THE temperature outside may still be disappointingly cool, but following yesterday’s announcement by British Gas that it will raise its electricity prices by some 12.5 per cent, the political debate over energy is hotting up this summer.
More than three million customers will be affected by the move, which will see the typical household’s average annual dual-fuel bill rise by £76 to £1,120.
Centrica, the company that owns British Gas, had its excuses for the price hike ready: wholesale prices may have gone down, it admitted, but transmission and distribution costs, as well as the cost of implementing government policies, were all on the up. The company also pointed out that it would give the most vulnerable customers £76 to cover the cost.
The Government was having none of it, however, and hit back immediately, criticising the rise and denying its policies were to responsible. It was also quick to point the finger at Ofgem, the regulator, for slow progress on action to protect consumers.
So, who should we believe? And does it really matter who is to blame when, as one energy insider put it, UK domestic prices simply “rise like a rocket but fall like a feather?”
One thing we do know is that the UK’s domestic energy market is a complicated, confusing mess, with consumers unsure and or apathetic about where and how to get the best deal from the myriad of tariffs offered by the plethora of companies. And while energy costs go up, stagnant wages continue to make it harder for many to pay their bills.
There is little doubt the Big Six energy companies – British Gas, Scottish Power, EDF, SSE Npower and E.on – have used privatisation to boost their profits through higher prices and Government subsidies. A landmark report by the Competition and Markets Authority last year said as much.
But successive Governments are also to blame for doing little to regulate them, continually burying their heads in the sand despite being warned about serious failings in the industry for years, many of which hit the poor hardest. Meanwhile, Theresa May’s decision to scrap her election pledge to cap energy prices – for some the only eye-catching policy in the recent Tory manifesto – highlights that politicians still find it tough to go up against big business.
But it should also be noted that despite significant publicity on the need to shop around for the best energy tariff, only around a third of us have bothered to switch supplier. And that means the majority of the remaining two thirds are probably paying more than they need to.
With this in mind, perhaps those of us who haven’t yet checked to see whether we are on the best possible tariff should use this latest price hike as an opportunity to do just that, whether we buy our electricity from British Gas or not.
As for the Government, it’s surely time for Mrs May to stick by her pledge, delivered on the steps of Downing Street a year ago, to give direct help to those who “can just about manage”.
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