/ Home & Energy

Update: will the proposed energy price cap be enough?

Energy prices

Prime Minister Theresa May has announced plans to tackle rip-off energy bills with an energy price cap. But will such a cap be enough to help you?

During her speech to Conservative Party Conference, Theresa May announced plans for an energy price cap. The Prime Minister said:

‘The energy market punishes loyalty with higher prices, and the most loyal customers are often those with lower incomes, the elderly, people with lower qualifications and people who rent their homes’

And announced that a draft Bill will be published next week that would give Ofgem powers to impose a cap on all standard variable tariffs.

Energy price cap

The move puts an end to months of buck-passing between the government and Ofgem about how to tackle soaring household energy bills. And it looks like it could finally deliver on the government’s pledges made during the General Election.

There are millions of hard-pressed energy customers still suffering due to a lack of competition in the energy market. So any intervention that brings down energy bills will be welcome.

That said, in bringing forward this legislation, the government must ensure that any cap doesn’t result in higher bills overall, undermine improvements in service or bring much-needed innovation to a halt.

To ensure that any intervention that’s made by the government is actually a good outcome for bill payers, we believe that it should pass five key tests.

1. It must not cause longer-term price increases
If bill payers see price reductions overnight, but energy providers offset initial reductions with price increases over the long-term, the cap won’t have worked.

2. It must not remove incentives for providers to improve their service
Consumers have routinely suffered from poor customer service from many suppliers and have faced particular issues with inaccurate bills and poor complaint handling.

3. It must not stifle innovation
The government and the regulator must ensure that the cap does not stop consumer-friendly innovation in the energy market. They must ensure that the smart meter roll-out continues to be advanced in the most cost-effective way possible.

4. It must lead to a truly competitive energy market
Consumers have suffered as a result of a lack of competition in the energy market with the competition authorities estimating that people are collectively overpaying by £1.2bn as a result.

5. It must have clear criteria for bringing any cap to an end
The long-term objective must be for a competitive energy market that delivers for consumers. This means that any price cap should be time-limited. The government and the regulator must set out proposals for the length of the cap, how they will monitor its success, and the criteria by which it will be removed.

Fairer energy

Of course, the cap will not take effect this winter, which may be a disappointment to those who are already concerned about energy costs as we descend into the colder, darker months.

With a number of price hikes by a number of larger and smaller energy suppliers in recent months, energy prices are returning as a top financial concern for many. So the draft Bill must make the most of the opportunity to fix this broken market and deliver a fairer deal.

Now we await the publication of the draft Bill and the full details of the Prime Minister’s proposal.

Update: 11 October 2017

The energy regulator, Ofgem, will extend its current price cap for prepayment gas and electricity meter customers to cover an additional one million households this winter.

The plan will see energy bills cut by an average of £120 over the year for some of the UK’s most vulnerable households, according to the regulator.

The regulator has also said that it will begin consulting on extending the price cap for a further two million households for next winter, once the government’s price cap plans are confirmed. The Prime Minister announced last week that the government will prepare a draft bill to propose an energy price cap, this draft bill is expected tomorrow.

Our managing director of home and legal services, Alex Neill, said:

‘As temperatures dip, today’s announcement will be welcome news to some of the UK’s most vulnerable households. The implementation of a market-wide price cap is clearly going to take some time, so it’s right that the regulator is looking to more quickly protect the most vulnerable.

‘Energy companies must also do much more to engage their customers, helping them to switch to a better deal now. Only time will tell whether all of these interventions will really deliver better outcomes for consumers.’

We want to see a fairer energy market for all households. Every household, even those affected by the energy price cap, could get a better deal by switching. Our free Which? Switch service can help you compare gas and electricity prices and help you find the best deal for you.

Do you think a price cap will be the solution we need to fix the energy market? What else would you like the government to do?

Update: 12 October 2017

We’ve been campaigning for many years to highlight the broken energy market. Over 500,000 supporters supported our Fair Energy Prices campaign, urging energy companies and the regulator to do more to get customers off rip-off standard variable tariffs (SVTs).

So today’s news that the government has published a draft bill to introduce a price cap should be welcome. But it isn’t quite so straightforward.

Two-thirds of households in England, Scotland and Wales will become much better off overnight when the cap is introduced, giving relief to hard-pressed consumers. 14 million people on SVTs will save themselves hundreds of pounds a year.

But although the Draft Bill requires Ofgem, the energy regulator, to put the cap in place as soon as possible, consumers shouldn’t expect to benefit soon. The Draft Bill will have to go through pre-legislative scrutiny first before a bill goes through the normal legislative process and Ofgem consults on the measure. Then there will be another step of statutory consultation to change energy suppliers’ licensing conditions. It’s unlikely the cap will come into force until winter 2018/19, to remain in place until at least 2020.

Whilst a cap may sound like a positive move, we want the government to safeguard against any unintended consequences like higher prices, reduced competition in the market and poorer customer service. So it is promising that the Draft Bill outlines a temporary cap, and Ofgem will be tasked with making sure competition and consumer incentives to switch are preserved. But there is a long road to travel down before we know what the actual cap will look like.

The most important thing for consumers to understand is that with or without a price cap, they will still need to watch the market and be prepared to switch to secure the best price. As the proposed price cap will take some time to come into effect, customers currently sitting on standard variable tariffs should switch now and start saving immediately.

Use our free Which? Switch, now with a brand new renter feature, to find the best deal for you.

Which? Switch

Comments
Member

margaret thatcher stole the energy companies from the poor people and they were not compansated for all of their tax,s they paid for those companies, they never were able to buy any of the shares when they were sold, they did not have any money to buy them, after the government had taken it from them in tax,s selling of the familys silver, made the cost go up 10, 000 per cent, and who,s paying now the poor.

Member
Boots says:
13 October 2017

I think this will only result in the better fixed term deals being increased to make up for the price fixes on standard tariffs. Those people who diligently seek out the best deals regularly will be penalised for those that cannot be bothered to shop around.

Member
chris says:
14 October 2017

nationalise the energy companies…. if you peg their dividends… they will sell off cheaper. this will hinder there ability to make profit. so maybe they beg us the government to buy… yeah

Member
Simon Wooliscroft says:
14 October 2017

That’s what Jeremy Corbin probably would do if he could. If Labour wins the next general election, a distinct possibility given the result of the last one, maybe that will happen. I’d support it.

Member
Derek says:
14 October 2017

Another delaying fudge by an lacklustre government – Will there also be a cap on standing charges? Anybody else noticed how much that price has risen and to cover what exactly? Another area poorly specified and open to abuse.

Member
bishbut says:
14 October 2017

Do you not realise how governments work ? Urgent things take a long time but unimportant trivial unnecessary ones are done immediately at once if not sooner

Member
Bryan Diss says:
14 October 2017

Energy charges are always a nonsense. They should be given clearly as standing charges then the cost per therm or kilowatt. Only then can accurate comparisons be made.

Member

Isn’t that exactly why we have – and use – price comparison websites?

Member
anthony wilson says:
14 October 2017

Wont make any difference, the energy companies will recover the lost money from other users who dont fit the criteria. These people will always win. I am dead against Corbyn but i think his plan to re-nationlise ids good.

Member
Trevor Greenslade says:
14 October 2017

We live on a small development of 47 homes supplied with bulk LPG by a company called Flogas, we were told that in the event that everyone wanted to change supplier, by giving notice from everyone in writing then we would be able to sign up to a new supplier, we have found such a supplier offering 32 pence per litre,
(Flogas charge 48.9 pence ) Flogas still insist that we are not eligible to change but will not give reasons why !
Where can we get help on this? With oil you can at least change to a cheaper supplier.

Member

Trevor as far as I know under the new rules on LPG you can change supplier every TWO years . Do you own the tank ? If not they can remove it .Is your contract a fixed one or not ?

Member

It might be you’re still within the original contract, Trevor.

Member
Terry Debrou says:
14 October 2017

I would like to see those add-on extras reduced:
Standing charge £0.26.010 per day.
Unit price £0.3.860 per kwh.
All added on and VAT added too.

Member

The energy companies will no doubt put their charges up long before any cap is introduced so it will be too late to benefit consumers anyway. Why the difference in prices anyway, surely gas is gas and electric is electric!! Why do we have to keep shopping around!! Thanks Maggie for your wonderful privatisation and more competition!! The introduction of VAT on energy didn’t help either.

Member

So basically the cap will featherbed those who are too idle to make the effort to look for a better deal. We already have a plethora of energy supply companies and savings are available with very little effort required from customers – literally MINUTES of looking for and applying to a new supplier. OF COURSE suppliers exploit customers whom they know will not leave them – it is good business practice to exploit all easy revenue sources, no matter what the business – so the simple answer is to not be part of that easy revenue source. Meanwhile, it is unavoidable that any price cap favouring the idle will be compensated at the other end by the withdrawal of the most competitive offers for the most active customers, thereby punishing those who make the effort to get a better deal for themselves. Socialism in action – people will never learn.

Member
helenlou24 says:
14 October 2017

I will just be doing the same as usual this winter, putting another fleece on, due to the 20 pounds a fortnight I have to pay for bedroom tax, I cannot put my heating on. and for those who think I am a scrounger, i do work voluntarily, and my house is over 100 hundred years old, so how much money has the council had off myself and previous tenants since 1913.

Member

Helen The Scottish government recognises this situation there and allocates money to councils to be used ONLY for compensating council tenants etc so they do not have to apply charges on it . It is ring-fenced and they can’t use it for something else . Legislation is ongoing and the intention is to BAN the bedroom tax in Scotland as they see it as a scourge on those living by themselves in larger propriety’s and having a hard time coping . They liken it to the dreaded Poll Tax that caused civil unrest in Scotland when MT “tried it out” on them first.

Member
B. Tchorzewski says:
14 October 2017

I do think this is going to help some people but the energy companies are just going to subsidise their -so called losses- by increasing other accounts.
There should be a cap on ALL accounts and the losses if any taken up by the share holders (many of which I belive are non domicile)
I now have a solar plant on my roof and a storage facility to spread what I generate over the night period, and I belive this should be increased across the country on all properties that can support it.
Take off the subsidies given to the big wind generaters -they don’t need it -and use this capital to subsidise solar.
Instead of Fracking which is the cinical use of yet another focil feul , dig deeper and use the boreholes to generate geothermal energy instead.
And stop this farse about neuclear.

Member

Borehole heating is used in Russia and some Scandinavian countries as well as Iceland

Member

Smelly, though.

Member

Which? says “At the moment, the difference between the standard variable tariff and cheapest deal from the biggest energy suppliers is £159 per year, on average. So that’s how much you’re overpaying by being on a standard variable tariff.

Read more: https://www.which.co.uk/news/2017/10/energy-price-cap-will-you-pay-less-for-energy/ – Which?

Well, it is not really a £159 overcharge. If all their customers tried to switch to their cheapest deal the price of the “cheapest deal” would be rapidly increased to preserve their profit margin. A fallacious statement,I think, just like the £1.2 billion over-payment is, on the same basis.

When figures are published to support an argument they need to be thought through first, and the consequences of the change considered.

Member
Tony easdown says:
15 October 2017

The best way to ensure that we get more economical energy from all companies large and small is by the product we are buying being shown in an account that is readable. For example 1, The cost of the standing charge should reflect only the cost of delivery and should be a fixed figure no matter what the tariff you are on, inclusive of the awful dreaded VAT, this should not be used to change when tariff’s change.
2, The cost of the energy purchased per KWH should always include VAT and also this figure should give us the actual rise and fall of the cost of energy as it fluctuates up and down.

Member

Everyone appears to agree that the vulnerable should receive priority and rightly so, and a percentage actually do under The Priority Service Register (PSR) whereby Ofgem requires energy companies to maintain a PSR list for people of pensionable age and people who have a disability or chronic sickness. Each energy company has its own list of sharing information about who is on their list, but it could be subject to means testing, and whilst 35% are happy to share, 31% are not and the remainder are neither happy nor unhappy.

It has already been established the main reason for the energy market not working is the failure of consumers to switch from SVTs to a cheaper tariff, which includes people without computers, people with pre payment meters, the unemployable, single parents, some mentally disabled and people who are resistant to change. So as long as this default tariff continues to co-exist alongside cheaper fixed rates the more the energy companies, along with the more able in society will continue to benefit. We effectively have a two tier system.

Ofgem need to comprehensively examine the whole multi-tiered energy system and work with the energy companies to reach a simpler fairer system that everyone can understand and work with so that consumers can get on with their everyday lives without having to worry about energy credit balances, switching suppliers every few months, rip off unregulated price hikes and impolite authoritarian call centre operators on the other end of their phones. after a hard days work at the factory or office.

Member

Beryl, why should anyone need to worry about “switching suppliers every few months” when competitive fixed price deals are available for either 12 or 24 months?

My personal experience of using such tariffs is that they make budgeting easier, because I know I won’t be facing any price increases during the contract term and, thence, because they also make the timing of bills and meter readings largely irrelevant.

Member

The whole point Derek being, you and I are able to take advantage of a more ‘lucrative? ‘offer, whereas statistics demonstrate 83pc of consumers, for all of the many and varied reasons pointed out in this particular enduring topic, are not, which is the main reason why the current energy market system is not working.

To switch or not to switch, that is the elephant in Ofgems room at present.

Member

That’s exactly the problem, Beryl.

There is also the hassle factor. I am in process of switching from e.on to Ovo. After learning from Ovo that the switch would take place on 5 October I cancelled my direct debit to e.on, knowing that I was well in credit and did not want any more money taken out of my account. I came back from holiday to find a letter from e.on headed ‘We’re cancelling your direct debit’. The reason given is that they were not able to take the most recent payment ‘as you may not have sufficient funds in your bank account’. Unless I take action by 18 October they will charge me another £35 a year on each standing charge I pay. They know that I’m leaving because it says so on their website and they have already written to me.

I will ring e.on on Monday, politely suggest they get their act together, ask when they intend to refund my balance.

I have had a fair amount of hassle with switching, though the first switch went without a hitch.

Member

Beryl, as a point of evidence, I don’t think that you can claim that 83% of consumers as all standing in favour of market reform.

For example, 82% might not be switching because they are essentially content with their energy costs at the prices they are currently paying. If that we so, then there would be little mandate for reform.

Member

DerekP, I don’t recall saying that 83% of consumers are all standing in favour of market reform. The evidence already demonstrates that 83% are still with one of the big six and two thirds (about 70%) are paying more than they need to on the more expensive standard variable tariffs by failing to switch to a cheaper deal.

If you are happy to pay more than you need on an SVT instead of a cheaper fixed deal, then the energy market will continue to prosper and the status quo will remain. Not everyone is in that fortunate position, as we have so often witnessed from the many postings on this issue. Both the government and Ofgem have acknowledged the UK energy market is broken and in need of reform.

I hope those who are struggling to pay their energy bills won’t have to wait until after the coming winter to receive the help they need.

Member

Beryl, you said “statistics demonstrate 83pc of consumers, for all of the many and varied reasons pointed out in this particular enduring topic, are not, which is the main reason why the current energy market system is not working.” so I think you were using the 83% to help argue your case.

Member

DerekP, there is no “argument” and it is not my intention to be drawn into one.

My point was, If the big six continue to maintain 83pc of the market share then it remains uncompetitive, since the remaining 17pc of consumers are then divided between the other medium/smaller ones. Therefore the market is in need of reforming.

I am unable to precisely estimate the exact number of the 83pc of the big six consumer share that are on the more expensive STVs and how many are on cheaper fixed price deals, but would hazard a guess it is probab,y very near to the 70pc – 30pc estimated by the regulators.

Member

I hope you enjoyed the recent break in this unexpected lovely warm autumn weather Wavechange. I am sorry to hear of the unpleasant surprise in your mail on your return.

I am pleased you had the good sense to cancel your direct debit payments before you took off on holiday. It makes you wonder whether the energy companies deliberately make the switching process more difficult in order to discourage other consumers from switching, keeping them stuck on expensive SVTs?

In an ideal world, all energy companies would adopt the OvO system, where you are able to control your own account without the added worry of building up large overinflated credit balances. Good luck, I hope you don’t have to wait too long for your refund.

Member

I spoke to e.on this morning and they did not see anything wrong with the letter they had sent me. I gave up trying to explain, thanked Sean and he wished me a nice day. If Ovo decide to hold on to my money, at least they will pay me interest.

I had a great break and it was warm enough to walk on the beach. 🙂

Member

I would like Ofgem, and also Which? to look at the costs in the energy market to see exactly where “rip off” (if there is one) or “overcharging” occurs, so we have some firm facts to move forward with – because we would all like to see energy bills reduced. My concern is they should be reduced on firm grounds, and not just tinkered with by government, possibly by subsidy.

Some questions I would ask:
Firstly, the way “margin” (profit) is arrived at, because I think a 4-5% profit is reasonable. My question is – is this 4-5%, the average quoted for the “big 6”, the real profit.
The average bill is made up of:
38% raw energy; it is fair to make the profit on this.
17% admin/operating costs – fair to make the profit on these
26% network cost – the distribution. As far as I know, this is simply a charge based on your usage made by the distributor, a totally separate company, involving no investment or risk to the energy supplier, so why make a profit on this?
8% government levies – why make a profit on this.

If the “acceptable” margin being calculated allows for the 4-5% profit on all these items, i think it is wrong. If my accountancy is defective then I’m sure someone with knowledge will say so and I’m happy to rub this comment out. If it is not, then the actual more realistic margin will be more like 8-10% which is too much.

Then we have many suppliers offering energy, from small to large. All have to buy energy at wholesale prices (maybe on different terms), all have to pay the same rate presumably for use of the network, all have to give the government its levies and tax, which leaves their admin/operating costs and margins. When I look at the range of annual charges quoted for an average consumer (3100kWh electricity, 12000 gas) they range from £785 – £789 – £792 for the lowest 3 suppliers to £1196 – £1204 – £1332 for the top 3. Plenty in between including the “big 6”. But why such a big difference? Not accounted for by cheaper energy – I doubt any can buy at hugely differing cost, and not by network costs and levies which should be the same. So how?

I’m simply asking naive questions that I would like someone to answer or ridicule so I better comprehend this market. Maybe others would like to also. If we understand it, we have more chance of a rational, rather than emotive, discussions and can see better where we can help the vulnerable perhaps.

Member

Malcolm-Then why not start at the source ? I have already posted part of the Trade dealings between the UK and Gazprom where the “UK Trading Unit ” -aka – business trading runs as proxy for HMG at this very minute working out prices for Russian gas behind closed doors .But as I said Gazprom has it made publically clear and I quote – it is up to the buyers of our gas as to how much profit they pass on to CONSUMERS . If that is not a giant hint I don’t know what is . The article was dated JUne of this year by Gazprom

Member

duncan, would you then like to put some figures to this? I’m questioning the whole bill, where wholesale energy forms less than 40%, just to see where profit is, and should be earned.

Can you give some figures for the Gazprom gas price proposed?

Member

Sorry taking so long I had other thing to attend to malcolm . As well as Gazprom,s own website I have one that I am sure the west wont duspute -Blookmberg -USA- they are cnot happy the UK is buying gas from Russia . They quote -UK, biggest gas store shuts for good and a lot of anti Russia propaganda but they admit talks are ongoing but Russia refuses to prrovide actual figures to them . As Gazprom are now dealing DIRECT with the UK this should cut out the middle-man Germany who re-exports Russian gas so it should be no more ( and maybe less than Germany pays wholesale . The Deputy CEO (Gazprom ) says their sales to the UK have increased substantially in the last two years – Centrica PLC announced it would lose its Rough gas storage in the North Sea increase from 8 billion to 12 billion cubic meters will occur -Medevev quotes the British Trading Unit and commercial buyers . Wel here,s something I didn’t know -last year it became one of the largest retail gas suppliers to British Industry after buying out Wingas (UK ) Although the main Gazprom office is in London . Buying more Russian gas could drive down the prices by boosting competition -Nick Campbell- energy risk manager -Inspired Energy PLC . There is a lot more anti-Russian propaganda but the bottom line is that the US CANT compete on prices . My question is- is TM going to strike a deal with the Donald to buy US gas at very high prices ?? I will keep trying to get a price of the wholesale gas direct from Gazprom but its secretive at the moment due to the negotiations taking place.

Member

Gazprom has access to huge gas reserves and is said to supply around 10% of our needs. Currently it sells to larger business users.

Are you suggesting that the UK government will decide who supplies our gas, rather than the domestic energy suppliers – the biggest 4 of whom are foreign (European) companies?

Member

Gazprom are in taks withe “British Trading Unit ” , this is the fiorst time I have come across this name .The official ( or was ) government Department was/is the Trade + Industry . Now its the now known as the Dept for Business/enterprise etc etc. Now its the Dept. for International Trade . Why then does GAzprom call it the “British Trading Unit ” and the US for that matter ( Bloomberg ) ^To me it sounds like UK business is doing the deal rather than HMG but I am open to offers ?

Member

i would expect business to handle gas deals, as it has nothing to do with the government (as far as I know).

Member
Robin Proctor says:
16 October 2017

I was choosing central heating system for my mother. Contractors were recommending a simple electric system, cheap to install, and very reliable. And therefore very popular with landlords and buy-to-rent people. But very expensive (for the tenant) to run! We need legislation to force landlords to fit heating systems (and insulation) that meet an economic operating standard, and so bring down tenants’ heating costs.

Member
Member

low users subsidise high users. wrong priority. make the high user pay more. make first 2000kwh extremely affordable for everyone & then progressive increments of payment. simples

Member

Simples, eh?

Some people on low incomes are inescapably high users of energy because they
:: are at home all day,
:: need higher temperatures,
:: need to keep the heating on throughout the night,
:: have an old and poorly insulated property that they cannot afford to improve,
:: have to use a higher-price fuel because they do not have mains gas, or
:: their accommodation is electric only.

Unfortunately resolving this problem cannot be boiled down to a binary choice of this or that.

Member

And, of course, many low users are far from poor. They may be a professional couple, out all day (and evenings?), and a modern well insulated house. Why favour them? We should not subsidise. Personally, I’d prefer the suppliers’ fixed costs to be paid by all users and unit costs then the same whatever your usage. I’d also prefer to see energy to be paid for depending on its cost – so linked clearly to the wholesale prices paid by your supplier. This does not preclude the benefits of your supplier forward buying to protect against market fluctuations.

Member

It obviously costs more to supply gas and electricity to those living in more remote areas than those where there are many homes close to each other. Why should one group subsidise the other?

Member

Same as broadband, water, roads, mail,………and council tax where you still pay for what you don’t use.

For domestic energy, the charges that make up the “network costs” do vary depending upon the region. When you ask for a tarrif, your address is used to help in its determination so some account presumably is taken of location. There is a cross subsidy, right or wrong, in the north of Scotland “<iThe North Scotland DNO receives a cross subsidy through the Hydro Benefit Replacement Scheme, so its customers face lower network charges than they otherwise would. This component is recovered from suppliers across Great Britain, through a charge added to all units of electricity. The cross subsidy is currently around £41 per annum per household in North Scotland.” Do you think this should be abolished?

Member

It’s you that’s saying that we should not subsidise. Each time we have a discussion you focus on high energy users that do so for good reasons and low energy users who are not at home much, never on those who are poor and cannot afford to heat their homes (many struggle with their energy bills) and high energy users that are simply profligate. I think balance is called for.

Member

I was responding to your comment ” Why should one group subsidise the other?” and costs in remote areas.

I have stood up for those who are vulnerable and linked to what is being done to try to help them.

I see no real purpose in a discussion that is personal. Id rather concentrate on information, suggestions and have those discussed, rather than cast doubt on commenters’ integrity and motivation. 🙂 If every commenter posted everything they felt about a topic in one place the convo would probably (in my view) grind to a halt.

Member

Malcolm/Wavechange – this raises an interesting question .I see malcolm,s point on remote areas as costing a fortune to provide services/or to a standard that equals city dwellers . The question is – I have spent a long time posting on the cost of broadband access and speed to those who live miles from a cabinet , I have provided solutions till I am “blue in the face ” . Why then does a new convo come out with the same old story ?? – those using their broadband for business in the country cant get high speeds . Am I totally ignored ? have I not presented the reasons why in a PRACTICAL sense umpteen times ?? That’s why I said Enough already – to the latest one as I see NO sense in beating my head against a brick wall. Its obvious even to a blind man that an agenda is going on here but is the GOVERNMENT or is it Which . ??

Member

To my mind capping will ensure that all companies work to this and so prices will be inflated anyway?

Member
Patrick Carroll says:
21 October 2017

Stop Energy Companies from chargeing standing charge 4 times a year especially when you’re meter is only read every 6 months and the other 2 readings are estimated

Member

The standing charge covers more than meter readings. They vary considerably from tariff to tariff. Maybe standing charges should cover the fixed costs that apply to all consumers, irrespective of their energy usage, and follow rules laid down by Ofgem. If standing charges are reduced, unit prices will increase; they are inextricably interlinked. I suspect energy companies use higher standing charges (and lower unit charges) to guarantee them an income, as energy usage will vary depending upon the weather. However, in the context of your annual spend, it is perhaps irrelevant; it is the total amount you are charged that matters, a combination of energy usage and daily charge.

Member

“Tracker tariffs” seem to be another way to link energy prices to an agreed independent index. Ofgem discuss them here: https://www.ofgem.gov.uk/system/files/docs/2017/10/guidance_on_tracker_tariffs.pdf

Member

Energy companies’ ethos needs to be challenged. They take a free resource, sell it back to us, make us need it, and make us suffer if we can’t pay. As well as debt bullying – often over their shortcomings, not ours – security deposits are being required ironically from those who have trouble paying. But we can’t avoid needing or paying for energy, and so it’s attacking the poor and ad hoc earners. Companies don’t like being questioned about billing or their terms. Yes, including the indie green ones. This onesidedness needs addressing urgently, as does the useless ombudsman who colludes with the company, not helps the customer.

Member

V, I don’t understand your comment “they take a free resource, sell it back to us,“. If you mean energy, it is not a “free resource”.

Member

Earlier in this Conversation I queried the logic behind the claimed £1.2 billion saving if we all moved to the cheapest tariff. What I was asking Which? was to look at this figure. Would that still yield an acceptable profit margin? Because I saw no way that it could. We should be careful about promoting this sort of information without giving it proper scrutiny.

Which? today say: “If you’re on a standard tariff, a quarter (26%) of what you pay covers your energy firm’s operating cost and profit. If you have a fixed tariff, just 14% of your bill goes towards operating cost and profit. Ofgem estimates that if variable tariffs were reduced to a similar level as fixed tariffs, suppliers would make a loss unless they could cut their costs.

Read more: https://www.which.co.uk/news/2017/11/top-five-cheapest-energy-deals-for-november-2017/ – Which?

So it was (is) a totally misleading figure. It demonstrates that fixed price tariffs are being subsidised by SVTS – something I believe should stop, by making them both contribute equally to their respective operating costs and profit. Then those who cannot switch will not be subsidising those who can.

Member

I’m with OVO and I will stay with them no matter what may does. I was with British Gas and felt I was being ripped off. I was! My PAYG OVO top ups are 50% less now. I’m very happy thanks to Which!!

Member

Hi Karen, that’s great to hear you’re loving OVO

Member

The usual result of enforcing price caps, is that all providers simply charge just below the cap. This achieves absolutely nothing.

Member

Any artificial device to interfere with a competitive market for political reasons will lead to a distortion. There are around 40 suppliers available to consumers with a huge ( relatively speaking) range of prices. This is about people who cannot be bothered to change tariffs or suppliers, or who are not equipped to. The former make a choice; the latter need help to switch. We should do this properly and not play around with inept “solutions”.

Member
Nigel W says:
18 November 2017

We are with Economy Energy and it’s time to switch tariff. The Which? energy supplier service confirmed that Economy Energy Online Saver tariff is the most competitive for our needs. However, when trying to switch we were told that the Online Saver deal involves a double payment in month 1 because “Economy Energy had pre-bought the gas”. I didn’t spot that in the advertised tariff and have decided to switch to another supplier on principal, even if their annual charge will be slightly higher.

Member

So British Gas are to scrap Standard Tariff. I’m sure this will make a lot of difference. They, like the rest will just find another way to rip us off. Its all smoke and morrow’s.

Member
Tim M says:
21 November 2017

As of course Which? is aware, speeches made at party conferences don’t necessarily translate into sincere action/ behaviour by suppliers (or indeed Ofgem which is supposed to protect us) that actually improves anything for those said to be the main losers. So I agree that the five tests as set out by Which? need to be met.

Energy suppliers aren’t fools. As in all big business, they can afford lots of in-house or out-sourced ‘advisers’ to keep them one step ahead of the regulator and to think up cunning plans to mitigate anything they see as a threat to their livelihood. Many suppliers are part of larger groups which have lots of distant grey suits in boardrooms across the world to keep happy and who get easily twitchy when balance sheets start looking a bit wobbly.

I am sure I’m not alone in believing that the charging/ tariff structure is kept deliberately opaque to:
a) give customers the illusion of ‘choice’
b) make it as difficult as possible for users to determine if they are being ‘ripped off’.

Therefore the whole structure must be drastically simplified alongside any price cap imposition.

Member

I agree. As so often happens with regulators, Ofgem is playing catch-up.

Member
rebecca says:
10 December 2017

[Sorry, your comment has been removed to align with our community guidelines https://conversation.which.co.uk/commenting-guidelines/. Thanks, mods.]