David Cameron writes for MSE on his plans to help on energy bills

sharrison01

I seem to have turned up a bit late to this debate so without having read all of the posts please forgive me if I am repeating someone else's sentiments!

Surely one of the simplest changes that needs making and one that will solve a lot of the problems is that of removing tiered pricing. The way that energy is currently priced is at a high rate for a set number of units used and then a lower rate after that. This makes deciphering the best tariff confusing and difficult, actually penalises those that are frugal with their energy and means that a mansion with the heating on 24/7 is relatively paying less than a bedsit with two hours of heating a day.

Making every energy company change to a fixed price regardless of how much you use would mean that you would simply have to look at how much they are all charging to see which is cheapest and this would then create a price war because more people changing makes competition for business more fierce. The counter argument from the energy companies that it would be more difficult to differentiate between companies can be negated by the fact that they can be competitive by offering different plans that will be pretty similar to mortgages (capped, fixed, variable, tracker). People might also choose one energy company over another because of their commitment to reducing emissions or ethical behaviour which would also serve the purpose of improving self regulation.

As I said this may have already been mentioned and seems like a very simple change for a really big impact. The cynic in me thinks that the carrot of a position on the board of an energy company for the politicians responsible for regulating energy would be a good example of how Cameron et al could be persuaded to do even less than this simple change.

undaunted

darkrev wrote: »

-I'm still in fuel poverty from last wintet so can't change supplier.

This is probably the biggest barrier out there to many people changing & I thinks it's disgraceful & quite possibly unlawful that disadvantaged customers are peanlised in this fashion.

There is no correlation between debt for previous supply & your future supply. What are Cameron, Hune or Ofgem going to do about it I wonder?

Personally it all sounds like nothing more than window dressing to me (there's nothing there in black & white that will definitely cut anyones bills as far as I can see)

Cardew

undaunted wrote: »

This is probably the biggest barrier out there to many people changing & I thinks it's disgraceful & quite possibly unlawful that disadvantaged customers are peanlised in this fashion.

There is no correlation between debt for previous supply & your future supply. What are Cameron, Hune or Ofgem going to do about it I wonder?

Personally it all sounds like nothing more than window dressing to me (there's nothing there in black & white that will definitely cut anyones bills as far as I can see)

So what do you suggest should happen?

Allow people to run up large debts with one company and leave owing that money?

Then move to another company and repeat that cycle? and again and again?

Companies who offer their customers credit terms, which is exactly what non PPM tariffs are, will obviously credit check their customers(that applies to all firms - not just Energy companies)

The people who can't, or won't, pay their energy bills will not, and should not, be allowed to move as the losing company will never get their money in many cases. They could move from company to company leaving a trail of unpaid bills.

The proposed gaining company will not, and should not, be forced to take on customers with a poor credit record(which includes defaulting on their gas/electricity payments)

spiderman46

The energy companies should be forced to have only one tariff for gas and one for electricity to simplify things, and so that low users do not subsidise high users they then can compete on a level playing field, or renationalise the whole lot.

lynzpower

Government minister Huhne has told the Commons he backs a motion - attacking Government cuts

In a debate a on electricity and gas prices today, Chris Huhne said “there is nothing we disagree with” in a Labour motion.

But the motion attacks Government cuts which will leave millions struggling to heat their homes and calls for urgent reform of the energy market.

Caroline Flint MP, Labour's Shadow Energy & Climate Change Secretary said:

“Chris Huhne’s position today was ludicrous.

"His announcement shows that the Tory-led Government are losing the argument and Labour is setting the terms of the debate on energy prices.

“Huhne caused obvious upset among Tory MPs by accepting our motion which said “...with a cold winter forecast and government support cut millions of families will struggle to heat their homes;”

“The motion also called on the energy companies to use some of their profits to reduce energy bills.

“Just a few weeks ago, the Government were so out of touch that they attacked Labour’s proposals to tackle the energy giants, to end the dominance of the Big 6, and to address these shocking price rises when people are having their living standards squeezed from all sides.

“After the failed ‘Energy Summit’, the Government are back peddling so fast – stunned by the public anger at their failure to stand up to these vested interests. Today, the Government are all over the place, and Labour is writing Government policy. It is clear as day that Ed Miliband is showing the leadership on this issue, not the Government.”

“Now we need the Tory-led Government to end the warm words and stop the gimmicks, and take some real action to bring down energy prices. Anything less will be a betrayal of the public. ”

This the Labours take on it. http://www.labour.org.uk/huhne-backs-motion-attacking-government-cuts,2011-10-19

magyar

spiderman46 wrote: »

The energy companies should be forced to have only one tariff for gas and one for electricity to simplify things, and so that low users do not subsidise high users they then can compete on a level playing field, or renationalise the whole lot.

I don't agree. I think you can have complex tariffs - as many as you like - but the important thing is that all companies should have the same ones. So in other words, Ofgem should set the tariff structures, then people can choose what they like.

The analogy is with buying a new car. You can buy the basic model but then literally thousands of permutations of extras, paint schemes and so on.

As long as I can go to six dealers and ask them to quote for the same car, it doesn't matter how complex it is - I can be sure I'm going with the cheapest.

lynzpower

The analogy is with buying a new car. You can buy the basic model but then literally thousands of permutations of extras, paint schemes and so on.

Could you explain more?

Eg) I am on prepay gas: the costs vary depending on who you go with.

Yet the product is exactly the same. Its gas.

magyar

lynzpower wrote: »

Could you explain more?

Eg) I am on prepay gas: the costs vary depending on who you go with.

Yet the product is exactly the same. Its gas.

It's not about the product it's about the terms. So for example, compare products:

1) Standing charge £1.50/day, electricity 12p/kWh for the first 2000 units, then 8.2p/kWh, gas 7p/kWh for the first 6000 units then 4.6p/kWh, £60 per annum dual fuel discount paid on 1st anniversary, £5/month direct debit discount. Terms fixed for 2 years following which you go onto standard tariff.

1) No standing charge, electricity 13p/kWh for the first 1500 units, then 7.8p/kWh, gas 8.1p/kWh for the first 5000 units then 5.1p/kWh, £5 per month dual fuel discount, £2/month direct debit discount. Terms fixed for 5 years, exit penalty £100.

It's impossible. Or very hard, anyway. Even if you know your consumption accurately (which most people don't) and use a comparison website, it's very open to fluctuations.

However you could have Ofgem set a number of tariffs, e.g.

- standard tariff, no exit charge, no fix
- 2 yr fixed tariff, first 5000 units at [PRICE], thereafter [120% of PRICE*], no exit fees allowed
- 5 yr fixed tariff (others as 2 yr) but exit fee charged, fixed by Ofgem at £100.

So if Ofgem are setting the tariffs then all the companies are bidding on is PRICE. But this still allows some people to have fixed tariffs if that's what they want.

The final thing I would do is to have a two annual windows for price rises: one in spring and one in autumn, so that people can know that they're on the cheapest price for at least six months.


* note that this is the reverse of what they currently do. Given that we are as a country trying to reduce emissions, having a system whereby low users subsidise high users is madness.

SwanJon

magyar wrote: »

It's not about the product it's about the terms. So for example, compare products:

1) Standing charge £1.50/day, electricity 12p/kWh for the first 2000 units, then 8.2p/kWh, gas 7p/kWh for the first 6000 units then 4.6p/kWh, £60 per annum dual fuel discount paid on 1st anniversary, £5/month direct debit discount. Terms fixed for 2 years following which you go onto standard tariff.

1) No standing charge, electricity 13p/kWh for the first 1500 units, then 7.8p/kWh, gas 8.1p/kWh for the first 5000 units then 5.1p/kWh, £5 per month dual fuel discount, £2/month direct debit discount. Terms fixed for 5 years, exit penalty £100.

Are either of those based on real tariffs? even vaguely? It looks like you've chosen to create complex tariffs to back up your argument.
Happy to be corrected though.
I'm all for a consistent structure (would make everyone's lives easier) - but most people on here are arguing for no tiers, no standing charges, while Ofgem want standing charges and the low users in the know want tiers.

magyar

SwanJon wrote: »

Are either of those based on real tariffs? even vaguely? It looks like you've chosen to create complex tariffs to back up your argument.
Happy to be corrected though.
I'm all for a consistent structure (would make everyone's lives easier) - but most people on here are arguing for no tiers, no standing charges, while Ofgem want standing charges and the low users in the know want tiers.

I made up the numbers, mainly because I couldn't be bothered to look it up, but both of those structures exist. But if you want a couple of real ones:

npower SOL23 (which I'm on)
Standing charge 28p/day, all electricity 9.555p/kWh, all gas 3.472 kWh electricity discount £42/yr, gas discount £52.50/yr, dual fuel discount £10.50/yr

Scottish Power OES14
No standing charge, first 225kWh electricity each quarter 17.842p/kWh, subsequent electricity 10.248p/kWh, first 670kWh gas used each quarter 6.48p, subsequent gas 2.756p/kWh. Dual fuel discount £16.80/yr, online discount £5.25 for gas, £10.50 for electricity. Cancellation charge £51 (which 'may' be charged)

Now, can anyone who doesn't know pretty much exactly what their usage is work out which one is cheaper? (Or have a degree in maths for that matter).

And that doesn't include fixed, capped, green etc. etc. tariffs.

*edit* - just noticed you say you work for British Gas! Come on, you should know this stuff!