Britain’s Big Six energy suppliers under fire (again) as ‘prices rise like rockets, but (still) fall like leaves’

Big Six logo montageOne of the major issues of ‘trust and transparency’ between consumers and providers of UK energy supplies is when ‘prices rise like rockets, but fall like leaves’.

The legacy of the UK Big Six de-nationalisation is that millions of UK consumers believe that these vertically-integrated suppliers continue to operate as oligopolies against the public interest in terms of competition (or absence thereof) in delivering the lowest possible prices.

The issue has come to the fore in recent weeks as the enduring slump in crude oil and gas prices has deepened. Whilst this has resulted in lower prices for refined goods (eg petrol and diesel) this has not happened as far as contingent goods (ie prices for household energy supplies).

Consequently, energy companies are being accused of overcharging customers, with bills failing to match dropping wholesale energy costs. With the ‘hidden commission’ of around £60 per dual fuel deal that is paid to the switching sites when people move supplier, customers are facing a dilemma.

David Hunter, energy industry analyst with Schneider Electric, explained: With the exception of British Gas, the UK’s Big Six have kept electricity and gas tariffs stagnant for two years.

“Ofgem has called out suppliers for overcharging customers. However, its suspension of ‘supply market indicators’ that revealed supplier margins every fortnight, means the Big Six are getting windfalls from the wholesale price drop under the radar.

“Households have been prompted to find energy cost savings by shopping around for better prices. However, hidden commissions on comparison sites of £60 per dual fuel deal mean customers are being caught between the hammer and anvil. Energy cost transparency is absolutely key to instigating a change in the market and fairer energy pricing.

“Fuel prices on the other hand have fallen sharply as a direct result of the drop in crude oil value – the lowest it’s been in 12 years. These savings have largely been passed through to customers. Yet the same hasn’t happened for network energy. 

“Fuel costs aren’t going to stay low forever, but if energy suppliers can’t reduce their prices now, when can they? We’ve enjoyed a mild winter so customers have used less gas than expected but the cold weather is setting in and the UK is going to feel the pinch.”

A spokesman for Energy UK – which, inter alia represents the Big Six and other suppliers – said: “There are now 34 suppliers operating in the market and there are deals and services to suit every customer so it pays to shop around. Almost four million people switched in 2015 and 338,253 in December showing that it is now quicker and easier for customers to switch.”

“Customer service is very important for energy suppliers. Companies work hard to get things right and, when things do go wrong, most complaints are dealt with by the end of the next working day. The majority of complaints are about billing and the roll-out of smart meters will improve this.”

Meanwhile, December 2015 saw 338,253 electricity switches by UK consumers, which is above average for the year.

The latest electricity switching data also shows a net gain of 100,904 for small and mid-tier suppliers, which is around 30% of all switches for the month.

Lawrence Slade, Chief Executive, Energy UK, said: “2015 was another successful year for switching, with over 3.8 million switching to new providers beating both 2013 and 2014.

“Industry and government have made strides towards making switching simpler and quicker. Customers have become more engaged in switching and are shopping around to find the best deal for them.”

 

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