Energy News

Big energy price rises hard for consumers to swallow

Wednesday 17th August, 2011

By Martin Fagan - editorial@consumerchoices.co.uk

Energy watchdog says price increases prove energy market in dire need of reform

Following the news that five of the “big six” energy companies are raising their prices, energy watchdog Consumer Focus has called for urgent reforms of the energy market.

Since early June, five of the “big six” - Scottish Power, British Gas, Scottish and Southern Energy (SSE), E.ON and npower - have announced inflation-busting increases in the price of gas and electricity.

Only EDF Energy has yet to raise prices, although there is speculation among industry analysts that this will happen in the very near future.

As the “big six” supplies 99% of UK households with their energy, Consumer Focus believes it is time to consider reforming the energy market.

To make the energy market fairer to consumers, the watchdog has a six-point plan it feels should be urgently adopted :

• A competition review of the structure of the energy market to improve transparency so consumers know if their bills are fair
• Measures to boost the number of new entrants to the retail energy market
• A clear strategy to help consumers cut their bills and help those in fuel poverty, through energy efficiency, smart meters and social assistance schemes
• An immediate end to cold call doorstep energy sales
• An end to complex and confusing tariffs
• The “big six” must treat their customers fairly, from how they market products through to how they treat people who cannot afford to keep warm

“Energy markets may be complex to understand but, for many consumers, they just defy all common sense,” said Adam Scorer, director of external affairs at Consumer Focus.

“Customers didn't feel much benefit when wholesale costs were low but have seen prices rocket when costs have gone up. With wholesale costs around a third lower than their peak, people are understandably questioning whether it is right that customers face all-time high prices.”

Consumer Focus said that although investment in cleaning up the energy supply is essential, it will raise bills even further, and therefore it is even more important that consumers get clear and open pricing.

Energy regulator Ofgem has said it will be putting the “big six” under closer scrutiny to make sure the market is fair, open and competitive.

However, Consumer Focus said that if Ofgem can't guarantee consumers a fair deal, the regulator must recommend that the energy market should be investigated by the Competition Commission.