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How can energy companies win back your trust?

An illuminated exclamation mark among question marks

Trust in energy companies has been dwindling while prices have been creeping up. Over to Tim Yeo MP, who’s giving you a chance to share your questions with your energy suppliers. Do you trust your supplier?

Public trust in energy companies is extremely low and it is not being helped by an apparent lack of transparency from firms on prices and profits. The government is planning significant changes in the UK energy system in the next few years in order to deliver secure, clean and affordable energy in future.

But, in order to deliver such changes successfully, greater public confidence and trust in the government and energy companies’ ability to deliver a fair deal to consumers and protect the most vulnerable households is needed.

We’re asking energy customers to share their questions for energy suppliers for our next committee session.

Calling for energy evidence

How can the government and companies earn the trust of the public on energy issues? It’s a tough question and there is no simple answer. That’s why the Energy and Climate Change Select Committee, which I chair, has launched an inquiry into energy prices, energy company profits and fuel poverty.

In our first evidence session, we heard from Richard Lloyd, executive director of Which?, who highlighted the complexity of energy markets and the need for greater transparency in order to strengthen consumer confidence and engagement.

Consumer Focus explained how energy company communications could be misleading to consumers, emphasising the need for clarity and simplicity in billing. The increasing burden of energy bills and the pressures placed on low-income families were outlined by Citizen’s Advice. While National Energy Action and Age UK expressed serious concerns regarding rising fuel poverty and questioned the adequacy of government programmes to address this.

The structure of energy companies, the way they trade and how they present their profits are all areas of interest to the committee, along with the impact of government policies on fuel poverty and the implications of rising energy prices for consumers.

Digging deeper into the energy market

As our inquiry progresses, we will have the opportunity to look at these issues in more depth, questioning energy company representatives, consumer and fuel poverty groups, politicians, experts and policymakers. In particular, we hope to focus on public perceptions and what energy companies and regulators can do to ensure consumer protection and fairness in the energy market.

As part of this investigation we are asking members of the public to let us know the one question they would like to see their energy provider answer. The committee will be putting some of these questions to energy company bosses on Tuesday 16 April at 10am.

We would love to hear from the Which? Conversation community, so please let us know the one question you would like put to energy firms next week. You can tweet your question using the hashtag #AskEnergyFirms by 11.59pm on Thursday 11 April.

Which? Conversation provides guest spots to external contributors. This is from Tim Yeo, chair of the Energy and Climate Change Select Committee. All opinions expressed here are Tim’s own, not necessarily those of Which?

Comments
Guest
paul stevens says:
10 April 2013

If we only have say 30 days storage of gas and oil at any one time then the prices will all ways be high but if we had say 3 months’ supply then EDF or say B/Gas could by cheaper gas and oil when the spot price drops and not be held to ransom by the major suppliers
2/ and they must drop the price when the price comes down strait a way within the storage time
And if any company brakes the rules all the profit for that year goes back to the customers finally the green tax should be put on the bills so people can see how much the government is adding to the bills
Let have a big debate on climate change as the last 16 years the planet has got colder not warmer so all the so called expert have got lied to us and the government have has well just to get more tax

Guest

Well, with complex tariffs, unfair standing charges, increasing profits for shareholders and ever increasing prices in general energy suppliers will have their work cut out regaining my trust. Not that I ever trusted them much in the first place.

If they’d prefer we all liked them a bit more, or at least hated them less how about a few simple changes in the way they operate?

One price tariffs rather than complex multi tier and price designed I’m sure to con consumers and make prices appear better.
And how is it fair when we’re all supposed to be economising on usage to reward high users with what is in effect lower overall unit costs.

Get rid of standing charges which overall penalise the poor and the low user more.
Yes I know there are fixed costs but Tesco has them too without seeing the need for a standing charge as you enter a store. Make fixed cost an element of a single unit price cover, most other businesses seem to manage..

Install some storage, I hear we only have about 30 days supply at any given time. This makes us far more vulnerable to fluctuating wholesale market prices. 3 months or even six months stored supply could enable us to buy at the best prices within a fluctuating wholesale market.

Be open and honest about profit. Surely announcing increased profit at nearly the same time as announcing a price rise is not going to make you any friends. How about foregoing some profit when wholesale prices are high in the spirit of “we’re all in it together”. Of course we all know we’re not all in it together, rather it’s a case of squeeze em till the pips squeak because suppliers really don’t care about anything other than a profit.

To be honest I really think that a fundamental part of national infrastructure should not be left to the profiteers of a privatised market. It should be re-nationalised so profits come back to the nation. Surely by now we’ve learnt enough to run a nationally owned energy supply operation at least as well as the private sector.

Guest

Chris – I agree with most of your points but I don’t believe that re-nationalisation is the answer. Our nationalised industries operated very inefficiently and energy supply had not been privatised we would probably be paying more for our fuel than at present.

I believe that the answer is to have tight regulation of energy supply companies and large fines for those that break the rules, so that we have the benefits of competition and effective controls in place to ensure that companies cannot exploit the public.

Guest

wavechange,
Whilst I agree in the past nationalised industries were very inefficient to the point of being a disaster that does not mean they would automatically be so today. The very tight regulation you suggest would go some way to ensure that.
I would advocate an independent body to oversee a re-nationalised energy supply operation. This watchdog would be there to ensure operational efficiency and low prices. I think it could work and I for one would prefer not to line the pockets of shareholders when it comes to a fundamental part of national infrastructure.

Remember the NHS is a nationalised body but surely we’d prefer that not to be privatised?
Not quite the same I know but the thinking need not be any different.

However I’d accept that despite my preference to re-nationalise energy the chances of it happening are slim. The country simply could not afford to buy it back. The blunder to privatise was made many years ago, back when we sold much of all the other family silver to bale us out of a previous crisis. A blunder we’ll have to live with for a very long time.

Guest

Chris – Neither of us knows whether nationalisation would work, so we will have to agree to differ. We certainly agree that it is unlikely to happen. The huge mistake, in my view, was not privatisation but allowing energy supply to fall into foreign hands.

I completely agree with you about getting rid of standard charges. Unfortunately, there are some heavy users who want to be subsidised by those who want to be more frugal or simply cannot afford to spend much on energy.

Guest

wavechange,
Well I think we agree on more than we disagree.
Privatisation is a bit of an academic argument because national finances are such that it’s not going to happen even if there was a consensus to go that way.
I think that’s a shame but I accept some others think differently.

Guest

Chris – One thing I forgot to mention is that I believe our energy supply and other essential services are too important to be left in the hands of whichever government is in power at the time. You mentioned involving an independent body to oversee re-nationalised energy supply. Assuming that re-nationalisation is fairly unlikely, we certainly need an independent investigation of many aspects of energy supply to determine what controls are needed on profits, continuity of supply, investment for the future, and tackling energy waste. Then the government (whichever is in power at the time) needs to implement the necessary changes and hopefully regain some public trust.

Guest

We thought we had tight regulation over the financial services but significant irregularities occured and still do.
Why do you think a regulatory body would fare better with the energy companies?
The issues are still the same while they operate as limited companies. Their priority will be to drive up the share price by sustaining an increasing profit regime.
Two questions I would like to see put the panel are
1. In order of operational priority, is customer satisfaction higher than share value?
2. What justications are there for remuneration levels of their executive officers.?