls I think. I don’t agree with universal grants – those who can gain by cutting their fuel costs should pay, although a loan at sensible interest throught the energy provider seems a good way of financing. In your case, good loft insulation should pay for itself. double glazing is unlikely to, but that can be a comfort issue rather than a financial one. The same with insulating solid walls. I don’t see why a grant (i.e. a subsidy from the rest of us) should be given for this.
There are very energy-efficient homes built, that far exceed the Building regulations – triple glazed, heat-gain glazing, heat pumps for example – that can be nearly energy-neutral I understand, but at a high building cost. That was the point I was making. As in your case it comes down to value for money – what are you prepared to shell out for whatever saving, or other benefit, is available.

I agree, Malcolm. Though with all the rhetoric about green policies and money-saving over a longer term, most people will always go for short-term gains or be too unconnected to take any action at all. This is where government incentives can help, and maybe we do need a balance between these and taking no action to everyone’s detriment.

I read recently (from a famous economist) that we ought to note that the UK’s contribution to ‘global warming’ CO2 production is about 1 1/2 %, whereas the USA and China together (the two biggest contributors) contribute nearly half together. And both of these have refused to join the Kyoto protocols. His point was that we can do more if we bring these two on board than by anything spent on reducing our own carbon footprint. Comments?

Harry Felgate says:
31 December 2012

One thing seems very apparent, we’ll never present a united front about anything…………..lol.

Robertino says:
31 December 2012

With so many comments the discussion is getting on famously…Today I received two letters from a would be new provider: one telling me that my bank will be instructed to deduct payments.. the other one telling me that they have been notified of my request to leave them. I expect I will be billed by TWO companies for the sme energy. Has any one else had similar bureucratic excitements?

Perhaps we are all conthingyfused and if the Government takes action – the sooner the better.

Robertino, confusion has two causes. One of them the government has a chance of addressing – the deliberately confusing tariff system that we’re addressing in this post. Maybe a stiffer fine regime would help; it has in the past when the regulator and ombudsman have acted, as has especially been apparent in rail pricing and poor service/times.

But the other is cause by simple incompetence, and while that[‘s also the ombudsman’s business, it’s a slow and not very effective remedy. Has anyone any ideas for persuading the power companies to use the more robust internal systems that are now generally in use by banks?

Principled says:
1 January 2013

Just to throw some figures into the mix. I’m currently on a visit to Canada: Electric price/kWh = 5p (UK around 12p+): Gas price/kWh = 1.26p (UK 4p). Bearing in mind the huge distances and small populations in Canada, you certainly can’t say that the lower costs are because of “economies of scale”!Lol

Harry Felgate says:
1 January 2013

Goes some of the way to explaining why North America has the reputation for “energy guzzling”. There is no incentive to curb wasteful use by the consumer and no reason for any government wanting to stay in power to agree to lower harmful CO2 emissions.

Andy says:
1 January 2013

Harry, you may wish to note that Principled was quoting Canadian tariffs not those in the US. I mention this because to the best of my knowledge the vast majority of th Canadian electricity generation is hyrdo and hence they don’t refer to electricity as a source of power instead they cite their hydro bill. It follows then that even taking their small national population into account their CO2 emissions for electricity generation are very low indeed.

Harry Felgate says:
1 January 2013

Andy, I said North America not the USA. Isn’t Canada part of North America anymore? How is gas produced so cheaply from hydro? Isn’t energy cheaper in the USA than the UK too? Am I right in suggesting that the cheaper something is then, the less care will be taken in it’s use and conservation?

Quite right Harry, that’s experience talking. So follow this line of thought – if you ask your energy company to charge you three times as much, you’ll be a better conservationist, won’t you? Go to it!

Andy says:
1 January 2013

Harry, you do make me chuckle! Principled cited Canada. You ignored that took a swipe at the whole of North Amercia. I brought it back to Canada and focused on HYDRO-ELECTRICITY which does not generate the same CO2 emissions as other type of generation and you decide to go off on another wild tangent and make risible comments based on something that I didn’t say.

As the Amercian’s like to say, get with the programme!

Harry Felgate says:
2 January 2013

Oh Andy, you’re so patient with me, geography lessons, explaining what other people mean, capital letters so I can read it, thanks. Serious now….does hydro still work at minus 20 deg C? Taking the electricity thing as a whole from construction, to generating, to using it in devices, and manufacturing the devices which will use the power, what is the difference in CO2 production of all that between hydro and gas fired?
New subject. I think we should assume that humanity is likely to be here in 5000 yrs time. I also think that we are linked in some way to every other species and plant on the planet. Destroying the habitat of other species, allowing the human race to increase exponentially, invade areas which should be preserved and concreting over everything will lead us all to the premature end of humans. I know that restraint by humans will never come about. We are very powerful and as we all know, power corrupts. If we don’t kill ourselves off, some other devastating planetary population control will. Now I’m off to Lanzarote this pm so have fun ripping this to bits while I pollute the skies, try and turn myself brown, have a few beers and turn up that aircon to max. Hasta la vista senores.

Andy says:
2 January 2013

Oh, dear me Harry, you make a mess of attacking me with risible comments that demonstrated you hadn’t read the previous contributions and just prove what a soreheaded grouch you are you could out with pure sarcasm that demonstrates what type of person you are. In the meantime keep your ill-conceived comments to yourself as I have no time for your banality and hectoring.

Robertino says:
1 January 2013

I note that Europe is amongst the best area in which conservation of energy is taken very seriously. Considering the economy and population size much of the world would benefit from following our example in trying to limit overconsumption and taking effective steps to reduce our collective carbon footprint. Too much is spoken about bent bananas and other press idiocies to alert the public to the serious impact of common european policies on energy and transport. Perhaps we ought to praise the UK in particular for its part in helping to get a common policy going across our continent. Now that Kyoto has expired a real effort needs to be continued by the EU governments to get the “reluctant ones” on board. Global warming is too serious to be left to the whim of man!

I am pleased that we have carbon trading, high price policies and other incentives to get all of us to deal with the issue at the home. Whenever Russia choses it deals with the pipelines in the same way as any old fashines robber baron; just note how Ucraina and Poland have had the gas turned off in past years and in the middle of winter. We are at the end of the pipeline and should not be too precipitate in burning up our politically stable sources or placing reliance on the Tzar!

Principled says:
1 January 2013

I also can’t follow Harry’s logic. This is a thread about energy pricing. I showed that whatever the energy price charged in the UK it had little to do with the cost of the raw materials used. So what is Harry proposing? That we increase further the cost of energy so that the majority of the population turn off their gas and electric to save the world? Or perhaps he thinks that we should ration energy? Each person having, say, 1000kW/h of Electric and 3000kW/hr for gas per annum. Then again he may believe we should go back to subsistence farming and wear horse hair shirts? That would also reduce consumption…Perhaps he could be the first to start a trend?
Has he not read the postings about the CO2 output of the UK being 2% of that of the world? So anything we do is a bit like peeing in the wind. If his reason for consuming less is to reduce CO2/person, then he just needs to cast his eyes across the channel. ‘cos the French already produce 35% less than we do. ( http://en.wikipedia.org/wiki/List_of_countries_by_carbon_dioxide_emissions_per_capita )

Our CO2/person level is more the fault of successive, hopeless, technologically ignorant governments than the individuals who use energy. The same can be said about our current energy prices.
As for his Little Englander swipe at North America, well…par for the course. Canada may be part of North American continent, but they are NOT Americans -North or any other sort. Next he’ll be calling the Scots, English ‘cos they live on the same island!
Anyway, I very much doubt that the UK Insulation regs are on par with those in Canada. I’ve been here for around 2 weeks and for that time the temp has hovered between -20C and -25C and the houses – made of wood from sustainable sources – have to be designed to withstand that level of temperature for 5-6 moths in the year. I know what my UK heating consumption would be at temps like that!
And as for Robertino’s post about Carbon Trading, well that’s the biggest con known to man. Akin in its stupidity to the quota regulation that causes edible fish to be thrown back in the sea because they were some how caught up in the net whilst the fisherman was trawling for other species. (…half the fish caught in the North Sea are being thrown back into the sea, dead, because of crazy EU laws…. from http://www.fishfight.net/the-campaign/). Insane.

http://www.cbc.ca/news/business/story/2012/12/12/business-deutsche-bank.html
http://ktwop.wordpress.com/2011/08/16/one-eu-carbon-trading-scam-comes-to-trial-e5-billion-just-in-lost-taxes/

Robertino says:
2 January 2013

Dear Principled
I find your comment interesting for if taken to its concusion it might imply that “I burn sufficient fuel for my lifestyle (and produce commensurate C02) but; if I reduce my output it will make no difference to the Global Warming sum total”.

You are right, and that is why – looking at the Wiki table of the per capita by country CO2 emissions you supplied a link to – you can indeed see how the volume varies from country to country. You may also note that industrialized countries in the EU like the UK, Germany France and Italy have been operating at average CO2 outputs and that in general EU countries have capped or reduced their CO2 emissions over the period.

It appears that in part you could concede that this may also be due to the conscious effort of consumers as well as industrial policies aided by taxation and incentives to conserve more.

So I hope all our contributions from little me, to the wider society, are making the result that much easier to achieve. I hear too many times the complaint about “why don’t other people do it” instead of how can I help? To lead by example will also rub off on pulic opinion and to governments. But if we do not try we just follow the lemmings over the cliff…I do hope your and similar comments keep the debate going and stimulate a great deal more action across the board.

Principled says:
2 January 2013

Robertino, I would like to think that at the bottom of our flattened CO2/person curve is an energy policy which has been well thought through and is logical. Unfortunately, having spent the last 7 years researching and debating this, the answer is an emphatic NO.
I gave the link to Wiki and France because it shows that with a little forethought the UK (which was resource rich) could have had lower emissions without the need to clobber the consumer- especially those with limited incomes. The answer was- for the foreseeable future- nuclear. But the “Green movement” ably led Natalie Bennett successfully rallied against this. It was only in the last year on the Andrew Marr show that she conceded that the policy had been wrong, but that “It will take decades to build them, so they are now out of the question” (or words to that effect). Had we had nuclear, not only would we have had less emissions, we could then have had the spinning reserve necessary when operating wind energy without creating even more emissions than we save. In such a scenario I would have gone from being against wind farms to a neutral observer.
The other fact hidden by the CO2 output/person is that the UK has lost heavy- energy intense- industry, which has now gone to China/India driven out primarily because of energy prices. Thus, we now have goods produced for the UK market in countries where pollution controls are less stringent and where the total energy input-if one includes transport- is HIGHER!. Thus, we have once again shot ourselves in the foot- we’ve lost jobs and increased pollution and CO2. Great policy!
We then decided to use gas to produce electricity because it produces less CO2 than coal. So we take our limited reserves and burn them at an astronomical rate to produce electric power (with an energy in/energy out efficiency of around 45%). Yet it is well known that the most efficient way of heating a home is by gas (energy in/heat energy out efficiency after well head and pumping losses, and a modern condensing boiler = 85%). So now we have to import gas from Russia (=no guarantee of supply) at a premium of 200% more than consumers in other countries like Canada pay, to not only heat our homes but to provide consumers, commerce and industry with electrical power. Another own goal.
I could go on, but getting back to the core of this thread this hotchpotch short-termism has not saved one iota of CO2 but has led to industries moving abroad and an increasing number of households in fuel poverty. If that’s the way we should show the world how to reduce energy consumption and CO2, then count me out.

Thanks for this, Principled.

There’s an extra dimension to the gas-for-electricity story, though. I remember how angry I was when Margaret Thatcher decided to commission gas power stations to replace the worn-out coal-fired ones. She’d already sold off the North Sea licences to give us cheaper taxes and cushion the global changes in industry of the 1980s. So, as you said, she then chose to squander our limited gas resources on clean electricity rather than save it for domestic use and essential industrial use, like glassware manufacture.

But the reason for this was pollution, not cost. We had an EU noxious emission target to reach in the next 10 years, and she chose this rather that spending on clean coal and oil power station technology. This did get developed, but the (newly private) power companies preferred to go for cheap-to-build gas power stations than any more complex alternative.

In this way, she ensured short-term Tory popularity with both the public and industrial big movers. It paid off, but at what cost to us today?

Tidal power – both stored and tidal flow – has been estimated as potentially providing 10% of our energy needs. CO2 free (except in construction), reliable local resource, so where is the progress on this? Qucker to build than nuclear, so a good fill-in – better than wind?

Controversy, Malcolm.

As I mentioned above, the Bristol Channel scheme could have been working 20 years ago in any of four proposed configurations. Pilots elsewhere have all been successful. But what I have to call government cowardice has killed each proposal. The point is this: there’s a downside to every good idea, and while governments want to be praised for being in power when the good stuff arrives, they don’t want to be slated for any downsides. This is an impossibility, and in any case, all big projects outlast two parliaments during building. So the safe practice for a government wanting re-election is to drag feet on a big project. Private developer sunderstandably want commitment, though. And they won’t go ahead until they see it.

Wave-machine generators have been in trial for decades, but haven’t so far been cost-effective in working economically while surviving storms and high maintenance costs. I think they’re still trying to get the idea working in Morecambe Bay and Loch Ness. Anyone know the progress?

Scotland hosts the European Marine Energy Centre in Orkney for research and testing. Scotland has agreed development of 6 wave and 5 tidal schemes in Orkney and Pentand Firth.
In France the Rance River scheme is tidal storage (barrage), in use 40 years, current construction cost~ ÂŁ480 million for 24MW installed capacity. Not very different from the cost/MW of offshore wind farms, but probably more reliable generation.
The difficulty is finding suitable inlets as sites – presumably a narrow entrance or restriction to minimise construction costs is best. Some Scottish lochs look promising?

The Rance is the world type example, Malcolm. The problem in the Scottish Highlands is the long power line to where people want to use the power – the longer the run, the more power is lost.. There are more prospective hydro sites – hill and loch – than anywhere else in Britain, so if the remoteness problem can be overcome, any of them is a winner. Scottish river valley dams are good too – Loch Tummel is a good example in use now. But in the lowlands the flooding area is usually built-up or is prime farmland so, say, a dam on the Trent near Gainsborough or the Thames near Shoreham would certainly provide plenty of power – but would drown big cities! Estuary dams are by far our best option, with the Bristol Channel and Morecombe Bay well in the developers’ sights and the Forth and Tay Estuaries and the Wash also good possibilities. And in each case, ship navigation is improved.

Robertino says:
3 January 2013

http://ec.europa.eu/consumers/citizen/my_rights/energy_en.htm

A helpful site is, this giving a nice view of our consumer rights. I think and hope it will assist further attempts at getting our act together.

Robertino says:
5 January 2013

I is useful to look at today’s “Le Monde” as there is an article showing the high level of CH4 escaping into the atmosphere from the processing of shale rock.

http://www.lemonde.fr/planete/article/2013/01/04/gaz-de-schiste-des-fuites-de-methane-plus-importantes-que-prevu_1812943_3244.html#xtor=EPR-32280229-%5BNL_Titresdujour%5D-20130105-%5Btitres%5D

Mon Francais n’est pas tres bien but I presume that the article is pointing out that methane is a ‘greenhouse gas’.

We have all these people pointing out that fracking is the answer to all our problems. Like all other energy sources there are problems and using shale oil could have more than most.

Amongst other issues, the article is referring to the rate of leakage of methane into the atmosphere, in the process of obtaining gas from shale.

Deckhanddave says:
9 January 2013

Simple solution.

Return all the utility companies to public ownership and run them for the benefit of ALL.

My view is that energy companies exist mainly to ‘make money’. We are unlikely to get a fair deal with the currently structured businesses. Concerning electrical energy prices, I would suggest a better way would be for domestic users to be able to select a tarriff which allows for a fixed quantity (kW hrs.) per week free of charge, and a scale of progressively increasing rates for kW hrs consumed, above that free inititial amount. I suggest per week (rather than say per year) to stop ‘surges’ and help those who have difficulty in controlling their usage. I believe such a basis would inherently encourage economical behaviour, and at the same time help to reduce the ever increasing electricity demand.

The energy companies are never going to offer a tariff which includes a quantity of free units, though the principle of charging progressively higher costs per unit as consumption increases does have its attractions in encouraging reduced consumption. The difficult part would be applying this principle fairly – larger households with larger families are bound to use much more than small household with perhaps just one or two people. The moment you try to factor in some sort of system to get round this, you end up with complicated pricing structures again.
The reason why we have suffered a plethora of tariffs is quite simply that the energy companies have chosen to bamboozle the public with complicated pricing structures, deliberately designed to confuse and to discourage switching.

We all know, of course, that it is the same electricity supplied through one network of cables and the same gas piped through one network of pipes, so the only variation between what the energy companies actually do is to design different pricing structures to try and attract customers. I know people who have used comparison sites and have signed up with a “cheaper” supplier, only to find weeks later that another comparison shows their old supplier to be cheaper. Best to calculate it yourself based on actual consumption (not size of house etc), daily charges (quite varied) and unit prices etc.

All commercial organisations have to make money to survive – that is their remit. At the same time they should offer a service that is competitive to retain customers.
I see no reason why anyone should get free energy.
I suspect most people do their best to control their usage, so no incentives needed. I have done all I sensibly should at present to minimise energy use, balancing the cost of measures such as insulation and boiler type against savings. I pay for what I choose to use as in any other purchasing decision.
If the issue is about conserving energy to reduce the depletion rate of resources, then we could start by minimising non-essential uses of energy – such as leisure flying, cruising and driving. I don’t see anyone proposing this (including myself). So why get so determined to penalise people who have a higher-than-average home energy consumption (usually for inescapable reasons, such as family size, building type, inability to fund energy saving measures, lack of gas supply for example?

Deckhand Dave says:
15 January 2013

The only way this will ever be resolved properly is to re-nationalise the energy industry. We have seen it proven that privatisation hasn’t resulted in more efficient systems, increased investment and cheaper prices. It has become a cash cow for the few who have large numbers of shares in these companies. We can now be held to ransom by these companies. Shame on all the government parties that squandered British wealth and resources like natural gas and North Sea Oil.

Principled says:
15 January 2013

Malcolm r makes some valid points. In terms of energy depletion, it is quite interesting that those in my village that have solar panels are the very people who own two or three cars and who use their Chelsea tractor to drive 250m to the local shop. This negates any CO2 saving by a mile. They fitted the panels not because of saving the planet but because they get a 6% return on their investment, which is better than leaving the money in the bank. Unfortunately, the premium they get for their kWhrs is paid for by the very people who can’t afford to have the panels! That’s the perverseness of subsidies. Those constructing land-based wind farms are doing it for exactly the same reason, except on a much bigger scale. As for price obfuscation, it seems to be the the UK’s preferred marketing tool!
I think I have shown through the comparison with Canada’s energy prices, that UK consumers have already been paying an energy premium on their gas and electricity, compared to global prices. However, this is forgotten when the Gov. permits further rises to cover the costs of renewable energy AND new infrastructure. But why do we need such a price hike (it doesn’t happen when a car company brings out a new model that has cost billions in R&D)? It’s because those companies that cashed in on privatisation (mostly foreign owned) have effectively made their profits off the fat of the land (ie the generating resources that they got at privatisation) and now that this resource is creaking at the seams they require huge investment to update it. Having siphoned away previous profits, they have gone to the gov. and convinced them that if they don’t increase energy prices the system will fail. Blackmail is the best description of what is happening. So there we have it. Consumers who were already paying a premium on energy prices so the fat cats could get fatter are now being asked for even more so those very same fat cats can provide the guarantee of supply that those previous profits should have been used to supply. You couldn’t make it up.

Earlier in this conversation I was a little surprised to discover where we are (or were when the table was published) in Europe on domestic energy charges. It would appear that the UK is between 6th and 8th cheapest for electricity out of 27 nations, depending upon consumption, and for gas 2nd to 3rd out of 23, again depending upon consumption. Does this mean that 20 other countries are being “ripped off” more than we are, including those countries where some of the big 6 reside? I wonder what their consumers and associations have to say, Which?

My daughter has just started training for an edf call centre. I showed her my Co-operative Energy bills and she was impressed with their simplicity and how easy they were to read. She also liked the explanation for converting units to kwh. It seems Co-op Energy is showing the way!

This goes to show that it can be done. Perhaps the regulator should step in to tell the energy companies how to present their bills, in a standardised format, perhaps using the Co-op example. I hope EDF treats its staff, including your daughter, rather better than it treats its customers. We have had to step in to rescue our 102 year old aunt from crippling EDF bills, caused by errors between their day and night (economy 7) charges. The figures have been the wrong way round for a few years – overcharging her by more than ÂŁ1300. It has taken us weeks of battling with them to get copies of all the old bills to recalculate. At her age she was unable to do this herself – but it is sorted now and the overpayment refunded.