This time last year we knew we were facing a winter of discontent when it came to energy prices. All six of the large energy companies announced bill increases by as much as 20%.
There was a lot of noise in the media. The Prime Minister was so worried about price increases that he called a summit of energy bosses and consumer groups to demand action to help people struggling with gas and electricity costs.
But what about this year? As we’ve basked in August sunshine, energy prices have dropped down the political agenda and we’ve had no signal from any of the big energy companies that rises were on the way. Until yesterday.
Gas and electricity price rises
SSE is the first big energy company to put its prices up. And its customers are looking at average increases of 9% for both electricity and gas from 15 October.
I guess we shouldn’t be surprised. It feels like energy price rises hit us every year. Energy bills are rising, squeezing household budgets as train fares and petrol prices also spiral. It’s therefore no wonder that they’re one of the top financial concerns for consumers.
The Bank of England had already warned that energy prices would go up (although their prediction was a lower 2.5%). And – despite a commitment from one big player, Eon, that they will freeze their prices until 2013 – many people are assuming that other companies will follow SSE’s lead.
Who can you trust?
The companies will say that they are doing something. Most have launched ‘trust initiatives’ to improve their relationship with their customers after mis-selling scandals and other incidents of poor conduct led to incredibly low levels of customer satisfaction. Plus quite a few of them – SSE included – have also set about reducing the number of tariffs they have and making them simpler to understand.
The regulator, Ofgem, is reviewing the energy retail market, and the government is giving us advice. It’s telling us to shop around to get a better deal, join a collective switching scheme or improve energy efficiency to help insulate ourselves from these price shocks.
So, isn’t that enough? Absolutely not.
We need radical reform
We cannot go through yet another winter of tweaks to the energy market, when radical reform is needed.
It’s not enough for the energy companies to simplify their own tariffs, when they’re still impossible to compare against offers from rival companies. It’s not enough for Ofgem to only simplify so-called ‘standard’ tariffs but leave the better value fixed deals as confusing and complex as ever. And it’s not enough for the government to keep looking to consumers to take action on energy, when people are bewildered by the offers available and don’t believe that they are being charged a fair price.
Concerted action is needed this year by the government and the regulator to reform our broken energy market. This means that energy prices need to be properly transparent and tariffs need to be made simpler. Without this consumers will continue to wonder whether they really are getting a fair deal.