Who switched energy suppliers in The Big Switch and why?

I see that Ofgem lists ELEVEN price comparison sites. Which? Switch is not mentioned.

Maybe we need someone like Which to show what household prices could be if the fallen wholesale price had been passed on. Then show how much lower the price will be compared all anything the ELEVEN comparison sites will list.

Apathy on the part of OFGEM should also be factored into any research findings.

Trust in the energy market also needs to contain an element of trust in the regulator and the only trust it gets from me is that it has and will do nothing for the consumer.

It’s virtually impossible to discover. Generating companies buy their fuel on the futures market at a price fixed long in advance: they also buy the dollars for payments on the future markets. This is all business confidential, so it would take a revolution to find the truth.

But we can be sure that they make loads of money and pay themselves Carribean Island sized bonuses. As many of us have been saying for many yesrs (since Thatcher sold out to businesses), the industry should be overhauled from top to bottom. Perhaps it’s time to go public!

terfar, this should be Ofgem’s job to ensure fair prices are charged. What do we pay them for? They should publish benchmark gas and electricity tariffs, for example, against which the commercial suppliers could be judged.

I imagine most of us drive past various filling stations and can decide if it is worth filling up. Likewise, we probably have a good idea of how much things cost if we buy them regularly and have the option to buy something else or go somewhere else if grocery items look expensive.

The chance of a genuine competitive market for energy supplies seems to have long gone.

Perhaps our energy meters could be adapted with an extra display so they run like petrol pumps with a tariff price per unit indicated and a rolling price to pay. If we’re spending billions on smart meters let’s do the whole job. For an extra tweak in the electronics we could also switch suppliers.

I don’t see we need to be made aware of competition; most of us have become much more savvy as choices have increased as,for example, through on-line shopping.

At 14p a mile you soon lose any advantage in shopping around for fuel – and in my area the cheapest fuel is not necessarily at the same station.

Supermarkets change their deals regularly, so even when you buy often you will not know you are getting the best deal.

At least with energy you can check your best deal on the internet without moving, any time of the day or night, with any of the suppliers. You can then change if it suits you with little effort. I am with EDF – they regularly email me if there is a cheaper deal than I am on – not only their deals, but other suppliers as well. Last night I changed from one of their fixed deals to another in a minute to save £50 a year. I don’t think that is a bad facilty to have.

mysupermarket lets you check best prices without having to roam round all your stores.

So most are aware of the competitive market and have the means to exploit it – if we choose to.

I am disappointed that Which? has supported smart meters despite the vast cost of the roll-out, which is doubtless making a generous profit for those involved.

I doubt there is much chance in doing much to help the consumer – as John suggests – if companies have their way. If the government was in control then we might be in with a chance.

c Nichol

You are an excellent example of what is possible but the aim of the exercise, as I understand it, was to get a better understanding of the factors influencing consumers` decisions to switch or not to switch.

Beryl, I may have misunderstood your comment, but the principal benefit to energy users of the Big Switch as presented by Which? was, I assumed, to put an especially attractive energy deal together that a lot would change to. Those that bothered to take part would not have thought it only a research survey. UEA, in turn, gained valuable information on consumer behaviour.

I am not sure how useful the information is – although the report made interesting reading (well, the bits I looked at). One issue seems to me to be highlighted – consumer apathy. This has been raised in previous conversations – such as why people don’t change their current account provider. Many moan about various institutions, but the thing that maybe matters is to how big that moan really is. If it is not too big we don’t change.

I also wonder how many participants, like me, did not use it to switch but were independent switchers anyway and used the Big Switch as another “comparison tool”?

c nichol

I agree with your comment re consumer apathy. My question is; do you know the reason for it?

David Deller makes the point:

“Our aim was to get a better understanding of the factors influencing consumers` decisions to switch energy supplier. Choosing not to switch was associated with relying on an estimate of your energy bill, facing an exit fee when leaving an energy company, and being busy during the period of The Big Switch.”

Only the second answer as far as I am concerned was a valid reason, the first and third I would regard as more excuses. People do not always understand themselves the real reason why they are so reluctant to switch but the sad fact is, some people are unable to tolerate change and the older one gets the less likely you are to want to change I accept there are always exceptions but common sense tells me that in accepting the status quo, nothing changes and exploitation continues unabated.

It is encouraging that we have consumer organisations such as Which? and researchers at our universities interested enough to investigate these matters as the road ahead can often be long and hard, but without them people would have no voice and democracy as we know it would be a thing of the past.

Beryl, I cannot quibble with what you say. We are an apathetic, or perhaps cautious, nation maybe – see how we treat elections for example with poor turnouts. Either we feel we can change nothing, so why bother, or we simply don’t feel strongly enough about the issues to get off our bottoms.

I think it is sad, given that it has never been easier to get better deals – energy, banking, for example – that more do not take advantage. Perhaps it needs a cultural change. It would likely lead to a change in business practise if we became more aggressive and discriminating purchasers.

Having said this, on-line shopping does show how determined many are to seek out bargains – young or old. Perhaps someone could investigate why we seem much more active in that area. It seems we are reluctant to change longer-term arrangements rather than immediate single purchases. Is that because we are generally comfortable with the arrangements we have made and the financial incentive is insufficient (as UEA hint)?

But as so many comversations show there are people who do not want this, and want the state to intervene – taking decisions for us. It is a valid stance, but one I do not feel is either realistic or healthy.

c nichol

“It seems we are reluctant to change longer term arrangements rather than single purchases.”

I think that’s as near to the truth as you will get.

c nichol – One reason for suggesting state control is for the benefit of many people who are not really in a position to look after their financial affairs. On Monday I will attend the funeral of a friend’s wife who was 75 years old and I think he is older. It’s going to be a while before he gives any thought to energy prices. Those suffering from cancer, a brain tumour, Alzheimer’s disease and so on are hardly likely to keep an eye on energy prices. Those who have been made redundant, are having family problems or suffering stress at work could be among the people that might be considered apathetic. Is it right that those who are not in a position to look after their financial affairs – either temporarily or permanently – should just be disregarded?

Wavechange:

Many thanks for your insightful and empathetic reply. I have however found an excellent article by Rosabeth Moss Kanter, Professor at Harvard Business School which c nichol could relate to from a business and leadership point of view @hbr.org – Ten Reasons People Resist Change Sept 25 2012.

I hope I am not veering too far from topic but this article does provide valid answers to the questions raised regarding consumer apathy.

Thanks Beryl. Some people need to realise that the problem is more than apathy and that as the population ages we will have an increasing number of people who are not able to shop around to avoid paying over the odds for energy.

This has led me to wonder what energy tariff rates are used in such computations as the Retail Prices Index and the Consumer Prices Index which feed into the calculation of welfare benefits and state and some occupational pensions. It would be unfair if it was assumed that only low tariffs available through switching and tracking should be the yardstick. It is one thing for people to keep on top of their shopping costs if they have to take the money out of their pocket or purse, but such people may not be in a position to manage their energy expenditure so easily, especially during cold weather with the risk of getting a massive bill. Something can surely be done to ensure that a ‘default’ tariff is the most suitable. It is amazing how many householders have to struggle with these things on their own, not just in far-flung rural areas but in major conurbations too; understandably their health and their family take priority over poring over comparison websites even if they had the means and the know-how to do so.

I don’t believe state control works. It is used for political purposes rather than for the benefit of individuals, and they are not particularly competent anyway. Have they benefited us with rail fare increases, extortionate electricity subsidies, an over-managed health service, Royal Mail sell off, smart meters……? So why put our trust in their help here?

My view is that family, charities, friends, local advice centres, should help those are are unable to deal with these matters themselves. A culture I would like to see in the UK is, where families exist, for them to feel a willing responsibility to look after their own. Not a culture where reliance upon the state is the first option.

Beryl, “Ten Reasons People Resist Change “. I’m afraid I don’t relate to this. I have been to courses in the past from academics extolling the virtues of and barriers to change. In my view, change has to be done for genuine reasons, not as one of my colleagues once said “to shake things up”. It overlooks the premise that practises often evolve through knowledge and experience developed by intelligent people. Incremental change is a good thing, but often change for its own sake is simply an assertion of authority without full consideration.

In the case of energy tariffs we certainly are comfortable with what we are used to, but given a compelling reason to change – significant cost savings for example – I would expect people to do so. If they don’t, they perhaps are not bothered, not motivated, lazy – or maybe need help to understand and manage the change. From family, friends, charities or advice centres.

It’s good theory that families should provide support. Some families do but many don’t. Expecting charities to provide support is totally unreasonable.

There is no reason why we need to run the energy industry using the same competitive system that we use to make and supply washing machines, for example. Earlier you suggested benchmark energy tariffs so that we can see how suppliers shape up. That would be worth trying but my view is that the government should set the maximum retail price that companies can charge.

“Expecting charities to provide support is totally unreasonable”. By charities I was thinking principally of the CAB – surely one of their functions? Not unreasonable to expect them to help people who need it?

My view is that it would be better to supply everyone with energy at the same price and to ensure that the companies involved are not making excessive profits.

c nichol

Reverting back to the main topic, David Deller also asserts:

“Other reasons for people switching included using accurate energy consumption information from their bills to generate a quote, rather than just estimating it, taking part with the aim of saving money rather than just out of curiosity and preferring the ethical or environmental stance of the new supplier.”

As with most intelligent debates there is always another side and it helps to understand in this case the reasons why some people switched and others did not. I think that has been established. There are a multitude of reasons why people do what they do or don’t do, but it helps to be able to see the other side even if you don’t agree with it.

Unless competition can restored to the energy market change will not happen. A general election in May this year will be the deciding factor. It will take a Labour majority I think to take control of our energy supplies, unless the CMA can pull something out of the bag and produce a solution that will end the enduring crisis in the energy market.

Beryl, I’m not sure how this relates to what I have said. I do “see the other side” and neither agree nor disagree with it, it is simply the way some people behave. Understanding reasons (e.g. for not changing) is one thing; I have, perhaps clumsily, given some reasons I think why they have not made a change that would be advantageous. But what matters surely is people being better convinced that change of supplier or tariff could benefit them, and that the benefit can normally be achieved cheaply (in terms of effort).

I do not think this should be a political issue. Politicians look for votes and bribe the electorate to get them. If Labour’s pledge last year “to freeze gas and electricity bills until 2017” had been enacted, would the recent reductions in tariff costs not then have happened?

You talk of a “crisis”. There have been far bigger “crises” building over the last few years in other more expensive essentials – food, housing and commuting, each probably up to 5 times the cost of domestic energy. Perhaps some attention to those would be appropriate?

I agree that the money spent on smart meters could have been more usefully spent on insulation and other measures to help the public cut their energy consumption.

Hopefully those with storage heaters are already using off-peak electricity. I am not at all happy about suggestions that washing machines and tumble driers are used overnight when electricity is cheaper. There is a small but significant risk of house fires, whatever brand of appliances you buy.

If the government is in control then let them demonstrate how smart meters will help consumers. As I see it, only the energy industry will benefit significantly. Somehow I expect we will still be grumbling about being hundreds of pounds in credit with our energy suppliers, though I look forward to being proved wrong.

I think you exaggerate the dangers of using off-peak electricity at night because of the almost insignificant risk of fires. Everyone has strategically placed smoke and CO detectors, don’t they?

All letters I agree are in a similar vein with much emphasis on wholesale prices, blaming hedging practices, increases in transmission costs and Govt levies for failing to pass on price reductions.

A bit of good news for some. E.on have today announced a reduction in prices. Will the others follow suit and is it enough? According to this evenings BBC News, energy companies are beginning to ‘feel the heat’ (pardon the pun) of political pressure. However, MP’s are to debate on energy wholesale costs being passed on some time tomorrow. It should be broadcast on the BBC Parliamentary Channel if anyone is interested.

I agree with you entirely but, further to your final paragraph, I think we also need to look at how much of each household’s energy bill is actually something they can influence. I don’t think it is appropriate the way certain politicians and media have characterised the general failure to switch suppliers as apathy, or laziness, or some other form of delinquency. Except at the margins, many people don’t think it is worth switching and have other things to worry about; I would say that nearly everybody has done something to fine-tune their consumption and improve their home insulation to the best of their capability and their financial resources. The government has failed to find a way of making life better for the tens of thousands of people who are having to live in aged structures that defy all viable means of keeping the heat in, or who out of force of circumstances are living in oversized property where energy bills are but one of their major problems. So long as every household in the land has massive government surcharges applied pro rata to their energy accounts there is no fairness. Personally I think the closer we can get to bills that relate directly to consumption without complicated add-ons, discounts and standing charges, and have no perverse incentives for higher consumption, the better it will be. I know this has been debated here many times and I respect contrary opinions and justifications so long as they are not framed entirely out of self-interest.

I am hoping the political battle-ground that is now being prepared will include a household energy campaign. The outlook is not very encouraging at the moment and it is difficult to see through all the party political posturing and other irrelevant distractions. We need a tribune of the people to set the agenda: perhaps there is a role for Which? here. The Chancellor of the Exchequer, to a massive round of applause from the better-off, reins back the road fuel duty escalator and effectively abandons it; the Treasury obviously did not have its fingers on the pulse of global oil supplies and prices as the pittance of relief afforded by the government has been completely upstaged by the incredible drop in road fuel prices. Keeping a progressive duty level would have provided the funds to do something dramatic on domestic energy instead of something pointless on motor fuel. Adding insult to injury of course, the falling pump prices are damaging the fiscal plan into the bargain but that can’t be helped. One consolation is that the cost of heating the home is at least much more exposed now as an issue.

About 10% of an energy bill is Govt regulatory costs, smart meters, but excluding vat.
It is tempting to say we should pay for energy only what it costs – fuel, suppliers costs and profit, transmission costs, vat. Similarly with road fuel. However the government revenue lost would then have to come from somewhere else – like vat and income tax, corporation tax.

Just how do we share out the cost of running the country fairly? I’d like to see the main political parties come clean as to what fairer tax system they would implement instead of tinkering with mansion tax, allowing profits to go untaxed offshore, higher rate tax rebate on pension contributions. But they would be unpopular with influential lobby groups if they change the status quo.

Yes that is the quandary. It is quite obvious that those running the country, and those aspiring to run the country but who made a mess of it last time, do not have the unfettered intellectual wherewithal to come up with a rational scheme of income and expenditure that is fair and achievable. Bearing down heavily on public expenditure is a good starting point, but it’s no good [in fact, it’s downright harmful] if what remains still gives poor value for money; that is half our present problem and it has to be tackled with as much urgency.

A collective switch – provided a large enough group did it – should be an attractive proposition for one of the smaller energy companies (who should be able to offer more competitive rates, but in my experience don’t). Even then, unless the reduced tariffs were significant, we’d need to check to ensure they remained cheapest through a Which Switch type online route, particularly while wholesale prices are volatile.

I’d much rather Ofgem got a grip on benchmarking what domestic energy prices should be and let us see whether or not our supplier is giving a fair deal. Is that too much to ask? Or are there too many vested interests inhibiting Ofgen action – see the June letters from the major suppliers and Ofgem’s apparent acceptance. Even EONs 3.5% reduction – less than wholesale gas price reductions should allow – was met with a “this is a small step in the right direction” from Ofgem – presumably having taken its dentures out. 🙂

Another thing that could help those struggling with the cold is simple unit pricing, which would help vulnerable people. It would be interesting to know if Which? is making progress on this.

Thanks Patrick, I had to pop out so missed Richard Lloyd. If another energy makes a better offer could we see a return to some competition in the market perhaps, or maybe I am being a little over optimistic. I will be switching next month so will wait in anticipation!

I totally agree with you. These external elements need to be financed from the Exchequer. As ever, the source of funding and its relationship to the reductions in energy bills would be where the devil will hide.

At the risk of sparking some controversy, I would suggest dog food as a good source of extra taxation. Reading the other day that there are around 8.5 million dogs in the UK, and if they all eat a standard 400g tin of dogs’ dinner a day [on average], and on the basis of what goes in comes out, that’s a massive 150 kilos per dog per year [or 127,500 tonnes in total], having to be processed through the waste disposal services [except for those that go in the woods of course] and yet no contribution is made towards these costs to society. I know there would be the usual claims for reliefs – old ladies, old dogs, gamekeepers, monarchs, sheep farmers, huntsmen, policemen, and so forth – but it’s worth looking at.

John

I agree about dogs too, but what about horses? It is a legal requirement that dog walkers clean up after their dogs (which most comply), but horses are still permitted to defecate all over the public highway and not clear up. So how about a crap tax?

John, prepared pet food (biscuit, meal, tinned, pouched etc) is already subject to standard rate vat. I do sympathise with the thought though.

terfar, in olden days, I believe, when London (and other cities) were awash, so to speak, with horses I believe some horses were made to wear nappies to prevent soiling the streets. I understand Blackpool, Vienna, Charleston and other places currently require them by law.

When I was young, a lot of house-to-house deliveries were still horse-drawn. My mother sometimes asked me to get a pail and go out into the road to shovel up any droppings so she could put it on her rhubarb. I always preferred custard on mine, but I digress. The difference is that horse manure had a useful secondary purpose whereas dogs’ doesn’t. I appreciate that dog owners pay a lot of VAT already so the easy way to collect this extra money would be just to double the VAT on dog food – most other pleasures are subject to excise duties as well as VAT.

I’m not suggesting that we take more money from people overall than is already being paid, it’s just a question of finding a good source of revenue to relieve the hardship of those who shouldn’t have to find it as part of their winter heating bills. It would only cost dog owners an extra 50p a week but they’d have lower gas bills. I don’t know what the total value of the extras on the energy bills is, but £200 million a year from the dog obligation would be a good start.

I expect the Off-Topic Regulator will be after me if I don’t stop this.

“Horse Cars, New York City
Mid-1880s in U.S.: 100,000 horses and mules pulling 18,000 horse cars on 3,500 miles of track.
1900: 3.5 million horses in cities.
Chicago: 82,000 horses produce 600,000 tons of manure per year”

Not insignificant and presumably if collected nowdays would be a useful source of bio-gas.

I’ve already asked about Which? Switch not being listed but no answer was forthcoming. Maybe there is no good answer.

Yes Alix – but, as I pointed out earlier today [somewhere below] the Which? Switch website doesn’t actually say that it is the Ofgem Confidence Code – after all, there might be other confidence codes out there for all consumers know [and I bet most people don’t know what Ofgem is or what the acronym stands for anyway]. So, just a little bit more transparency required, please.

Thanks for the explanation, Alex.

Alex, Thanks. If I’d thought to look at the Which?Switch site I need not have bothered you!

Sometimes the best deal may be to buy your gas and electricity from separate companies rather than through a single company dual fuel contract. as I found a couple of years ago. Perhaps a note on the site to suggest people try this as well. It’s only a matter of saying you only buy gas, and then only buy electricity, at the start.

Beryl, the best deals depend on your requirements. For example whether you’d like to fix a tariff for 1, 2 or 3 years. How you want to pay – DD monthly fixed, quarterly variable. Your mix of fuel usage. It does not lend itself to easy analysis, and neither does the tariff label. The simplest way is to put your own annual energy consumption into Which? Switch and you will quickly get all the offers available in ascending order of cost.

Agreed computers make it enormously easier, but they have only made things much more convenient and quick. They have added to the ways you can check costs, not detracted from them. And for the many – including many elderly – they have made keeping bills as cheap as possible a much more available reality.

Malcolm

Ofgem have already succeeded in simplifying the energy market by reducing the number of tariffs available, so why can’t they go one step further by keeping consumers informed with regular bulletins? I don’t know whether Which? Switch is considered an official comparison site or whether it benefits from commission so I can’t comment on that. Any method that can be instrumental in keeping prices low I am sure would be very welcome by many.

Beryl. I’ve asked Which? about the status of the comparison site. It’s the only one I’ve used though and seems excellent. I think its as easy to look at Which?Switch for information as it would be to look at Ofgem’s site if they published such information.

Incidentally, one of my energy providers emails me if a better deal (£50 a year or more saving) becomes available either from themselves or from a competitor. I don’t know how comprehensive it is in comparing all providers – haven’t tested it – but that seems a remarkably good way to be informed. Perhaps all energy companies should do the same.

So far as I can see, Ofgem has gone about as far as is sensible in simplifying the tariff structure to make it easy to compare suppliers. If there were a truly competitive market there would hardly be any need for switching – commercial pressure would ensure that prices were broadly comparable over time. Buying energy is unlike buying petrol, where the pump price is today’s price for that fuel and if you don’t want to run out of petrol you need to pay that day’s price [there might be fractional differences within a local district but usually not sufficient to justify spending much time or expense going for it]. With mains energy, you don’t get a new buying opportunity every time you need to replenish your provision: that is the benefit of mains supply for which there is a price to pay. The result is that people get stuck on a tariff which gradually becomes out of line with other tariffs [not always for the worse if market prices are moving upwards and it is a fixed-price tariff] because they have to deliberately elect to accept a new tariff offered by their supplier or to choose a new supplier. I question how much more now needs to be done to help people get the optimum terms for their preferrences apart from requiring companies to introduce a tariff that will automatically put them on the most favourable rate from that supplier whenever there is a price change. In a falling price market this could be crucial. One consequence of such a tariff would be that it would be a rolling contract so that every time there was a price change a new period would commence for the purposes of any exit penalties or other terms & conditions.

Like Beryl, I do not know for certain whether Which? Switch benefits from commissions from any switches that are executed via the website. Even though the site says it offers a “transparent and impartial way to compare energy tariffs” there is an obscurity about that aspect so, in the absence of any contrary evidence, I presume that Which? Switch does get paid for each switch. With reference to the points made by Malcolm R and Wavechange about not being on Ofgem’s list of acredited comparison site, I notice that Which? Switch says “tariff updates are provided by Energylinx . . . [which] is fully accredited to the Confidence Code to compare energy for domestic consumers”. I think it should say “Ofgem’s Confidence Code” to make it abundantly clear [or transparent even].

The big things to tackle now are really the actual prices of mains gas and electricity [they could be lower] and consequently the cost of heating an ordinary house. Whether elderly people can do tariff switching is probably a receding issue whereas what can be done to make an ordinary house more comfortaable at an affordable price remains a challenge, especially since so many properties in the UK are not conducive to additional energy saving measures due to their age and construction. As a result of their lower market value in consequence of their lower EPC rating, they tend to be occupied by people on lower incomes, often only on pensions or benefits. They can switch until they’re blue in the face but at the end of the day they will still be blue in the feet because the heating bills are still too high.

Beryl, these days many fixed tariffs have no exit penalties if you switch suppliers, and certainly not when you change tariffs with the same supplier, so no problems there.

Reduced gas prices do not only show on standard tariffs, but also on fixed tariffs – a new version just appears that you switch to, as I have in a matter of minutes getting a 5% reduction.

Having put your details into a comparison site it should be simple for an email to be automatically sent advising of better deals. I already get that from one of my energy suppliers when the saving exceeds £1 a week.

Comparison sites are watched for good practice by Ofgem – they have a Confidence Code, currently being updated

https://www.ofgem.gov.uk/publications-and-updates/confidence-code-review-january-2015-policy-decision?utm_medium=email&utm_source&utm_campaign=5299461_Daily-Alert_30-01-2015&utm_content=$LINK_KEYWORD$&dm_i=1QCB,35L39,F31FFV,BAZOI,1

No need for more Govt. involvment.

Our supplier, E.On, offers penalty-free switches to lower-priced tariffs within their own tariff menu as they become available [which, as Malcolm, says has become fairly frequent lately], so it isn’t always necessary to switch to a diffferent company to get a better rate. If an alternative company’s prices are so much better, then E.On’s exit penalty of £5 per fuel is hardly a deal-breaker anyway. One consequence of switching internally is that a new contract period starts immediately putting off the day when you can make a penalty-free exit.

I agree with Beryl that at the moment there is a case for encouraging people to switch because that is the best way to make competition effective. But since energy is an essential commodity we should be at ease over it and not have to keep worrying about fractional movements in prices and changing suppliers all the time – switching is costing the industry millions of pounds a year and we’re all paying for it. Ofgem has made a useful start on consumer-biased regulation by rationalising and harmonising the tariff structures to make comparisons easier. In fact comparison websites are becoming less relevant as the myriad of tariff types has been drastically boiled down.

I saw an interesting breakdown of “the costs that make up energy bills” on a friend’s recent statement from SSE as follows: Buying the energy 52%, delivering it 24%, govt. environmental & social schemes 8%, billing, customer services & IT 6%, VAT 5%, and supply business profit 5%. So the reduction in global market prices for oil and LPG bears on only half the bill. And as has been seen recently, EDF customers won’t see much benefit because that company made a price promise to customers that anticipated increases rather than reductions in input costs. EDF entered into forward procurement contracts that looked very good at the time but have now been overtaken by falling world prices which cannot be passed through to customers [who are said to switching in droves].

Sometime around the end of May-early June the government, whoever they are, will have to give consideration to how to compensate for the fall in VAT revenues from lower energy bills and lower prices on other goods and services. Savings on the government’s own energy consumption and other purchasing won’t offset much of it so some cunning book-balancing required. I would expect it to be wrapped up with increased reliefs to the offshore oil and gas industry and putatively funded from economic growth resulting from lower input costs for industry and commerce [to the extent that that isn’t all absorbed in countering the impact of devaluation in the Eurozone].

John, Ofgem publish, monthly, an SMI (Supply Market Indicator) that shows, in an average domestic energy bill, how an average major supplier’s charges are made up. 44% gas and electricity, 23% network (transmission),7% environmental and social, 13% supplier operating,

It is estimated that “environmental and social obligations” cost us £93 – perhaps these should be funded elsewhere?

More importantly it shows that the pre-tax margin the supplier makes has increased from 3.9% in 2013 to an estimated 6% last year and a predicted 9.6% this year – that is a 2 1/2 times increase in % margin. As it is an average clearly some will make more than this. That, to me, seems an overgenerous increase in return at our expense. Should not Ofgem be stepping in here to protect consumers?

If environmental and social costs were transferred elsewhere, then the same should apply to standing charges. It’s not difficult to see that standing charges bear little relation to the actual cost of supplying gas and electricity to an individual home.

At present, those who cannot afford to heat their homes adequately are subsidising those who are heavy users of energy, for whatever reason.

Environmental and social costs are a form of tax. Standing charges should represent the fixed costs directly associated with supplying you and opersating your energy account. It costs your energy supplier to provide their operating infrastructure, reading your meter, preparing your bill, etc – these are costs that are not related to your consumption. It costs just the same to operate a high user account as a low user.

I want to see these fixed costs monitored and approved by Ofgem, kept to a minimum, and kept separate in your bill. I do not want to see vulnerable users, or any users for that matter, whether high or low, paying more in “fixed costs” than they should.

I regret the abolition of the two-tier tariff. The first units were at a higher cost than the later ones. This at least gave a choice in how we paid the standing charge, and did of course mean some low users were not paying the full cost of operating their account. But it also meant high users only paid up to a limit – not continuing to pay more than a fair share.

Not only are the standing charges hurting the most disadvantaged people but it’s not difficult to see that they do not relate to the costs of maintaining supplies to properties. Compare, for example, the standing charges for supplying property in isolated rural areas with those for recent properties in built-up areas. I have done this, albeit a few years ago.

I have to agree that there is a huge inequity in the way these services are charged. There are differentials in that certain companies ‘own and maintain’ the supply infrastructure in different areas. For example, my area is maintained by SSE, so my supplier, CooperativeEnergy, has different pricing for my area than say someone in Wales where the infrastructure is maintained by SWALEC.

However, I don’t see any transparency in the pricing. I’d like to see a true breakdown of the transmission charges, but I won’t hold my breath as I don’t believe that anyone actually knows the true costs. The transcos are able to determine their overall annual costs which they then divide up using some method (probably sticking a wet finger in the air) to divide it amongst home and business customers depending on the capacity of the supply line.

Do they add a percentage for the estimated following year’s investment? I bet we pay for much more than just the maintenance.

terfar, the transmission companies charges are regulated by Ofgem. Whether that gives a fair outcome I don’t know.
https://www.ofgem.gov.uk/electricity/transmission-networks/network-price-controls

When prices go up, so the ‘percentage profit’ increases in proportion to the price rise. When the prices fall, they ensure that the ‘enhanced’ profit doesn’t fall by increasing their margin and not passing on the full fall. That’s why we lose whether it is an increase or decrease in wholesale prices.

I would like to see high users contributing more towards energy costs and so would many who care about the environment. Anyone who is struggling with their bills should be eligible for means-tested benefit. If they are living in a large, poorly insulated house there are various possible solutions.

Many people who have planned carefully for their retirement have been let down by failure of pension schemes, rising prices for food, rent and transport. State pensions are not generous and the goal posts have been moved regarding retirement age, especially for women. Some have been unable to plan because of their own health or family problems.

What I am pushing for is simple unit pricing, as supported by the Which? campaign. What I would prefer is for standing charges to be funded from taxation, which might help towards resolving the big imbalance between the poor and the wealthy in the UK.