Npower and Scottish Power jump on the price rise bandwagon

Phil, an interesting report with some interesting links to other official statistics. For instance, 2012 prices excluding taxes:
UK domestic electricity 14.3% above EU15 median price, ranked 8th out of 15 EU nations
UK industrial electricity 27% above EU15 median price, ranked 13/15.
UK domestic gas 1% ABOVE EU15+ G7 median, ranked 8/15 EU, 3/7 G7
UK industrial gas, small user, 26.6% BELOW EU15 median, and lowest out of EU15.
Why such a big disparity in industrial vs domestic gas?
(we fare better with after tax prices presumably because other nations tax energy more heavily than UK).
Possibly an unfair snapshot but surely we should know just how we compare with our neighbours and why there are significant disparities – the raw energy market is dictated by international prices so what creates significant differences between different countries?

Thanks for the link it and its linked documents. Very interesting reading .

Malcolm R is right about energy costs but doesn’t understand the water industry where there is a great deal of competition, although not obvious to the uninformed consumer.

The Regulator OFWAT determines fixed charges for each water/sewerage company for 5 year periods – they agree what needs to be done in the period to maintain and improve the existing infrastructure and to meet ever rising customer demands and increasingly stringent EU Directives.
OFWAT employs independent consultants to check in great detail each engineering proposal and costs and use the previous 5 year outcome costs as a basis upon which to reduce by considerable margins the estimated cost of the future agreed needs. This provides incentives to make innovative and better solutions for the multi billion pound investments.

Each year OFWAT monitors performance over a range of measures and compares the results against those of all the other companies, publishing league tables that not only encourage companies to do better but heavily penalise financially those lower performing companies.
Furthermore, OFWAT has local consumer groups for each company’s region who keep a close eye on performance.

Water and sewerage charges cause a public uproar but they are my lowest annual cost compared to all my other infrastructure costs, including council tax, energy, petrol, mobile phones, and SKY tv. What other of these providers not only bring you the service, but take the wastel away and safely dispose of it afterwards. The public generally have no appreciation of the extent of the infrastructure needed for this service as it is generally underground or sited in remote places.

Malcolm R’ has valid complaints about the energy companies and seeming lack of competition, but it is difficult to provide proper competition where they generally use the same source for gas or electricity bought at global prices and use the same means of distribution to the customer, along with similar customer and billing centres. Each water/sewerage company has different geographical and demographic needs. Does he wish to set up similar duplication for water, which is very expensive to transport beween companies and prohibitively costly to duplicate the infrastructure?

Peter H, I do not disagree in general with some of your observations. These conversations usually develop well because un-informed or partially-informed participants raise issues that more expert members can respond to.
However, I believe real competition only exists when the consumer is given a choice of supplier. A regulator or independent consultant might do their best to control the market and infrastructure development, but only those with hands-on knowledge can make the most of it – and rhese are the supply companies. I do not suggest duplication in the water industry – no more than exists in energy supply – other than trunk mains which could serve the same role as the national grid.
There are choices open to energy companies for sourcing their electricity and gas – and for the basis on which they buy it.

Using a single distribution system – wires, pipes, roads, rail for example – makes economic sense – you don’t want the unecessary costs of duplicating them. The competition should be about tendering for the use (rental) of the wires and pipes by the energy suppliers, and the cost of the energy they then put into the pipes and wires.
Tidal power – tidal flow or storage – is a very unexploited source of carbon and pollution free energy that is abundant around our extensive coastline. Would you prefer to see £45 billion spent on a railway line, or invested in tidal energy generation? Or even in 3 nuclear power stations?

Tidal and wave power have a big uphill battle in the UK. The nuclear lobby used some pretty shoddy tactics to undermine Salter and the Severn barrage, and there is a lot of stubborn pride now invested in remaining “right” while being wrong 🙂

Good spot, sir!

Ofgem’s proposals in the Retail Market Review Aug 2013 include:
“Simplifying tariff structures to ensure that all tariffs have a simple standing charge (which could be zero) and unit rate structure (no multi-tier tariffs).”
This means existing two tier tariffs – where you pay a higher unit rate up to a usage limit, and a lower rate thereafter – will no longer be allowed. Allowable tariffs will all consist of a unit rate (price per kiloWatt hour) plus a daily standing charge. The standing charge can be zero – meaning you would only pay per unit – with another tariff having a lower unit rate plus a non-zero daily standing charge.
Whether all suppliers will offer both of these remains to be seen but I suspect most will.

True. But why is SP discontinuing a zero standing charge tariff on the basis that Ofgem doesn’t allow it when Ofgem does allow a zero standing charge?

This is what SP says under its FAQs

Ofgem, the energy regulator, is introducing new requirements on all energy suppliers, which are intended to help make your tariff choices clearer. These new obligations include moving existing customers who have No Standing Charge prices to prices that include a Standing Charge (called a Daily Service Charge). These Daily Service charges cover the fixed costs to service a customer’s account that don’t vary regardless of how much energy they use. Going forward, all tariffs in Great Britain will have a Standing Charge element, making it easier to compare.

This is untrue and misrepresents Ofgem’s position.

This does not seem to be a true reflection of Ofgem’s proposal. Scottish Power should either change their answer or be reported to Ofgem – perhaps Which? coiuld follow this up?

Richard, we had 13 years of labour government from 1997 and they didnt do anything about the energy industry – apart from reducing competition to 6 large suppliers!

We had 30 years of Tory Misrule that privatised everything so we no longer had a viable country – frankly Labour’s rule was far better – Renationalise all Utilities

Scottish Power does offer to phone you back and provides the opportunity for you to select a time slot.

I tried this and it worked for me.

I agree that the times should be easy to find, June. I don’t use Economy 7, but I checked the website for Scottish Power, my supplier. Most of the times are given but times vary for customers in three of the distribution areas – which is not very helpful.

I suggest you look at your meters at switchover time at night or in the morning and check what is happening.

june p, i imagine you have checked whether economy 7 is worthwhile? With EDF you seem to need to use at least about 30% of your electricity off peak to save money. I was with npower and that needed around 45% – there was no way I could use that between 12:00 and 7:00am.

Heat pumps do seem to be the best option for areas without mains gas. I was tempted to move to a house without gas, but with recent price rises, I am fairly glad I did not. Please be careful with running washing machines etc. overnight to save money, June. I have read about fires and a few have been mentioned on this site.

@June,

I can understand why you might be confused. Successive govenments and regulators have a hugely complex edifice about which most citizens have little knowledge, but it suits the regulated businesses and the agencies involved – and the army of advisers, consultants, experts, lawyers, accountants, PR types, etc that have become bloated parasites.

OFWAT ‘regulates’ the prices the water companies charge. It’s this weird and stupid British system of regulation which is based primarily on a ‘negotiation’ between the regulator and the companies – with the companies having almost all of the relevant information. As a result, most regulators have been captured by the businesses they’re supposed to be regulating.

Occasionally, though, a regulator will slap down some egregious price-gouging – just to show it has some teeth. This seems to be what has happened in this case. But I wouldn’t be fooled in to believing that the system of regulation of water is working to protect the interests of users.

OFGEM, only regulates the networks – the pipes and the wires – direcly. There has been no formal regulation (in terms of price controls) of wholesale or retail energy electricity or gas supply activities for than a decade. This area is everybody’s responsibility (OFGEM, the OFT, the FCA, the Competition Commission) and, as a result, nobody’s responsibility. Therefore the Big 6 can, more or less, do what they like. OFGEM is empowered to penalise them for deceptive and fraudelent practices – and frequently does so, but the fines are a tiny fraction of their turnover and they claw it back (and more) in price hikes.

Quite simply the Big 6 need to be broken up in to wholesale and retail businesses, but this will have to start at the EU level. Four of the UK’s Big 6 are subidiaries of the much, much larger EU Big 7. Of course, no British government will engage effectively with the EU to develop solutions to the current problems. So British consumers will have to put up with constantly increasing electricity and gas prices. Ed Miliband’s proposed price freeze is beyond stupid.