Which? calls on government to break up Big Six
Moves to transform Britain's energy market are growing as the backlash against the Big Six's winter energy price rises gathers pace. One energy expert says the country is now "at crisis point".
Consumer rights group Which? has today written to chancellor George Osborne, demanding the government step in and chop up the Big Six energy suppliers into smaller entities and cut the cost of government energy policies.
The demands come as a survey by uSwitch revealed that eight in ten households - up to 22 million – will be rationing their energy use this winter.
uSwitch says the price hikes announced to date (by four of the Big Six) will take bills to £1,434 a year – but if they rise to £1,500 a year, 59% of households would go without adequate heating and 36% would be forced to turn their heating off entirely.
In today's letter to Osborne, Richard Lloyd, Which? executive director, states: "Last week four in 10 told us they can't reduce energy use any further as they have already cut down as much as they can. And three in ten don't know how they will afford to heat their homes this winter.
"British Gas told us that their price rise meant around only £2 a week extra, but the average household is only able to save just over double that - £5.20 per week - so that £2 halves what people can put away for a rainy day.
"People need your help - and they need it now."
Which? wants Osborne to act in his forthcoming Autumn statement, by separating energy generation from supply, which would help keep costs down and boost competition. It always wants the government to revamp its energy efficiency obligations, for example scrapping the roll-out of smart meters, which Lloyd says is "a £12bn luxury we cannot currently afford."
SSE, British Gas, Scottish Power and nPower have all announced price rises of up to 11% in gas and electricity in the last few weeks, with only E.On and EDF Energy to come.
Ofgem figures indicate there is a discrepancy between the movement of wholesale gas prices and the increases in prices charged to consumers by the Big Six energy firms. For example, according to Ofgem, the average wholesale price fell by 4% to £57.32 in 2011 and rose by just 2% to £58.39 in 2012. But in those years, nPower increased its retail prices by 7.2% and 9.1% respectively.
Turn down and switch off
Ann Robinson, director of consumer policy at uSwitch.com, says: "When it comes to affordable energy the country is at crisis point. Consumers are being forced to turn down and switch off in an attempt to shield themselves from the impact of higher fuel bills. This winter we will be seeing even more going without adequate heating for fear of racking up a bill they cannot afford – this is the grim reality for many households in Britain today."
Representatives from the Big Six energy firms are due to appear before MPs today to explain why they are increasing prices by up to four times the rate of inflation.
- If you were an MP at today's energy hearings, what would you ask the bosses of the UK's Big Six energy firms?
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).