Blog: Don't rely on the government to keep energy prices down

Like the first sign of frost, autumn heralds the tradition of our “big six” energy firms raising prices, just in time for the six months when most people’s gas use quadruples.

Fuel poverty has become even more of an issue in the last six years as utility prices have doubled in that time.

How many people’s income have doubled in that time? Not many, and in the past three years millions of workers have had to suffer a pay freeze.

British Gas and npower price rises

The big news this week has been the announcement of energy price rises from both British Gas and npower.

This follows the announcement in August by SSE that they are raising prices on both fuels which applies from Monday 15th October.

Now, the natural response for consumers should be to check what tariff they are on and switch to a better deal if they can.

Remember, energy bills are now the biggest household bill we receive.

Government help

Earlier this year Chris Huhne, the then Energy Secretary chaired a summit aimed at bringing together all parties to find solutions. It was attended by the regulator, Ofgem, the "big six" energy companies, consumer groups and the Prime Minister David Cameron.

The aim was to promote ways of saving energy, simplify tariffs for consumers and encourage consumers to compare, switch and save.

At the time David Caneron said: "First of all we want to clear up the bewildering array of tariffs and special offers provided by energy companies so people know how to get the best deal. Right now, it's all far too complicated and it's incredibly frustrating."

There have been some improvements to the number of tariffs on offer from some energy firms but the call to action for consumers to switch is still not getting through.

Yesterday, as the latest price increases were announced, the Chancellor, George Osborne said: "We've also got to do everything we can in Britain to try and keep those bills down.

"Partly it is because of things beyond our control - what's happening in the world with oil prices and gas prices.

"But I would urge those energy companies to look again at any increases to see if they are absolutely necessary at a time like this." 

Not exxactly going to have Phil Bentley and his peers quaking in their boots is it.

Why don't we switch?

It is not as if the gas or electricity is prettier from one company than other. It is the same gas and the same pipes no matter who supplies you.

But history shows us that for some reason consumers are happy to bury their heads in the sand and carry on with their current supplier and tariff regardless. Over 50 per cent of households have never switched suppliers.

Millions of households are affected and quite possibly millions more will be if EDF Energy and Scottish Power follow suit, which is widely predicted. Only E.On has said that they will not raise prices before the end of 2012.

The inertia of consumers sends out a worryingly powerful message to the energy companies; that they can carry on raising prices because we are not too bothered about our utility bills continuing to increase.

And these days it is so much easier to do. Comparison sites are not perfect and not all tariffs are on there, but truly, for about 15 minutes of your time, you can check and switch to a better deal and save up to £200 a year. That is a pretty good hourly rate.

Some sites will even give you extra cashback just for saving yourself money and switching.

Compare, switch and save

You can check out one of the many features that do the work for you and present the best energy deals or, and even I admit this is taxing, you can work out your annual usage and plug in the numbers to the tariff rates and standard daily charges to work out exactly how much you would pay for each tariff to ensure you are getting the best deal.

I did this yesterday and admittedly my brain felt quite battered by the end of it, but it is my job, so I have no excuse, but last year when I did it, I found a better deal and saved myself £150 a year. I moved suppliers because I found a deal that worked out the cheapest for me and I saved myself over £100 in annual energy costs.

Energy companies are past masters at explaining away their price rises and they have a point to an extent.

Wholesale costs do go up (they also go down of course), the government is piling on the regulation and environmental requirements that add to their costs and North Sea oil is running out.

We need a revolution in consumer attitudes

But, just like PPI, if enough pressure is put on them and consumers vote with their feet and switch to the best deals, we will see a change in prices.

If 50 per cent of us appear not to be bothered what we are charged then the firms will keep raising prices.

What we need is an autumnal revolution from customers to force the hand of energy suppliers. We can’t rely on the government to help us, so much in the same way as the “shareholder spring” led to high profile resignations and will hopefully lead to changes in executive pay, we need a similar campaign from consumers aimed at energy firms.