Will sound and fury over energy prices deliver action?
More sound and fury over energy price rises, but will it mount to anything more than another round of switch urging?
Five large energy companies have announced price increases up to 15%, including Scottish Power and SSE. Many of the medium and small companies have also moved to increase prices. Energy bills now account for 10% of spending in the poorest households, compared with just 5.5% in 2004.
The energy regulator Ofgem says there is no basis for this increase because of the way companies hedge increases in costs. Another way of saying that they bring prices down slowly, but put them back up again at the first whiff of an increase in wholesale prices. The CMA report found customers had paid £1.4bn a year in “excessive prices” between 2012 and 2015, with those on standard variable tariffs (70% of the total) paying 11% more for their electricity and 15% more for their gas than customers on other tariffs.
Even pro-market MPs are beginning to recognise that switching isn’t the solution. A Westminster motion this month urged: “Government to consider solutions which recognise that many people lead busy lives where switching their energy supplier may not always be a high priority”.
Conservative MP John Penrose (Weston-super-Mare) talked about the relative price cap idea – a maximum mark-up between each energy firm’s best deal and its default tariff. Even the Prime Minister has said the energy market is not working as she signalled that the government will go beyond encouraging customers to switch suppliers when it publishes its upcoming consumer green paper. She said: “Energy is not a luxury but a necessity of life. It is clear to me that the market is not working as it should.”
The chief executive of Citizens Advice, Gillian Guy, said: “The prime minister is right that the energy market is not working for everyone. Over 2 million low-income families and pensioners in Britain are paying £141 more each year because they remain on their supplier’s standard variable tariffs.” She said the prepayment meter price cap should cut bills for millions when it comes into force in April. “Extending the cap to standard variable tariff customers eligible for the warm homes discount would be an important first step to protecting many more of those who pay over the odds for their gas and electricity.”
Of course we have heard all of this before. The question is, will there be any action next month, or more hand wringing?
- Posted in: energy prices