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Will the energy regulator’s plan make a difference?

Energy price pound

Ofgem, the energy regulator, has announced that a plan is on its way to tackle energy bills and relieve the burden on the most vulnerable energy customers in the UK. But will it be enough?

Today the energy regulator has outlined proposals to deliver a fairer, more competitive energy market that will help around two million customers on low incomes.

Update: 7 August 2018

This weekend, the government announced an independent review of energy costs.

The entire electricity supply chain will be under scrutiny as the independent review seeks to uncover ways of reducing costs and meet the government’s ambition of achieving the lowest energy bills in Europe while meeting climate targets.

The review, led by energy expert Professor Dieter Helm CBE, will build on commitments made in the Industrial Strategy Green Paper and include the role of innovative technologies like electric vehicles and artificial intelligence. Although a step in the right direction, the time for action on energy bills is now.

Our managing director of home products Alex Neill said: ‘It is right to look at how to keep costs down, but yet another review is going to be cold comfort to the millions overpaying on their energy bills right now.’

So far half a million people have backed our campaign for fair energy prices. We want to see urgent action from the government and regulator to tackle the lack of competition in the energy market and ensure all consumers get a good deal on their energy prices.

Ofgem’s plan

While the regulator has announced the plans to deliver a fairer energy market, it hasn’t yet published the full details.

The regulator has proposed a new ‘safeguard tariff’ specifically for vulnerable customers and it plans to hold a summit in July to consider which ‘safeguard’ tariff’ would be best. One option would be to increase the existing cap for four million households on prepayment meters to include those who receive the Warm Home Discount.

Some of you will recall that earlier this year we pressed for action from energy companies to tackle their often poor value standard variable tariffs. Today, the regulator noted that energy companies must do more to help customers who are stuck on these tariffs switch to a better deal. The regulator will announce reforms to improve energy switching services.

The regulator also announced a proposed cap for charges to install pre-payment meters under a warrant, and ban these charges altogether for the most vulnerable energy customers.

But, the plans announced today fall short of the Prime Minister’s aim to help 17 million families on those often poor value standard variable tariffs with an industry-wide price cap, as outlined in the Conservative’s manifesto. The policy to tackle energy bills with a price cap was also lacking from the Queen’s Speech on 21 June.

Energy bills

While we welcome the plans to help the most vulnerable as well as steps to make switching easier, will these plans go far enough to help the millions in the UK are overpaying for their energy?

We believe that any price cap intervention in the energy market should first consider our five test points before implementing:

1. It must not cause longer-term price increases
2. It must not remove incentives for providers to improve their service
3. It must not stifle innovation
4. It must lead to a truly competitive energy market
5. It must have clear criteria for bringing any cap to an end

Ofgem will be consulting on its proposals and we’ll be feeding in to this.

Do you think Ofgem’s planned interventions will be enough to deliver a fairer energy market that finally works for all consumers?

Comments
Guest
John Hole says:
6 July 2017

The main problem is rip off standing charges especially on prepayment meters. These charges should be scrapped so that if someone on benefits for example tops their meter up it should only countdown whilst using energy. At the moment especially after the recent intervention by ofgen making energy companies reduce the unit price ofgen gave the big companies the green light to slam some sky high standing charges on making most users much worse off overall.
What they should do is abolish standing charges on prepayment meters. This would prevent the scenario were the user has been frugal and finds the meter has consumed all their credit in standing charges and these people having to use a loan shark to get some money to put on their meter to avoid losing the contents of their freezer.

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Guest

Thats a good comment John they can levy what they like including zero standing charges(but hit you elsewhere ) and your right, light user are hit the most due to OFGEN fiddling with the rules that helps big businesses .Of course maintenance comes into it but from what I could get , many of those companies HIDE the standing charges, they have doubled from previous years and can be 40p +/day. Other utilities are upfront in what you pay in rental like the telephone companies , you might not like it but at least you know what it is up front and you are paying for any repairs to the service and/or maintenance due to storms / vandals/ “official vandals ” local council digger digging up cables etc .

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Guest

I can see your point, John, and it is valid in most cases I expect. But there are some electricity consumers for whom a daily standing charge and a relatively low unit price is a better deal. I think people should have the choice, and, as I said in a previous comment, there should be much more openness about the unit prices and standing charges available from different companies for a pre-payment tariff. I doubt if standing charges are ever a good idea on a gas supply account because of the long period each year when very little gas is consumed.

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Guest

Just change to Utilita – they don’ t have standing charges on their prepayment tariff.

They DO have TWO tariff rates, so the cost per unit decreases after a certain threshold, but that’s still a lot nice than having a standing charge.

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Guest

Well there you go , for all those that STILL dont believe me when I posted 3 days ago about the Donald wanting to take over the world in energy supply even though I get emails from the White-House its now plastered all over the International news websites visiting Poland,s Krasinski Square -Thursday July 6 he states that he intends to supply Poland with AMERICAN LNG -first saying “America loves Poland ” -OMG !! -low tech.commercial advertising -eager to expand partnership and guess what ? the old “energy security ” soundbite comes out –he will make sure Poland does not depend on a single supplier-IE-Russia calling it “destabilization ” and the clincher ? – maybe we will get your price up a little but thats OKAY -tough negotiations thats sounds like a certain UK Prime Minister coming back from Berlin saying – we have an agreement- no war. Now do posters believe me ??? . What he is telling them to do is pay MORE for their energy supply , does the penny drop ? the Donald to TM – energy negotiations – exactly the same words -who suffers – the poor , STILL dont believe me ? just look at US owned Ukraine whose poor are living in poverty and cold because they dont want Russian energy ( the US owners dont ) price rises many times over and the media in this country keeps stumm. I am only concerned with those having a hard time paying to stay alive but you still have got to admire the Donald – he is perfectly honest in his pure American self-interest its a pity that doesn’t apply here .

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Guest

What is LNG?

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Guest

Liquefied Natural Gas Ian -logistics- sea to Poland – Gazprom ? a few miles to Poland via a pipeline. Poland,s latest statement -quote-we want to be the European hub for US LNG —(please sir ? -pretty please “Your Highness ” grovel-grovel )

Guest
William Coleman says:
6 July 2017

Nationalise the lot thus stopping already rich shareholders leeching the rest of us. As usual it is the poorest subsidising those who are well off .

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Guest

Most of the shareholders of the big energy companies are pension funds, life assurance companies, and investment funds. If you have an occupational or private pension you will be hoping for the best yields.

Guest
Tim Roberts says:
9 July 2017

You’re right about the poor subsidising the well-off (see below). But nationalisation as the solution? Implausible.

Rant alert! (I hope a respectful rant is not contrary to ‘Which’ policy).

The problem is ‘renewable’ energy. It is a truth (almost) universally acknowledged that we must change over to renewable energy, See for example Stephen Hawking’s outburst recently on the BBC , that we are (or may be?) reaching a tipping point which would result in the Earth becoming as hot as Venus (hundreds of degrees C.) Incredible (to some) is that the BBC should broadcast such tosh. Suppose (bear with me a moment!) he’d said the opposite – that he didn’t regard the current rate of warming as particularly dangerous. Immediately critics would have said – what do you know about it, you’re not a ‘climate scientist’ so you’re not qualified to judge! A few other scientists – certainly not as distinguished as Hawking, but not so far off – Nobel prize winners – some more qualified as ‘climate scientists’ than Hawking – have criticised the disaster scenario, and been told pretty well exactly this.

I do not challenge the agreed science (though I reserve the right to point out what it is – the consensus is less extensive than you may assume). Challenging any claim about the ‘agreed science’ just gets me called a denier (poor me!). I do however say that even if you accept that the science (as I do) , and believe (as I don’t) that it shows that we are in real danger, and must do something (or as an absolute minimum be in a position to claim that we are doing something that might possibly stop catastrophe), it is still possible to question the policy we adopt in response. It should also be possible to query the economic analysis – a consensus (if there is one) among economists is hardly as impressive as one among physical scientists.

So, what about the policy? Take UK policy as an example. This is based on two propositions, which are not clearly compatible. First, that ‘renewable energy’ has become, is becoming or already has become cheaper than that from fossil fuels. Secondly, that in spite of this, we must continue to subsidise it (indefinitely?). This is done – in the UK – by loading this ‘essential’ subsidy onto the cost of electricity. The result (you might suppose) would be to discourage industry from investing in UK, so sending jobs to less scrupulous locations abroad, perhaps increasing emissions rather than reducing them. Whether that is true or not (it is claimed there is little or no evidence to support this plausible idea) it is certainly true that loading this subsidy onto domestic electricity prices is a regressive tax on the poorest. Every winter more of the poorest turn off their heating because they can’t afford it. And in consequence more die.

So, suppose that you are right in thinking that we must continue to subsidise renewable energy (although it is cheaper than fossil fuel) – shouldn’t this be done out of general taxation, rather than a regressive tax that hits the poorest hardest? State the alternative preferred, with reasons for your choice! (Rant ends).

Guest
rduff says:
7 July 2017

ofgem are a. waste of space they seem frightened to take on the rip off energy companys the government is not much better when we hopefully get out of the eu utility companys want to be brought back into public hands make them british companys again and stop privatisation

Guest
Catherine M E Stow says:
8 July 2017

The race to privitise all our energy and utilities companies were Thatcher’s & Regan’s dreams to make their friends richer than rich and fulfil their other dreams of globalisation. The sell was to bring cheaper energy to us all and the lie is where we are today. Do not depend on Ofgem to change much. The magic tree is always there for the rich.

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Guest

It is easily forgotten that the privatisation of the UK utilities etc was hugely popular at the time and it precipitated the demutualisation of building societies and other mutual organisations. We rue the day now and it is impossible to put the genie back in the bottle.

Energy costs actually fell in real terms following privatisation. It is anybody’s guess where they would have been now if they had remained under state control.

And before British Telecom was privatised you had to beg for a landline, have the socket in the hallway, and couldn’t buy your own telephone instrument.

Nationalisation wasn’t all good.

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Guest

If I’m not mistaken, phone sockets arrived before privatisation.

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Guest

Your right on two counts Wavechange -#1- PST sockets were installed before outright separation of the GPO from BT –1981 ( dont mean the separating of the company as not part of the government/GPO ) which I found out to my cost as the police started hitting me with parking tickets which,after an argument, BT paid for. I have all my original instruction manuals from the government training school . #2- yes Wavechange I installed plug-in phones to public homes they were called the PLAN 4 system and as they required multicore wiring for bell+return ( in series ) one machine clip through the cable could mean a complete rerun of the wiring and I installed them in mansions taking days , there was even a current booster in some cases for keeping the bells ringing as you had to have a bell-box in case you unplugged all the phones . Each bell coil was 1000-ohms so you could add that up in series – 4000 ohms was usually the limit ( now its parallel operation ) . I have all the original circuit diagrams going back to the 20,s .For some strange reason BT+ Wiki dont want to talk about plan 4 but I have all the details.

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Guest

A trip down memory lane. 🙂 You can edit this if the authors have it wrong: https://en.wikipedia.org/wiki/British_telephone_socket

I wonder if those of us who supported privatisation would have done so if we had realised that part of it would fall in to the hands of other countries so quickly. It’s not a bad idea for countries to try to be self-sufficient in food and energy production. An advantage of coming out of Europe should be the opportunity to recover control of our energy industry but I don’t have any great confidence that this will happen.

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Guest

I know that plug-in phone sockets replaced hard-wired junction boxes for new installations before the privatisation of British Telecom but my point was that the public corporation would only put them in the hallway. At least it soon became possible to buy doublers and extension sets so you could have your phone wherever you wanted it. I went mad and had three phones in a one-bedroom flat! – one blue trim phone, plus green, and cream, standard phones to suit the decor.

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Guest

I assumed Duncan had written that Wikipedia piece, Wavechange. It has his hallmark on it.

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Guest

I wish I had John , I would have added some additional technical information but you made me smile John and thanks for that. If you had kept your trimphone it would now be worth more than you paid for it , they were all recalled because they had luminous dials which radiated above safe levels of radiation (long period ) , then re-issued again . The radiated dial ones are valuable (if you can find one ) your green tele 746 is worth more than the cream one . They then came out with phones in football club colours also worth some money , I still have a pushbutton (old type ) trimphone only sold for a couple of years , the original pushbutton telephones had an internal battery that only lasted a year or two.

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Guest

Of coarse. Wikipedia comes in for a lot of criticism but factual errors but anyone can correct and update articles. I wonder how many users of Which? Convo do this.

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Guest

There are one or two Wikipedia pages that I keep an eye on and update from time to time. They cover specialist topics closely related to my professional engineering knowledge and interests. It is nice to be able to share that knowledge in a public space.

Because anyone can change anything on a Wikipedia page, it is important to watch out for “opinions” that are presented as “facts”.

Good checks are to see whether or not references have been provided to cite suitable supporting evidence and, if so, whether or not the references are from reputable sources.

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Guest

I agree, Derek. Specialist subjects are often well covered in Wikipedia because only those who understand the subject are likely to contribute. In biochemistry and microbiology there are many Wikipedia articles that are very good and cite papers and reviews in peer reviewed articles.

Hmmm. I think we are supposed to be discussing energy regulators. As a sat nav says – turn around when possible. 🙂

Guest
R.T.Green says:
12 July 2017

That is not my experience of pre-privatisation of B.T.

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Guest

What is your experience R.T.Green ?

Guest
Tim Roberts says:
9 July 2017

William Coleman,

You’re right about the poor subsidising the well-off (see below). But nationalisation as the solution? Implausible.

Rant alert! (I hope a respectful and relevant rant is not contrary to ‘Which’ policy).

The problem is ‘renewable’ energy. It is a truth (almost) universally acknowledged that we must change over to renewable energy, See for example Stephen Hawking’s outburst recently on the BBC , that we are (or may be?) reaching a tipping point which would result in the Earth becoming as hot as Venus (hundreds of degrees C.) Incredible (to some) is that the BBC should broadcast such tosh. Suppose (bear with me a moment!) he’d said the opposite – that he didn’t regard the current rate of warming as particularly dangerous. Immediately critics would have said – what do you know about it, you’re not a ‘climate scientist’ so you’re not qualified to judge! A few other scientists – certainly not as distinguished as Hawking, but not so far off – Nobel prize winners – some more qualified as ‘climate scientists’ than Hawking – have criticised the disaster scenario, and been told pretty well exactly this.

I do not challenge the agreed science (though I reserve the right to point out what it is – the consensus is less extensive than you may assume). Challenging any claim about the ‘agreed science’ just gets me called a denier (poor me!). I do however say that even if you accept that the science (as I do) , and believe (as I don’t) that it shows that we are in real danger, and must do something (or as an absolute minimum be in a position to claim that we are doing something that might possibly stop catastrophe), it is still possible to question the policy we adopt in response. It should also be possible to query the economic analysis – a consensus (if there is one) among economists is hardly as impressive as one among physical scientists.

So, what about the policy? Take UK policy as an example. This is based on two propositions, which are not clearly compatible. First, that ‘renewable energy’ has become, is becoming or already has become cheaper than that from fossil fuels. Secondly, that in spite of this, we must continue to subsidise it (indefinitely?). This is done – in the UK – by loading this ‘essential’ subsidy onto the cost of electricity. The result (you might suppose) would be to discourage industry from investing in UK, so sending jobs to less scrupulous locations abroad, perhaps increasing emissions rather than reducing them. Whether that is true or not (it is claimed there is little or no evidence to support this plausible idea) it is certainly true that loading this subsidy onto domestic electricity prices is a regressive tax on the poorest. Every winter more of the poorest turn off their heating because they can’t afford it. And in consequence more die.

So, suppose that you are right in thinking that we must continue to subsidise renewable energy (although it is cheaper than fossil fuel) – shouldn’t this be done out of general taxation, rather than a regressive tax that hits the poorest hardest? State the alternative preferred, with reasons for your choice! (Rant ends).

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Guest

Things are different in Scotland Tim where Holyrood directly pays subsidies(taxes ) to the renewable energy industry as well as receiving grants from an EU fund , there again in Scotland they are pro- green energy . half of energy there is green : http://zmescience.com/ecology/renewable-energy-ecology/scotland-renewables-08042016/ and if you dont believe that the BBC backs it up. Meanwhile Germany has just announced 35 % of its energy is renewable. I am also with an eco/green friendly power company. Do you know that Scotland was presented with an award by the EU for the best figures received for green energy in Europe ?

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Guest

Tim,

Thanks for your long, detailed and well laid out post.

My opinion is that we should not burden energy prices with elements that will act as regressive taxes on the poor.

As regards climate change, I am content that it is happening, but I remain more sceptical as to whether or not human activity is accelerating its rate of change.

Nonetheless, I think it is better to be safe than sorry. So, if a “low carbon economy” may help to limit the extent and rate of climate change, I think we should pursue that.

In the early 1980s, I worked on renewable energy research, under the UK Government programme started in response to the 1976 oil crisis. Global warming was effectively unheard of then, but we were concerned about energy security, environment pollution (“acid rain”) and other shortcomings of using coal, oil and gas for electricity production.

At that time, our nationalised generating company, CEGB, was still building new nuclear power stations and advocated their usage as the lowest cost option for “always on” (baseload) power.

Subject to the provision of appropriate means to deal with such things as striking miners and unreliable/unpredictable foreign suppliers, coal, oil and gas were regarded as appropriate for load following, so renewables were set the tough target of competing with the marginal costs of coal generation.

Guest
gerry toal says:
10 July 2017

simple they will always find a way to rip people off.

Guest
Philmid says:
10 July 2017

Frankly, as someone who spent most of his working life generating electricity pre privatisation, I am amazed how low cost it is today. We made electricity at roughly 1p/unit where consumers were charged about 6p/unit . Roughly 0.5p generating costs were coal/ 0.25p salaries, 0.25p plant. However not all generation was so low cost as it was a lot more expensive to keep a Power Stations on standby to generate at peak demand periods (usually early evening). We now have ‘energy trading’ rather like a ‘stock market’ where generators ‘bid’ in prices to generate and all are paid at the highest ‘bid’ price. Then you have OFGEM the regulator, plus you have the comparison web sites and ‘cashback’ web sites. All these additions have to be paid for. Then you have the costs involved in changing suppliers and the associated ‘call centers’ ; none of which applied when ‘nationalised’. The highest cost is, as with most products, distribution costs (grid and local networks) and these are still monopolies but privately owned. When it is a sunny windy day there is an excess of generation from renewables, but it still has to be paid for and the latest scheme is to pay consumers to take the excess. At the same time conventional Power Stations are sitting doing nothing waiting for a drop in renewable generation that may be after the sun goes down. In fact the highest demand mostly occurs early evening on a frosty windless winter day, so what is never factored in is that mostly 100% generation has to be available from gas and nuclear generation, that may be sat idle but staffed and maintained but not being called to generate at times of an abundance of renewables.
I have just changed my supplier to a company owned by the French Government and with the ‘cash back’ my annual bill will be less than my water bill; how daft is that. In fact if you think about all those payments to ‘hangers on’ my supplier is probably almost giving me my electricity. Also it is reported that NPower made £100 million loss last year, so not all are ‘milking it’. What many do not reallise is that mostly electricity is made and consumed simultaneously.

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Guest

It never has been, and it probably never will be, possible to balance demand and supply of electricity totally and correctly, so there is always an inbuilt inefficiency. However, it is possible to make intelligent forecasts of requirements and the resources available so it need not be entirely haphazard. Managing the balance is actually helped by the diverse types of generation available. Judgments need to be made about which resources to deploy for optimum economy and reliability of supply. It is inescapable that there has to be sufficient conventional generating capacity to handle 100% demand assuming there is no contribution from renewables, but this is not necessarily a major problem. If generating capacity is idle it is not wearing out so that prolongs its life. Wind turbines can be disengaged if their potential output is not required whereas the sun is either shining or it is not – but even the hours of darkness between dusk and dawn are totally predictable. For my liking, solar power is not efficient or reliable enough in this country to justify the huge investment that has been made in it but the economics have been so badly distorted that it is not surprising. It makes a useful contribution from time to time. The good thing about the wind is that there is usually plenty of it when the heating is on and people are indoors cooking and washing and using equipment. There should be a control mechanism so that air-conditioning plant can only run when the grid is receiving a certain proportion of solar power. Not practical, I know, but possibly worth thinking about. I think harnessing wave power should have taken priority over solar power except for water heating where raising the temperature of the water intake to a heating system even by a few degrees saves a considerable amount of energy, especially where an electric immersion heater is the sole heat source.

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@ldeitz
“Ofgem statement on consumer summit for vulnerable customers
Publication date
18th July 2017

Ofgem announces plans to deliver a fairer, more competitive market for all consumers
On July 3 Ofgem announced plans to protect vulnerable customers, including the option of introducing a safeguard tariff which would protect them from overpaying for their energy.
This is part of our wider programme to deliver a fairer, smarter, more competitive market for all consumers.
As planned, Ofgem held a summit yesterday in London with consumer groups to discuss plans for protecting vulnerable customers. 
Rachel Fletcher, Ofgem’s senior partner for consumers and competition, who hosted the event, said:
“We have held productive discussions with consumer groups about how best to protect vulnerable customers who are struggling to pay their energy bills. We are considering a range of options, including a safeguard tariff for vulnerable customers. We will be meeting with energy companies soon to discuss these options.
We will continue to gather evidence over the summer and will formally consult on our proposals shortly afterwards. Ofgem remains committed to taking prompt action to ensure that some of the most vulnerable society are not left behind as we move towards a smarter, more competitive market. We are also continuing our work to help all consumers, particularly those on poor value standard value deals, get a better deal.”

Were Which? one of the consumer groups that contributed?

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Guest

Hi Malcolm, I’m so sorry for my tardiness in responding to your very straightforward question.

Having spoken to our policy team this morning I can confirm that our Chief Economist attended this Ofgem event and we have participated in a number of events around this issue with Ofgem.

I hope that helps 🙂

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Guest

@Lauren, thanks.

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Guest

Electricity costs more when demand is high, as more expensive generation comes into play. It is charged at different rates half hourly to larger commercial and industrial consumers depending upon time of day.

The introduction of smart meters allows this time of use tariff to be used in domestic billing. So you’d pay more per unit at peak time, and less when demand is low.

This report (that looks expensive) https://www.ofgem.gov.uk/system/files/docs/2017/07/distributional_impact_of_time_of_use_tariffs_1.pdf
seems that on average we might save around £8 a year by going to a time of use tariff compared to a static tariff such as a standard variable or fixed price. They seem pessimistic about the take up. A bigger saving is available if you have a home battery to store off peak electricity – £32-£96 a year. But they don’t regard this as worthwhile given the cost of batteries.So on the whole voluntary ToU tariffs seem unlikely to appeal. So might they become compulsory?

I may have been unduly dismissive of the benefits. Someone might like to look at the report in more depth than I have. I just read the summary and recommendations.

I really do wonder what the point is of spending £11 billion on smart meters unless the intention might be to impose time of use tariffs on us and charge half hourly.

Guest
Judy says:
7 August 2017

Think it would be better if prices were in per unit rather than asking how much per year was used. Scrap separate standing charges and increase prices to cover this so there is a level playing field to make it easier to compare. All comparison sites should compare all suppliers and not just a panel of their preferred ones. I know Direct Line for instance are not on comparison sites but do not understand why

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Guest

For those that want them, zero standing charge tariffs are already available, e.g. from Ebico (“Ebico Zero”) and Utilita.

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Guest

People who have second homes or holiday lets which are for short seasons don’t need standing charges so Ebico and Utilita are a good choice, especially since less electricity is used in the summer months so the higher unit price is less of an issue.

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Guest

Has everyone heard the news? There’s going to be an independent review into costs energy. No stone will be left unturned as the review will look at the whole electricity supply chain in an attempt to highlight where savings can be made.

Here’s what our managing director of home products, Alex Neill, said: ‘It is right to look at how to keep costs down, but yet another review is going to be cold comfort to the millions overpaying on their energy bills right now.’

Let us know your thoughts in the comments box here.

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Guest

We know that a lot of householders are paying too much for their energy because cheaper tariffs are available and not being taken up. Some drivers pay too much for their petrol, and many of us pay too much for our house insurance, and other services or products. Are there many people being overcharged for their energy, though? Outside of those who pay in advance on a pre-pay tariff I doubt it.

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Guest

I think we have to ask what we mean by “millions” overpaying..
1. Is energy priced too high in general so that profits are excessive? If so, this should be demonstrated by publishing a “model” supplier showing all of the costs involved and the resultant “fair charges” to the consumer.
or is it
2. A lot of people are paying more than they need, because they do not change to the cheaper tariffs available.

I hope the investigation will be objective, and not a “political” solution that gives a popular outcome but does not deal with the cause.

Ofgem regularly publish data on energy supply. https://www.ofgem.gov.uk/publications-and-updates/infographic-bills-prices-and-profits. This does not suggest profits are excessive.

On the other hand, we know people are paying too much because, for whatever reason, they stay on a high standard variable tariff when they could save a considerable amount by switching to a fixed price fixed term tariff.

So why is such an in depth investigation necessary? Window dressing perhaps? I believe the fixed tariffs are subsidised by the standard variable tariffs and that this is wrong. An average user can save up to 25% of their annual spend by choosing one; that surely is a saving far in excess of any saving the energy company makes by dealing with you online.

My solution is to either abolish fixed price tariffs, or set them at a level where they genuinely only allow for real savings, and bring down the cost of svts by ceasing to use them as a source of subsidy.

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Guest

A current Which? poll asks “Have you been contacted by your energy supplier about moving from their standard variable tariff? Yes/no”. I don’t know what the results will demonstrate because I, like many others, am not on a standard variable tariff. Perhaps it should have been phrased – “Are you on a standard variable tariff and, if so, have you been contacted etc………..?”

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Guest

I answered YES because even though we are not on an SVT we are regularly informed by our supplier of the advantages of a fixed-price tariff. These polls are pointless and their data is open to misuse.

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Guest

Ofgem are consulting on a proposal regarding customers who come to the end of a fixed term tariff:
Default tariffs for domestic customers at the end of fixed-term contracts
Closing date: 15th September 2017

Helping consumers make informed choices – proposed changes to rules around tariff comparability and marketing
We want to make sure that at the end of their fixed-term contracts, consusumers are free to make a switch away if they choose and are not locked in with termination fees to further fixed term tariffs that may be poor value or inappropriate for them. They should also receive regular prompts to engage, to ensure they are aware of better deals that might be available.
Currently, suppliers are required, as a default, to roll their customers onto standard variable tariffs at the end of their existing fixed term deals. This means that consumers can switch away whenever they choose and are not locked in by termination fees. However, standard variable tariffs can be among the more expensive deals on the market.
We propose to allow suppliers to roll their customers onto further fixed-term tariffs at the end of their existing deals as long as those tariffs do not have any termination fees and are no more expensive than the standard variable tariff that the consumer would otherwise have been rolled onto.”

https://www.ofgem.gov.uk/publications-and-updates/default-tariffs-domestic-customers-end-fixed-term-contracts?utm_medium=email&utm_source=dotMailer&utm_campaign=Daily-Alert_14-08-2017&utm_content=Default%20tariffs%20for%20domestic%20customers%20at%20the%20end%20of%20fixed-term%20contracts&dm_i=1QCB,53TEM,F31FFV,JKMJ7,1

I hope Which? will be taking part. I would like to see fixed term tariffs disappear and standard variable tariffs reduced in price – because I think they are being used to subsidise the fixed price tariffs.

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Guest

Ofgem are also consulting on getting more customers to “engage”:
“We are publishing an open letter with information for stakeholders who have ideas about more effective ways to engage consumers and are keen to be involved in trials to influence the policy debate.
The open letter explains that we are most interested in trials to identify effective prompts to help get people off default tariffs (often SVTs) and to stop consumers rolling onto an SVT at the end of their fixed deal; the value of supplier-led trials in policy making; how to produce robust data and insight that we can use; and what a supplier should do if they are interested in running a trial.”

They have also published their final “Standards of Conduct” statement:
https://www.ofgem.gov.uk/system/files/docs/2017/08/final_decision_-_standards_of_conduct_for_suppliers_in_the_retail_energy_market.pdf