Huhne calls for consumers to switch energy suppliers

 

Chris Huhne: "Consumers can know that they will get the fair deal as well"

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Energy Secretary Chris Huhne has said that people have to check that they are on the cheapest available energy tariff and whether they could save money by paying by direct debit.

He was speaking after a summit with the six biggest power firms, consumer groups and regulator Ofgem.

The summit discussed whether bills were higher because of lack of competition.

The prime minister said that the government needed to work "harder and faster" to bring down energy bills.

David Cameron called for a "trusted, simple and transparent" market.

"We should be checking to see whether or not we're on the cheapest tariff," Mr Huhne said after the summit.

"We should be switching if we're not on the cheapest tariff and taking the opportunity ahead of this winter to really make sure that we're insulating so that we can save money."

'Inconvenient truth'

David Cameron: "We need to make sure that the energy market is competitive"

British Gas, Scottish Power, Npower and EDF have pledged not to raise prices again this winter.

SSE has already said prices will not rise again until August 2012 at the earliest.

However, Phil Bentley, the managing director of British Gas, the UK's biggest domestic energy supplier, warned that prices in the longer term would keep on rising because of the rising cost of gas on the international market.

"We are importing 50% of the gas that comes into Britain and we are having to compete for sources from the Middle East - Japan is importing huge amounts of gas on ships and that was gas that used to come into the UK market," he said.

Analysis

If anybody thought that at the end of today their energy bill was going to come rocketing down, then that absolutely was not the case.

Chris Huhne's argument seemed to be that at the end of the day it's up to us, the consumers, to shop around and we should not expect the government to somehow resolve the issue of high energy prices.

The difficulty is there is a limited number of levers the government can pull because these are private companies - they're not charities.

Chris Huhne has been going around today saying, "They're not the Salvation Army," and that pretty much is the bottom line.

"It is an inconvenient truth that unit prices of energy are going to go up.

"In my opinion unit prices will only go one way unless someone discovers huge amounts of gas and imports it into the UK: the international price for gas I am afraid is going up," Mr Bentley added.

Getting tough

Last month, Labour leader Ed Miliband attacked the "rigged" market in Britain, while Energy Secretary Chris Huhne said he planned to "get tough" with the firms.

Regulator Ofgem has predicted a rise in firms' prospective profit margins from £15 to £125 per customer - figures challenged by the industry.

Ofgem has also announced plans to simplify tariffs in order to allow customers to compare prices more easily.

Last week one firm, SSE, said its power would be sold on the open market rather than going straight to its supply arm.

Experts say if the other five big firms followed suit it could save customers a lot of money.

Reduce wastage

In a joint statement with Mr Huhne on the MoneySavingExpert.com website, Mr Cameron said they could not control volatile world energy prices, "but we can still help people get their bills down".

Ed Miliband: "The energy companies are not giving a good deal, a fair deal"

"The easiest ways to get energy bills down quickly are to get people paying the lowest possible tariffs and to reduce the amount of energy that is wasted," the statement added.

"Our intention is for today's summit to be the start of a much more active engagement with consumers, with us all working harder and faster to deliver an energy market that is trusted, simple and transparent."

But shadow energy secretary Caroline Flint insisted the government's "warm words" wouldn't "heat homes during a bitter winter".

"They're unable to take on vested interests, they won't tackle the spiralling prices imposed by the energy giants, they won't investigate the mis-selling of energy and they won't help the pensioners whose winter fuel payments have been cut," she said.

£1,000 level

The cost of gas and electricity has risen by up to 18% in the past few weeks, with the cheapest dual-fuel deals - for those with online deals - having risen above the £1,000 level for the first time.

This prompted the Department of Energy to call the summit to examine ways in which customers can take action to save money.

But the consumers' association Which? said the meeting should look at more fundamental factors affecting the market.

"We need commitments from suppliers and the government to put an end to practices that harm consumers and action to create a competitive energy market that works for everyone," said executive director Richard Lloyd.

Mike O'Connor, chief executive of watchdog Consumer Focus, said: "Government, energy firms and consumer organisations have a responsibility to make sure that consumers get all the help they need to cut their bills."

Simplification plan

Last week, the regulator, Ofgem, published its simplification plan, which said suppliers would be forced to have no-frills tariffs, which would consist of a standing charge - fixed by the regulator - plus a unit charge for energy used.

It means the only number consumers would have to compare between suppliers would be the unit energy charge.

Ofgem will publish its detailed proposals for consultation next month and hopes to have implemented some of its reforms in time for winter 2012.

A year of energy price rises

Month 2010-11 Company Price rise

Source: Company announcements

November

Scottish Power

Gas: 2% Elec: 8.9%

December

Scottish & Southern

Gas: 9.4%

British Gas

Gas: 7% Elec:7%

January

Npower

Gas & Elec: 5.1%

February

E.On

Gas: 3% Elec: 9%

March

EDF

Gas: 6.5% Elec: 7.5%

August

Scottish Power

Gas: 19% Elec: 10%

British Gas

Gas: 18% Elec: 16%

September

Scottish & Southern

Gas: 18% Elec: 11%

E.On

Gas: 18% Elec: 11%

October

Npower

Gas: 15.7% Elec: 7.2%

November

EDF

Gas: 15.4% Elec: 4.5%

 

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  • rate this
    +1

    Comment number 913.

    My combined gas and electric monthly debit has increased by 51.9% since May 2007. We have not increased our energy consumption and have bought newer more energy efficient appliances.
    I keep a close eye on the energy companies deals and tariffs and feel at the moment we have one of the best on offer.

  • rate this
    +19

    Comment number 672.

    I grew up in a large farm house, no double glazing, no central heating and stone floors. No not in the early 1900's but in the 1980's, we survived and today my parents still live there, granted they have central heating now but not in every room. Suppose what i'm trying to say is there is an over use of 'heating' today so maybe individuals could start by looking at there own consumption first.

  • rate this
    +32

    Comment number 516.

    We live in a world that cannot produce enough power from fossil fuels for all 7 billion people to lead lives of luxury. Being cosy and warm 100% of the time all winter long was a luxury 50 years ago and at this rate it will be a luxury again 50 years from now. Investment in renewable energy is the only long-term solution, it's a shame some people are too pig-headed to see it.

  • rate this
    +10

    Comment number 391.

    Lets have transpaency on the Green Tax on our bills to pay for all the wind turbines being erected. I think consumers will be surprised at the amount this is. I have no land so cannot erect a turbine. My property faces wrong way so cannot have PV panels yet i am paying in taxes for the very generous subsidies to anyone fortunate to have land and suitable roof space.

  • rate this
    +66

    Comment number 368.

    As a household we have become evermore efficient in how and when we use energy and still my monthly direct debit continues to rise. We also have a 2.5kW PV system worth a £5 DD reduction according to SP. The price structures are all front loaded, the first few hundred kWh's are the most expensive, the more you use the cheaper it gets. This needs reversing so you are rewarded for efficiency.

 

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