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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?

Update: 6 September 2018

Households on the most expensive energy tariffs could save around £120 per year when a new price cap comes into force this winter. But the cap doesn’t mean you’re protected from overpaying on gas and electricity – switching supplier will save you more.

Alex Neill, Which? managing director of home products and services, said:

“While this cap may bring a price cut for some, people shouldn’t think it will mean they’re automatically getting the cheapest deal on the market. There are still better deals on the market and energy companies must not use the cap as an excuse to delay helping the millions of customers stuck on rip-off standard variable tariffs to move. The price cap can only be a temporary fix and the Government, regulators and the big providers should now press ahead with reforms to create real competition, promote innovation and improve customer service”

Energy price cap

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.

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 the 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.

Update: 13 February 2018

A report published by the Business, Energy and Industrial Strategy (BEIS) Committee has concluded that the government’s proposed energy price cap is necessary to address the UK’s broken energy market.

According to the Committee, the energy market has been dysfunctional for years. It highlighted that the regulator has failed to protect energy customers.

The report found that many energy suppliers are making substantial profits out of around 12 million ‘sticky’ customers who are on poor-value tariffs. The committee believes that an absolute price cap is the best way to tackle this overcharging for energy.

The introduction of a price cap should be a helping hand for millions who are paying over the odds for their energy. However, we’ve stressed that this price cap should not lead to any unintended consequences for consumers, such as poor customer service or higher prices overall.

While the Committee has called for the cap to be urgently introduced, it’s not expected to come into effect until next winter at the earliest. Our research found that you could save up to £305 per year by switching*, so if you think you could be overpaying for your energy then try Which? Switch to compare prices and see if you could get a better energy deal. Even once the price cap is in force, you will have to switch to get the best deals on the market

*A saving of £305 per year is possible by switching from the priciest Big Six standard tariff to the cheapest deal on the market. The figure is correct as of the 1 February 2018.

Comments
Andy the Nomad says:
1 December 2018

Is it working? Looking at the fact that Ofgem have proudly declared that they believe five of the big six will be unprofitable (if they weren’t already) due to the price cap, and the continuing flow of smaller supplier bankruptcies, it seems that the policy is a great success. I work in the industry, and I know that there’s several more suppliers on the verge of bankruptcy. Due to Ofgem’s stupidly conceived rules, the cost of supplier bankruptcies is passed on to those suppliers who who were more prudent, adding further pressure to bills More widely the UK energy sector has become a singularly uninviting sector to invest in. And despite the price cap, energy prices will continue to rise over forthcoming years to pay for already committed investments in all the government’s windmills, solar farms, which then beget further costs by requiring additional generation backup and investment to stabilise the grid. We have the incompetently conceived smart meter programme pushing up costs for no benefit, costly follies like Hinkley Point C, and at a time when France is announcing shutting down all remaining coal power plants and 15% of its nuclear fleet over the next fifteen years, Ofgem’s bunglers are hoping to subsidise undersea interconnectors, believing that when the UK is short of power, other countries will magically have a surplus. I could go on, and on, and on with other examples of madness in the work of our officious, interfering, energy regulator. A thought in passing: Ofgem are always prattling on that the energy market doesn’t work for consumers. Given that they have been probably Britain’s most powerful and active sector regulator for the past two decades, it would seem that the regulator itself is unfit for purpose.

When I see the pitiful handwringing by Which over energy prices, and yet its involvement in the misguided price cap, and failure to challenge the vastly expensive energy policy, I conclude that something’s very wrong in Hertford, and Which? simply don’t understand any of Britain’s costly, chaotic, and counterproductive energy policy. But I might also conclude that something is wrong in Hertford from the fact that Which describes itself as a “charitable, social enterprise” at the same time that it is awarding best buy status to a coffee machine costing ONE THOUSAND FOUR HUNDRED QUID.

derek says:
24 December 2018

How about getting rid of standing charges, and only pay for what you use,we could understand the price better and not the mess we have now, only pay for what you use a fair unit or therm price.

Then the price would rise through the roof Derek , standing charges cover maintenance of infrastructure .

DerekP says:
24 December 2018

Derek,

Retailers can operate with zero standing charges if they want to, e.g.:

ebico.org.uk/energy-plans/ebico-zero/

But I think the resulting tariffs don’t seem to be very popular with most consumers – or more retailers would be offering them.

The energy price cap can only be a temporary fix – what is now needed is real reform to promote competition, innovation and improved customer service in the broken energy market.”

I wonder what reforms are proposed, and how we should promote competition when there are already around 60 dual fuel suppliers.

We’ve seen one quite predictable effect of the price cap – the great reduction in the number of, and savings provided by, fixed price tariffs. Why should we be surprised? Energy companies will have to maintain their profit margin, so will no longer be able to attract new customers with a low-cost fixed price tariff subsidised by their standard variable tariff customers. A good thing too for customers in general, in my opinion; much better to simply charge what it costs, providing the regulators ensure charges properly reflect the wholesale costs.

It would be useful if Which? spelled out exactly what a model energy supplier should be that is achievable commercially. I have to say that my experiences with npower and Scottish Power have been adequate so far; I’ve had competitive tariffs, refunds paid promptly, queries answered, help with switching when there was a problem.

Philip Grierson says:
9 January 2019

I got a hugely inflated invoice, based on estimated readings, just at the end of 2018. A week later the company has gone bust. Economy Energy were a terrible operator, and I can’t help thinking that there was something very dodgy going on when they sent this bill out to me just before they collapsed!

Philip- normal business policy UK – before you go bust send out bills to the debtors because you dont have to pay them back –why-
Creditors FIRST- debtors LAST.

Ian Scott says:
10 January 2019

Almost all Energy Suppliers prices are deliberately confusing so that they benefit from customers making an error when trying to select what they perceive as the best deal. I appreciate that the price they have to pay will change due to a variety of reasons but the choice presented to customers could be greatly simplified.
The management at these businesses are incentivised by profit and performance related bonuses and until that changes nothing else will. They are motivated by greed. They should try living homeless (or in a cold damp house with a pittance for income so they have to choose between heat or food) for a whole month in winter and see how that makes them feel.

Ian concentrate on who helped this to happen as changes always come from the top unless its a revolution.
People only get what they vote for.

If you put your last year’s energy consumption into Which?Switch you will get a list of deals that are simple to understand. These will also show the costs on which they are based – a unit price for each unit of gas and electricity and a daily standing charge for each. I’ve not found anything deliberately confusing about tariffs but perhaps you could give an example?

Collective switching schemes can offer very good prices and this option does not feature in price comparison services.

A number of smaller energy companies have gone bust because their pricing model was wrong, as had been predicted, or maybe for other unsavoury reasons….?

Economy Energy failed at the end of last year with Ovo being appointed to take over their customers. However it appears they tried to sell 30 000 customers to E (Gas and Electricity) Ltd. Quite how that would have helped is unclear to me but Ofgem have put a temporary stop to the transfers while they investigate the circumstances.
.cityam.com/271798/failed-supplier-economy-energy-tried-sell-customers-e
https://www.ofgem.gov.uk/publications-and-updates/ofgem-orders-e-stop-transfer-former-economy-energy-customers?utm_medium=email&utm_source=dotMailer&utm_campaign=Daily-Alert_17-01-2019&utm_content=Ofgem+orders+E+to+stop+transfer+of+former+Economy+Energy+customers&dm_i=1QCB,62TZ7,F31FFV,NV1RP,1

E had to pay a “voluntary” redress of £260k (less £1) a year ago to their customers for breaching marketing and telesales rules.

When we are urged to switch suppliers to save money we need to look very hard at the credentials of the companies concerned. It might help if Which? listed actions, more prominently than just on their “News” web page, taken by Ofgem against them in the past to help us weed out the good from the possible bad?

Sounds as though a continuously updated topic would be useful. Thinking about it perhaps another category could be added to the top line of Topics Our community Recent Activity Need help?” If another category, say “Updates” could be added, then topics in that would consist solely of links to actions taken by various bodies, and separate topics could be there for OFCOM, OFGEN and so on.

Which? has several articles on the subject of energy supplier: https://www.which.co.uk/reviews/energy-companies/article/guides None of them are dated, and there are many other undated articles on the Which? website.

One explanation we have been given is that information is updated periodically. I don’t think that is good enough and would like to see every article dated.

“Our Power, an energy supplier with about 38,000 domestic customers, has ceased to trade.“. Yet another small supplier bites the dust, perhaps through an unsustainable business model that made hay while the sun shone. Its debts will be bailed out by the rest of us. When Ofgem grant licences to energy suppliers they should, perhaps, look harder at their business plans and financial status before letting them loose on consumers.

Nottingham council own Robin Hood Energy which, according to PEYE, is on the brink of insolvency and may receive the third handout in 12 months to bail out an unviable energy supply model. I wonder what the council tax payers feel about that?

This is the issue when governments allow vital services to be privatised.

I don’t believe this has anything to do with privatisation – there are plenty of energy suppliers who are viable and competitive. I think it is to do with license conditions. This was predictable (see previous convos) when small companies do not have adequate resources to ride out the fluctuations in wholesale prices.

Both these enterprises seem to involve local government, so sort of nationalised at local level. Perhaps this is the issue when public servants get involved in business enterprises.

M J Broughton says:
7 February 2019

Re Energy Price Cap. Is anyone checking on increases in fixed tariffs? I have regularly changed suppliers as advised and have been on various fixed tariffs for years. I have just done a price comparison and my dual fuel bill will go up by a minimum of 15% if I switch to a company I have never heard of. If I stay with my current supplier the increase is more. It seems to me that energy suppliers are now increasing fixed tariffs to make up for lost income because of the Price Cap.

That’s right but the price cap will help those who are on standard variable tariffs, which includes many people who struggle to pay their bills. It is still cheaper to look around for better deals but the price cap means less exploitation of poor and vulnerable people.

It was inevitable that by capping variable tariffs the profits were reduced and the ability to subsidise fixed price contracts became much more limited.

Most people have the capability to switch to another supplier offering a cheaper deal – either fixed or variable: https://www.which.co.uk/news/2019/02/top-five-cheapest-energy-deals-for-february-2019/

However, remember the price cap is also variable, so will increase if the wholesale cost of energy goes up. “Energy customers could face bigger bills than before the price cap The price cap on standard and default energy tariffs will increase by £117 per year on 1 April 2019. Customers could end up paying more for gas and electricity than they did before the price cap. Compare gas and electricity prices now.
Read more: https://www.which.co.uk/news/home-garden/ – Which?

So you are generally still better off on a fixed price deal.

Personall,y I’d ditch fixed price deals and make all contracts variable, so we pay depending on the wholesale cost of the fuel like we do for petrol and diesel. No tempting subsidised deals to lure in customers, just straightforward competition.

the price cap will help those who are on standard variable tariffs, which includes many people who struggle to pay their bills.“.

The price cap has also caused a large increase in fixed price tariffs, so those people who “struggle to pay their bills” and who had the ability to shop around for deals are now having to pay a lot more. Some of the the “poor and vulnerable people” will have been substantially hit financially.

An unintended consequence of meddling with the market? Not the magic bullet portrayed. I’d rather see people helped to find the best deal for them in an open market than have inept political interference that helps some and deprives others in the same group.

My understanding is that the price cap will help many of the poor and vulnerable. If there is evidence to the contrary I would be interested to see it.

The evidence is in the large increase in the cost of fixed price deals that the poor and vulnerable could (and many no doubt did) take advantage of. They still can, but it’ll cost more. Those who stick with the more expensive variable contracts are now also faced, from April, with a substantial increase. Those who were on fixed price deals do not. It is clear where the poor and vulnerable could save most money. Let’s help them do it?

I have not seen any organisation that supports the poor and vulnerable argue against the price cap. There is plenty of evidence that many people don’t switch to cheaper deals and efforts to address this have had limited success. If I’m not mistaken, you used to suggest that fixed price contracts should be scrapped.

I do suggest fixed price deals should be scrapped. However, while they exist we should take advantage of them. That is Which?’s message as well. Those on SVMs – rich and poor alike – are subsidising my fixed rate deal; nice for me but not the right way to deal with an essential, like energy, in my opinion.

I suspect many of the poor are capable of finding, and do find, the best deals. Now they are suffering higher costs. Just because you are poor does not mean a lack of knowledge or ability, or helpful family and friends.

I don’t need an organisation to tell me that many are now paying more than they need for energy. The cap has, according to some, also given energy suppliers the opportunity to put their SVTs up to very close to the limit, with people lulled into the false sense of security that doing nothing is now OK because prices are “capped” – whereas there are, in fact, cheaper deals available than an SVT.

I would help the vulnerable and poor by finding them the cheapest deals possible. Perhaps that is what the “organisations” should be doing.

If the price cap was hurting the poor and vulnerable then surely the organisations that support them would be up in arms but I have not seen evidence of this. Citizens Advice did welcome the price cap.

Efforts have been made to encourage the poor and vulnerable to switch to cheaper deals but by and large it has not been a success.

Perhaps these organisations had not thought of the consequences that are now apparent.

“Citizens Advice did welcome the price cap.”
“Energy cap means “fairer” prices, but consumers should continue to shop around, says Citizens Advice
1 January 2019
As the energy price cap comes into force, Citizens Advice is reminding people that they should still be able to save money by shopping around and the cap doesn’t limit their total bill.

From the Citizens Advice website:

Energy price cap “offers some much needed protection for loyal households”, says Citizens Advice
6 November 2018
Citizens Advice, in its role as the official consumer champion for energy, has responded to Ofgem’s announcement confirming the level and timing of the price cap on default tariffs.

Gillian Guy, Chief Executive of Citizens Advice, said:

“This price cap will finally offer some much needed protection for loyal households on default tariffs, who have been exploited for too long.

“While the cap will mean that people pay a fairer price, it will not be the best deal on the market. By shopping around and changing tariff or supplier, people are likely to be able to make much greater savings on their energy bills.

“Households may also be able to reduce their bills and make long-term savings by improving the energy efficiency of their homes. Simple steps, such as better insulation or heating controls, are a good place to start.”

Those likely to benefit most are the poor and vulnerable who often remain on the standard variable tariff.

Their comment was aimed at “loyal households” – who are people who don’t switch. The answer to saving people money, which is what we all want, including the poor is to shop around. It seems to me that is what we should be encouraging. Then we could save them real money.

However, as I have said elsewhere, I think fixed price deals subsidised by those on expensive variable tariffs should cease. That should reduce the price of SVTs so all the poor who do not switch will be helped more than by capping. However switching will still be the route to finding a supplier with the better SVT.

In the meantime one advantage of encouraging and helping the poor to go for a fixed price tariff is their energy costs will be known; they will not suddenly be faced with a large increase that they can ill afford such as will happen to “capped” tariffs come April.

Perhaps we can continue this discussion next year, but I suspect that the price cap will benefit more of the poor and vulnerable. Those who engage with the market are still able to find cheaper prices than relying on the price cap. Those that don’t will benefit most.

DerekP says:
9 February 2019

I think many of those that don’t shop around regard the bother of switching as more trouble that it’s worth, even given the potential money savings that can result.

It is easy to see how anyone who can comfortably afford their bills might regard not shopping around as a valid consumer choice. But even those who struggle to pay bills can be put off by the potential risks and complications involved in switching.

In theory, I could save money by shopping around annually for house and car insurance and for my energy supplier, but I don’t always find the motivation to do all three. As my energy bill is much greater than the sum total of my insurance bills, I do usually manage to shop around and move suppliers annually, but I haven’t always found it to be a quick and painless process.

The thought of an energy company dumping me on an more expensive tariff or a breakdown recovery company charging me more for renewal than a new customer is a good enough reason to switch. I have no intention of being exploited.

As Derek says, many of us don’t bother to shop around because of the hassle. I stayed with the same company for house/contents for many years until they became greedy. They lost a customer who did not make claims. Switching energy supplier has not always gone well for me.

“Which? responds to energy price cap increase
7 February 2019
Alex Neill, Which? Managing Director of Home Services, said:

This eye-watering increase ( £117)to the price cap will be a shock to the system for people who thought that it would protect them from rising bills.

“Energy customers can take the power back into their hands by switching and securing a better deal before the new cap comes into effect in April. While there are fewer cheap deals on the market than a year ago, by switching today you could choose better customer service and potentially save more than £150 a year.”

It would be useful if the wholesale prices of gas and electricity were routinely published so that such price rises could be understood (I expect they can be found if you look hard enough, but I haven’t). Energy forms around 37% of your total average bill. The increase of £117 in the cap is 10%, which suggests that, as other costs should not have changed significantly, the actual cost of the energy has increased by around 25%. Is this the case?

Ofgem will change the cap in April and October. The April cap will therefore fix the price, presumably, for 6 months – so you are no longer on a variable tariff but one that will not be reduced, presumably, if energy costs fall in the late spring and summer. You might as well be on a proper 12 month fixed tariff that is significantly cheaper from the outset.

Would it be useful if the wholesale prices of gas and electricity were routinely published? There are certainly figures available https://www.energybrokers.co.uk/gas/historic-price-data-graph.htm. However, bearing in mind that different suppliers buy different amounts at different times and, I am quite sure, pay different prices for it depending upon each of the previous variables (woe betide any that bought during the w/e 3rd March last year), realistically fluctuations in the market are likely to render the figures fairly meaningless to the average householder – even above average ones.

I would, however, be very interested to know just how much of my monthly installment was being taken in profit – if I could only guarantee that the figures were not being massaged to the supplier’s benefit.

I occasionally wonder where we would be now on energy pricing if the regional gas and electricity boards had still been the sole suppliers in each region. The gas boards generally produced their own gas and the Central Electricity Generating Board ran the power stations [in England and Wales]. There was no opportunity for dual-fuel discounts and all accounts included a standing charge. Administration was cheaper because there was none of the churn caused by switching, but the boards were overstaffed and top-heavy. I expect direct debits would have been possible and even paperless billing.

David Wilmin says:
15 February 2019

I am currently a Sainsbury’s Energy (gas+ electricity) customer. I do not wish to transfer to British Gas in April. My current tariff is Price Freeze Jan 2020. The Sainsbury website states that I have to pay an exit charge of £30 per fuel to reject the transfer to British Gas.. Why should I have to pay any exit charge when it is Sainsbury’s that have made this commercial decision to leave the energy supply market ?

Which? responds to British Gas price rise announcement
19 February 2019
Alex Neill, Which? Managing Director of Home Services, said:

““The energy price cap will be cold comfort for the millions of British Gas customers who will now face eye-watering price hikes in April. This is the fourth price increase announcement in quick succession with the rest of the Big Six expected to follow suit.”

This is news without explanation.

I think consumers should be told the reasons behind the increase rather than just make their eyes water. The energy price cap is decided by Ofgem and they have given the increases that are due to come into force on April 1st (good choice of date). I would find it useful if Which?, or Ofgem, explained how they arrive at the price cap figures and, particularly, how they link to wholesale energy prices. We might then at least understand what is going on as we wipe the tears from our eyes.

Which? responds to Scottish Power price hike announcement 19 February 2019
“Energy customers will be feeling the heat as this latest increase means price hike Monday is set to see more than one billion pounds added to household bills across the country……………………

Is this tabloid journalism style the right way for the Consumers’ Association to communicate? Once again, no explanation behind it and I would think the press could make up their own take on the news. I would like CA to present “news” with supporting information so those who are so inclined could understand why things happen.
🙁

“Two in five UK households will now be collectively hit with a billion pound price hike” Which? response to SSE price rise
21 February 2019
Alex Neill, Which? Managing Director of Home Services, said:

“Inevitably, SSE has fallen in line with the rest of the ‘Big Six’. Two in five UK households will now be collectively hit with a billion pound price hike when their energy bills increase on the 1st of April.

This is hardly surprising if wholesale energy costs have gone up. They’ll all be affected, presumably. However, a 10% price rise suggests the wholesale prices of gas and electricity in a medium dual fuel bill will have increased by around 28%, as the actual energy (fuel) makes up just 36% or so of a typical bill. I’d like Which? to explain just how Ofgem decides the cap and if it really is based directly on wholesale fuel costs.

LYN WILCOX says:
1 March 2019

Just had a ‘renewal’ quote ….additional £38 per month …We were on a very good deal, according to the company, but prices have gone up !

DerekP says:
1 March 2019

Hi Lyn,

An extra £38 a month sounds like a lot more to me.

Have you visited “Switch with Which?” to see what other retailers might quote you?

Usually, it is cheapest to move suppliers every year?

If you let us know who your current supplier is, I’m sure the regular gang here will be able to help recommend suppliers worth considering and also those best avoided.

For starters, I’d place Scottish Power in the first category and Enstroga in the second.

I suggest that Lyn has a look at this page which summarises the results of an survey of energy suppliers: https://www.which.co.uk/reviews/energy-companies/article/best-and-worst-energy-companies/which-energy-survey-results

The reasons we have seen recent prices are mainly the rise in costs of energy to the suppliers and a price cap that reduces the amount that those on the default standard variable tariff subsidise those on fixed price contracts.

It’s worth checking whether or not there is a fee (often £30 for each fuel) if you move supplier, although that does not apply near the end of a contract.

To use switching sites like Which? Switch, mentioned by Derek, most effectively you need to know your approximate annual consumption of gas and electricity, which will be shown on your statement.

Some suppliers buy more electricity from renewable sources and this can be found from the Which? website.

The only way to bring down prices is to reduce demand by offering clear customer incentives to do so and with clear government policy to increase renewable generation capacity and storage solutions, but as recent scandals have confirmed this lot are incompetent beyond belief, so complain continually to your MP and the press…we have OAP’s dying of cold and hunger…a national disgrace

I hadn’t appreciated that renewables tariffs can be exempt from the energy price cap. I wonder whether the relevant customers do?
https://www.ofgem.gov.uk/system/files/docs/2019/03/ecotricity_renewable_derogation_extension_of_temporary_derogation.pdf
Good Energy and Green energy also seem likely to be included.

Drew says:
26 March 2019

The process requires each energy company to apply individually to Ofgem for a derogation (statement that the specific rules don’t apply to them). Good Energy have also applied for this, and I’d imagine that First Utility, now rebranded as Shell Energy may follow suit.

In my humble opinion, green energy supply is a con. On a night (evening or morning) when there’s no wind, the available renewable power is minimal – the dubious “biomass” output of Drax, or the tiny amount of hydro-power, all amounting to about 3-5% of total output. Where exactly are these companies buying renewable power from when there’s virtually none available? Sounds like the manuka honey scam to me.

Having said that, if people want to pay more for their energy and delude themselves that it is green, why should anybody else try to stop them? There’s no price cap on housing, food, cars, or Werthers Orginals.

Since the electricity actually supplied under a renewable energy tariff is not exclusively sourced from a renewable source at the rime of consumption, the vagaries of the wind are not strictly relevant so long as the supplier buys enough renewably sourced energy to balance the overall demand for electricity under the renewable tariff. If the supplier only offers a renewable tariff then it would have to buy more [including solar energy] than its forecast requirement and sell on the surplus.

There are very few periods when there is no wind somewhere around the moors and coasts of the British Isles – albeit there are windy places where there are no turbines yet – and there are occasional sunny days, so, provided there are not more suppliers offering renewable energy than there is the capacity to deliver, this particular business model works for those who want it.

I agree with John. Furthermore, I would like to support investment in renewable energy. If burning imported biomass at Drax counts as renewable energy then maybe the definition should be changed.

In essence, timber pellets made from waste wood in managed forests are a renewable resource, but that depends heavily on the management regime and on what happens next. If they are then transported by diesel-powered freight trains to a port, loaded onto diesel-powered sea-going vessels for a trip across the Atlantic Ocean with no back-load, then transferred again onto a diesel-powered train to take them to a UK power station where sophisticated equipment is required to deal with the by-products of combustion, then the eco credentials of electricity from biomass are deeply flawed in my opinion and it is not much of an advance from town gas production from raw coal delivered by steam trains to coking plants.

The environmental impact of transporting biomass is not restricted to burning diesel, but that’s certainly a major factor. It’s very wrong in my view to class it as renewable energy.

https://www.which.co.uk/news/2019/04/why-the-price-of-your-fixed-energy-deal-isnt-as-fixed-as-you-think/
”you switched energy supplier to a brand new cheap fixed deal. The monthly payments stated were much lower than you were paying before. But a few months later your new energy firm tells you that your payments are increasing and you panic: didn’t you sign up to a fixed deal?

Do some people really think, as the article continues, that they will pay a fixed price for their (year’s?) energy irrespective of how much they choose to use (or indeed, how little).

The key to avoid unexpected changes in your direct debit, as the article goes on to discuss, is to give as good an estimate as possible of your annual usage when you obtain a quote. Then send in regular meter readings (if you aren’t on a smart meter). I do this monthly and SP immediately calculate a new monthly direct debit based on the updated estimated annual usage. They give me the option of staying on the original payment, but if the usage has increased there is no point in putting off the evil day.

Sandra says:
23 May 2019

I am on the standard tarriff. I am behind on my payments over last year my bills were all over the place. I was in arrears then it was cleared then i was told i had underpaid by £770. So i went from a zero balance to £770ish plus my monthly invoice. They will not allow me to change to a lower tarriff which could save me over £500. They said i would need to commit to a direct debit triple what i am paying. So i need to stay on higher rate paying them online weekly. So much for helping.