UK Energy Price Cuts Should Have Been Sooner and Larger
Energy prices in the UK are a contentious issue. Many people’s bills reached levels that they could no longer afford in a time of austerity. Recent cuts in energy bills may have been a welcome relief for some. But they could have been much bigger, according to the consumer body Which?. The report found that the cuts could have happened earlier, as well as being more substantial. It also discovered that energy suppliers had failed to keep prices in line with falling wholesale prices over the last two years.
Because standard variable energy tariffs haven’t been matched to wholesale prices, households on these tariffs were £145 worse off last year. This amount per family adds up to a significant sum of £2.9 billion. The consumer body looked at wholesale costs since 2013 and compared them to what people were paying for them with their energy bills. Which? revealed that they could see no reason for the increase in gas and electricity prices in late 2013.
They also suggest that the recent cuts of 5.1% to standard gas tariffs on the Big Six suppliers (including SSE, E.On, and EDF) should have been significantly higher. They put forward a number of between 8.8% to 10.3% to put bills in line with wholesale costs. This would amount to a decrease of between £777 million and £907 million per annum to households on standard tariffs. Some consumers are turning away from the larger energy providers, looking for a better deal. They can find better prices and customer service when they’re trying to fix a First Utility Problem or issue with another smaller provider. In addition to Which?’s suggestions for reducing gas prices, Which? also believe that electricity costs should be cut by up to 10% for people on standard tariffs. This measure would save consumers £1.6 billion a year.
Richard Lloyd, Which? executive director, said: “Our analysis places a massive question mark over how suppliers have been setting prices over the last two years. They now need to explain to their customers why bills don’t fall further in response to dropping wholesale prices. Energy bills are consistently the top consumer concern, so it’s about time people got a fair deal.”
The consumer body has sent their report to the ongoing Competition and Markets Authority‘s investigation into the energy market. They have also submitted it to HM Treasury for its recently announce inquiry. Lloyd said: “Consumers will now look to politicians of every party to set out how they’ll deliver fair and affordable energy prices in the future.”
Statistics from the Which? Consumer Insight Tracker show that energy prices are the top financial worry for consumers in the UK. Their Fair Energy Prices campaign calls on the Competition and Markets Authority to investigate the best way for the regulator to establish a ‘price to beat’. They also want suppliers to use simple and directly comparable pricing.
Hopefully, investigations into the UK energy market will result in a better deal for consumers. But only time will tell if there will be positive results.