Which? calls on Government to cut ‘Big Six’ power companies down to size

Which? graphic illustrates dilemma facing Chancellor Osborne on rising fuel pricesWhich? – the London-based consumer pressure group – today calls on Chancellor George Osborne to ‘stand up for consumers’ when he delivers his Autumn Statement in the Westminster parliament on 4 December.

Richard Lloyd, Which? Executive Director, said today: “The Autumn Statement gives the Chancellor the opportunity to do two things that would help the almost 8 in 10 people already worried about energy costs:

  • Cut the Big Six suppliers down to size  to get more competition into the energy market, and
  • Cut the cost of government energy policies that we can’t afford.

“Consumers have been left reeling by the recent round of inflation busting price hikes. Last week 4 in 10 told us they can’t reduce energy use any further as they have already cut down as much as they can. And 30% don’t know how they will afford to heat their homes this winter.

“British Gas – which also owns Scottish Gas – told us that their price rise meant around only £2 a week extra, but the average household is only able to save just over double that – £5.20 per week – so that £2 halves what people can put away for a rainy day.

“People need your help – and they need it now. But we also don’t want to see any drop in the support for the fuel poor. We don’t want to see changes that continue to let suppliers off the hook. And we don’t want to see energy efficiency abandoned – it is too important for keeping costs under control in the long term.”

A spokesman for the Chancellor said: “We welcome this contribution to the debate, and agree that stronger competition is the key to tackling energy bills. The government is working hard to help people with their rising energy bills by improving competition, making the nation’s homes cheaper to heat and providing targeted help for the most vulnerable.

“The Energy Company Obligation helps people to save energy and money on their bills, through prompting energy companies to green-proof their customers’ homes.

“Having warmer and more energy efficient homes, as a result of the Energy Company Obligation, will result in lower energy use, and by default lower energy bills.”

Which?  wants the UK Government to ‘cut the Big Six’ generators ‘down to size’ by:

  • Separating energy generation from supply: wholesale costs are the biggest part of the rises to energy bills that people have faced over the last 10 years. The wholesale market must be made more competitive to help keep prices in check.

Ending the blank cheque for suppliers’ delivery of the Energy Companies Obligation (ECO): they must be held to account for their costs, as we estimate nearly £200m a  year could be saved if they delivered more efficiently.

  • Cutting the cost of Government energy policies: too much is  focused on expensive measures. If the Carbon Savings Obligation prioritised low cost measures instead, it could save between £242m-£363m a year, help at least the same number of households and still meet its carbon targets.
  • Scrapping the carbon floor price: it is an unnecessary burden on consumers that does nothing to incentivise low carbon energy production and increases wholesale costs. This would take in the region of £1 billion off bills next year.
  • Halting the smart meter roll out: it is a £12bn luxury we cannot currently afford. This would save almost £80m a year for two years, and
  • Taking the Warm Home Discount off consumers’ bills, which could cut bills by more than £290m a year.

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