The Scottish Mail on Sunday

Use the power to dump greedy energy giants

- by Jeff Prestridge PERSONAL FINANCE EDITOR jeff.prestridge@mailonsund­ay.co.uk

OLIGOPOLIE­S – as my old school economics teacher used to say – are not good news for consumers. By controllin­g markets, they are able to dictate prices while keeping all but the most tenacious of new competitor­s at bay. Profits boom, shareholde­rs smile and most customers grudgingly accept their lot.

Sadly, horrible oligopolie­s are now part and parcel of everyday financial life. They are prevalent in banking, energy supply, broadband and phones. They have even leaked into the accountanc­y world, raising concerns over the diligence the big auditors now apply to the scrutiny of client businesses. Money for old rope I would say – you could go on a world cruise for the amount a senior partner of an accountanc­y business is charged out at for a mere hour’s work.

Yet it is the big energy suppliers which are currently under the spotlight for their bad oligopolis­tic ways. British Gas has taken the fiercest stick in the wake of its decision to raise dual fuel (gas and electricit­y) bills by an average 5.5 per cent – equivalent to an annual increase of £60 and taking the average household bill to £1,161. Some 4.1 million customers are impacted and it follows in the wake of the supplier’s 7.3 per cent price increase last September.

Although British Gas’s move is partly in response to higher wholesale prices and government levies, it has quite rightly been lambasted for profiteeri­ng. Even Energy Minister Claire Perry expressed ‘disappoint­ment’ at the move and suggested customers should switch supplier.

Others described British Gas’s decision as unjustifia­ble and deeply cynical while one price comparison website said it was evidence of a broken market. And yes, we must not forget that Centrica, British Gas’s parent company, is desperate to maintain its reputation in the City by not cutting its dividend payments. Ever-rising standard variable tariffs are a sure fire way of boosting revenues.

Of course, oligopolie­s maintain their grip on markets by working in tandem. So it was no surprise that in the wake of British Gas’s move, EDF decided to announce a 2.7 per cent dual fuel price rise – as well as discrimina­te against cheque or cash payers by imposing on them additional charges. The other big suppliers, bar E.On which increased its prices last month, will follow like lemmings.

The Government is hoping to introduce a price cap on standard variable tariffs this winter. Indeed, as this threat looms ever larger on the horizon, it is likely that British Gas et al will keep pushing prices up. Why? First, to make as much profit from diehard stickers (nonswitche­rs) as they can before the Government pulls up the drawbridge. And secondly, to persuade others to move on to other deals that will not be affected by the price cap.

For households still sitting on a standard variable energy tariff this weekend from one of the Big Six suppliers (British Gas, EDF, E.On, Npower, SSE and Scottish Power), may I suggest you switch soonest. The savings you can make are just too good to miss out on.

According to experts at price comparison website energyhelp­line, annual savings of at least £300 can be made by getting shot of a standard variable tariff in favour of a fixed deal. You may have to turn to a supplier that you have never heard of before – the likes of Avro Energy, Outfox the Market and Utility Point – and you will probably have to set up a direct debit. But it will be worth it. Money for old rope.

Sadly, these horrible oligopolie­s are now part and parcel of everyday financial life

NAUGHTY ICICI Bank. It is currently advertisin­g HiSAVE Bonus Saver as offering an annual equivalent rate of interest of 1.35 per cent.

This AER figure is meant to show savers what they will earn if they leave their money in the account for the next year. But no one opening this account today will enjoy such a rate.

This is because the bonus part of the offering – 0.7 per cent – only lasts until the end of January next year. Thereafter, the rate becomes 0.65 per cent. So, if you had opened an account at the end of last month and ran with it for a year, you would receive 1.23 per cent, not 1.35 per cent. Open it today and you would get 1.21 per cent.

It is for this reason that rates scrutineer Savings Champion has excluded the account from the ‘Best rates for your savings’ table (page 62). A wise decision. Naughty ICICI Bank.

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