Britain’s new energy secretary Amber Rudd is putting more pressure on the major energy suppliers in the UK about whether their prices are reflecting companies’ costs.
With the threat of a price freeze now a distant memory with the defeat of Labour in the election, is there now the opportunity to look again at energy tariffs? Amber Rudd sees no reason why the ‘big six’ cannot breathe easy, and pass on benefits to their loyal customers. Bearing in mind that a lot of the energy was purchased at a time when world oil prices were at an all-time low.
The energy secretary has written to the “big six” suppliers to put the suggestion that they are not going far enough in handing on company profits.
One of the big six, SSE has reported a 40% rise in profits, despite actually losing around 500,000 customers during the course of one year, to smaller more competitive tariffs. They have implemented two price cuts and a freeze until July 2016, but even this does not seem enough for the government, who say it does not reflect falls in wholesale costs. There is a case for the Competition Authority (CMA), who have been investigating since last summer, to step in and force the energy firms to make energy bills far fairer.
Analysis by regulator Ofgem suggests that companies could easily increase their profit margins to £118 per customer on an annual dual-fuel deal this year, and still give the customers a discount.
Between January and April, 2015, the big six have reduced gas energy bills by between 1.3% and 5% depending on the individual company. However, campaigners say this did not reflect falls in wholesale costs, which are £80 lower than in the year previous.
Over the two year period 2012 to 2014 it has been estimated that up to 95% of dual-fuel customers with the main suppliers would have saved serious money if they had switched tariffs. The savings they missed out on could have been as much as £234 a year per customer. With the trend for switching becoming far more prevalent, the larger companies can ill afford to alienate their customer base.
Consumer analysts have said that the firms had “run out of excuses” and need to regain the trust of the public, for failing to reduce costs further. In defence the energy companies complain that they have to take into account that it is an excessively competitive market, and they cannot just slash prices.
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