Energy companies face biggest storm over prices but calm action is needed to help reduce consumption

Ofgem graph showing difference between UK wholesale energy prices and average dual-fuel bill

We’re watching this week as energy companies face the biggest storm over prices – but calm action is needed right now to help businesses and consumers manage their energy better.

We’ve talked a lot this year about why the team here at SaveMoneyCutCarbon believe in government action, through a National Simple Savings Steps Programme. The urgency is even greater after this week’s developments.

Breaking up is hard to do … but it looks as though the energy market in the UK will suffer the confusion and expense of a state-mandated separation between generation and distribution. National action on energy saving can cut through this confusion and make a big difference to the rising energy bills facing companies and people throughout the country.

The move this week means that “The Big Six” energy companies that dominate the UK market – Centrica-owned British Gas, French company EDF Energy, E.ON UK, Germany-owned npower, Scottish Power and SSE will now be embroiled in a possibly lengthy tussle with government over the terms of separation.

Breaking up the market has been fuelled by the fact that four of the Bix Six have raised energy prices this month by at least three times the rate of inflation.

And the chief executive of E.ON, Tony Cocker told MPs on the Energy and Climate Change Committee yesterday (October 29th) that there should be an inquiry into the whole energy market, echoing a similar call earlier this month from another Big Sixer, EDF Energy. While we await the terms and conditions of engagement in this epic battle, Andrew Wright, the acting head of the regulator, Ofgem, advises that competition in the market will be fully examined in a review due out in around six months – Spring 2014.

The nub of the problem is that, according to Ofgem, wholesale energy prices have risen by less than the rate of inflation with electricity and gas rising by just 1.7% in the past year. The regulator calculates that the net effect of wholesale gas prices on a household bill should be just £10 extra on a bill of £600.

Of course, the energy companies argue that wholesale prices are not the only cost, citing green-energy charges and infrastructural investment. That certainly is a factor, as is the pressing need to create more generation facilities. The issue is over the co-ownership of generation facilities by the Big Six and the feeling that this is not healthy in market terms.

While the energy companies and government battle it out, there is nothing to be lost at all by backing the National Simple Savings Steps Programme. Everyone benefits, from the hard-pressed consumer to companies struggling to contain costs and the energy firms whose generation plants are creaking under the strain of demand.

If you want to know how to slash your energy bills, save water costs, and reduce your carbon footprint, why not call us on 0333 123 5464.



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