NOW CUT OUR POWER BILLS
New Energy Secretary warns ‘Big Six’ providers they MUST pass on 20% fall in gas and electricity costs
giant power firms were yesterday ordered to stop making excuses and start cutting household bills. In a declaration of war, the new Energy Secretary Amber Rudd has written to bosses demanding they pass on a 20 per cent fall in wholesale gas and electricity costs.
Before the election the firms insisted they could not make large cuts in case a Labour government crippled them with a price freeze. Despite the Tory victory removing this risk, the ‘Big Six’ suppliers are still refusing to slash bills.
Analysts say there is scope to ease the burden on families by more than £100 a year.
Yet just last week SSE, the UK’s second biggest supplier, reported a 50 per cent rise in profits to £369million. Similarly bumper results are expected from British Gas, Npower, EDF, E.on and Scottish Power.
Suppliers did offer reductions a few weeks ago but these were well short of the fall in wholesale costs and came after the end of winter, when consumption drops.
Miss Rudd’s warning comes amid forecasts of a particularly harsh winter that would hit families in the pocket.
She said: ‘Labour’s price freeze was a theme for why they were unable to reduce prices before the election. Now that threat is no longer there, I intend to keep up the pressure on them to act.
‘My focus is to get the best deal for consumers and the department is working hard
to keep energy bills as low as possible. That is why I have written to energy companies asking them what their plans are to lower bills for hardworking British bill payers.’
Watchdogs are already investigating allegations of profiteering. The Competition & Markets Authority fears millions of customers are penalised for their loyalty by being moved to more costly tariffs.
The industry regulator, Ofgem, estimates that the average profit margin made by the big suppliers has soared 32 per cent over the past year, to an average £120 per household.
Gillian Guy of Citizens Advice said: ‘Energy suppliers can no longer make excuses about prices being high due to the prospect of a price freeze.
‘Firms need to make sure consumers get the benefit of a drop in wholesale prices by passing on savings to customers.
‘We’ve been calling on energy companies to pass on the savings from the drop in wholesale prices so it is good to see the Government putting extra pressure on suppliers.’
The chief executive of German- owned Npower, Paul Massara, used Labour’s freeze pledge to justify his pricing policy.
He said before the election: ‘We are acutely aware that if the Labour party were to implement their proposed price freeze, we will be living with the consequences of our standard rate tariff price for a very long time and beyond the level of risk that we could manage in the wholesale market.’
However the company, which has come under fire for shocking customer service and billing errors, now claims it makes only a small profit per customer.
It said: ‘We constantly monitor all costs, not just wholesale, to ensure customers receive a fair deal. We balance changes in wholesale prices against increases in the other costs the industry are charged.
‘Wholesale costs represent less than half of a typical household energy bill. Npower recently published its annual consolidated segmental statement for the year 2014 which showed a profit of £31 per dual fuel customer.’ None of the other dominant power firms gave any hint they would bow to the Government’s call for lower prices.
SSE said it had cut tariffs and is running a price freeze until 2016. A spokesman added: ‘Providing this peace of mind for customers requires a long-term approach to pricing; however, as ever, if we can cut them again, we will.’ EDF Energy said it kept prices under constant review. It added: ‘EDF Energy buys the majority of the energy that its customers need well in advance – in some cases years ahead – so the majority of the energy that customers are using today does not reflect current movements in wholesale prices.’
Energy UK, which represents the firms, rejected claims of profiteering and said: ‘Energy suppliers work hard to provide good service and value for money to their customers. By shopping around customers can find deals that are both cheaper than this time last year and which match individual circumstances.
‘Our members will be replying to the Secretary of State in due course and the industry as a whole is keen to work constructively with the new government to ensure energy security at a price everyone can afford.’
British Gas declined to comment. Last month, it said its prices were driven by costs and competition, rather than politics.
‘Adding extra pressure’
HOW the Big Six energy companies have changed their tune. Before the election, they protested they couldn’t pass on sharp falls in wholesale prices because they feared Ed Miliband’s price freeze would lock them into ruinously low tariffs.
But now the Labour threat has passed, they offer new excuses for failing to cut our bills, claiming they buy much of their fuel at prices fixed years in advance or that other industry costs are rising.
Meanwhile, profits pour in – up 32 per cent over the past year, says industry regulator Ofgem, to an eye-watering average of £120 per household.
Isn’t the truth that these grasping giants will seize on any spurious pretext to keep bills as high as possible?
To her immense credit, incoming Energy Secretary Amber Rudd has wasted not a moment in writing to the Big Six, demanding tariff cuts without delay.
A welcome declaration of intent – but it will take more than exhortation to drag them into line. We need proper competition in this rigged market – and a regulator with teeth. We’ve heard all the excuses. And they won’t wash.