Business

Huhne calls for consumers to switch energy suppliers

  • 17 October 2011
  • From the section Business
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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'

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.

"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".

"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.

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