Why you need to shop around for en­ergy deals

Huddersfield Daily Examiner - - FRONT PAGE -

CON­SUMERS should shop around for lower en­ergy prices – and stop wait­ing for oth­ers to take ac­tion on their be­half, says a Hud­der­s­field econ­o­mist.

Kevin Rowles, a se­nior eco­nom­ics lec­turer at the Uni­ver­sity of Hud­der­s­field, said any move by the gov­ern­ment to cap en­ergy tar­iffs would be fraught with prob­lems.

“Over the years, switch­ing en­ergy sup­pli­ers has be­come eas­ier and the com­pa­nies have to sup­ply in­for­ma­tion about com­pet­ing tar­iffs,” he said.

“Con­sumers may sim­ply be un­will­ing to in­ves­ti­gate al­ter­na­tive of­fers and in­deed may be in­clined to wait for oth­ers to take ac­tion on their be­half. As con­sumers, we need to take some re­spon­si­bil­ity for our ac­tions.”

His com­ments fol­low a let­ter from 76 Con­ser­va­tive MPs urg­ing Prime Min­is­ter Theresa May to cap en­ergy prices for 15m house­holds on stan­dard vari­able tar­iffs which they claim are be­ing “preyed on” by the big six en­ergy firms.

Mr Rowles said in­dus­try reg­u­la­tor Ofgem had set a cap re­duc­ing tar­iffs for about 4m house­holds us­ing pre-pay­ment me­ters – often the poor­est house­holds.

“In the elec­tion cam­paign, Mrs May promised to in­tro­duce a cap on ‘un­fair’ price rises to help fam­i­lies on the stan­dard vari­able tar­iffs,” he added. “This was part of the de­sire to as­sist ‘the just about man­ag­ing.’

“Typ­i­cally, cus­tomers pay­ing a stan­dard tar­iff are those who do not shop around or use the price com­par­i­son web­sites.”

Mr Rowles said Ofgem had ar­gued that the gov­ern­ment would need to leg­is­late to widen the scope of any price cap – or face pos­si­ble le­gal ac­tion from sup­pli­ers to pro­tect their com­mer­cial in­ter­ests.

While the gov­ern­ment might seek to help con­sumers at a time of fall­ing in­comes, it also needed in­vest­ment in the en­ergy sec­tor to safe­guard sup­plies in the fu­ture and pro­mote en­ergy ef­fi­ciency to meet cli­mate change goals.

“The gov­ern­ment it­self has con­trib­uted to the rise in en­ergy prices through var­i­ous en­vi­ron­men­tal pro­grammes that have been met by rais­ing en­ergy tar­iffs,” he said.

Mr Rowles said: “En­ergy prices in Bri­tain are not high by Euro­pean stan­dards, which would sug­gest that a wider cap will be paid for by higher tar­iffs for those con­sumers who shop around.

“It is also the case that there are other in­dus­tries where loy­alty to a par­tic­u­lar sup­plier is not re­warded. In­sur­ance, fi­nan­cial ser­vices and even su­per­mar­kets give the best deals to those cus­tomers who are pre­pared to take their busi­ness else­where.”

And he warned that in­ter­fer­ence in free mar­kets “usu­ally comes at a price”.

“Whilst some pro­tec­tions for the most vul­ner­a­ble con­sumers such as those on pre-pay­ment me­ters may be jus­ti­fied on dis­tri­bu­tion grounds, wider in­ter­fer­ence must be treated more care­fully to en­sure that costs do not oc­cur else­where in the econ­omy.”

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