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Energy bills – now is the autumn of our discontent

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.

Comments
Member

Whilst I’m all in favour of simplified tariffs they would be only a very small part of a much bigger problem. That being the ever increasing cost to the consumer to simply heat their homes.
Back in the days when energy supply was privatised we were all told that the resulting competition would benefit us all. Well, to me it doesn’t seem to have happened that way.
The big six suppliers seem to have a monoploy, it seems a cartel even if it’s not. Prices keep rising and profits keep rising, and there seems little the free market can do to improve the situation.
Energy is a basic element of national infrastucture and now we are at the mercy of profit hungry private ownership, worst still some of it foreign private ownership.
I’d re-nationalise the lot along with the railways and all other basic elements of national infrastructure. At least then we could control prices through the ballot box and any profit would come back to us, or at least the treasury.
Trouble is there are still people who think the free market approach works and even if there was a majority will to re-nationalise there is no money to buy back the “family silver”.
So apart from minor tinkering around at the edges with simpified tariffs, big switch initiatives and the like we’re stuffed, no money, fuel poverty is where many more of us will end up.

Member
Dave D says:
23 August 2012

We should feel very sorry for the energy companies: they are facing the prospect of profits which might fall slightly unless prices go up. That might upset the odd shareholder here and there and the poor MD might have to have a slightly inferior new Yacht next year.
Poor souls.

Now, having taken off my Sarcasm hat, I’ll add that I absolutely agree with Chris, Gloucester, above.

The energy companies are rather like the banks: they have been trained to believe that they had a God-given right to make massive profits at the expense of the public who have virtually no choice but to trade with them.

And of course we must not forget the £11bn (or has it gone up again) cost of the SmartMeter farce.

Member
Ramsay dunning says:
23 August 2012

There is an alternative to the big six. It’s cooperative energy. For the benefit of its members (customers) not absentee shareholders.
Coop energy also looked at the rising infrastructure (grid) and other costs, and announced a price rise this month. 2%, that’s right 2% not 9%.
As coop energy was already cheaper, it will end up much cheaper.
So, we can grumble about the big six, or change the way the industry treats customers by switching to coop,energy.
Easy as that.

Member

Ramsay dunning.
Good idea to transfer to the co op but if everyone did I doubt the co op could cope, leaving most people still putting up with the profiteering nonsense we see with the big six.
I still maintain that a fundamental element of national infrastructure should operate for the benefit of the whole population and that this is only possible if it’s nationalised and there is in place a strong independant body to oversee and ensure efficient operation and fair pricing.

Member

I’ve tried comparison sights and the never seen the co-op listed.

Member
Dave D says:
23 August 2012

I’ve not been with the Big 6 for years – I use Ecotricity for Gas and Electricity. I’m not tempted by the Co-Op because their customer service levels in their bank and their shops is so dire – ***a GREAT shame*** because in theory their ethical stance means that they should be THE most attractive provider of them all.

Personal preferences aside, I completely agree with Ramsay dunning AND with Chris, Gloucester’s original post. There is a choice (of sorts) which we can exercise and more people should, but the fundamental problem with the energy supply industry is that is was ever privatised in the first place.

Given that I think re-natiuonalisation is as good as inconceivable, exercising choice to move away from the Big 6 is the next best option.

Member

One of these days I might join you Dave, but Ecotricity seem a bit obsessed with wind power and I think we need to have a more balanced approach to our move towards renewable energy sources of renewable energy. Avoiding using the big companies is definitely the best reason for switching.

I am a bit older than you and well remember how inefficient most of our nationalised industries were. I think that the answer is private industries that are efficient through competition but closely regulated to avoid the problems that we are all aware of. Re-nationalisation is inconceivable, as you say, so we need to get on with the regulation.

Member

I wonder if people realise how much of their bills isn’t actually going to cover the gas and leccy they’ve used, but to pay people with solar panels and other green schemes and only today I was told all the companies will probably be hiking prices to build a war chest in preparation for rolling out smart meters as the government is contributing and so it’s down to the main companies to fit new meters to every house in the country when smart meters are actually rolled out. It would be nice if a paid for what I used.

Member

I agree. It would be a good start to tell us how much extra we are paying.

I think that those generating their own electricity should be paid the same per unit as they are charged for electricity. Anyone who wants a smart meter should pay for one.

I am happy that the government should offer some s