Tuesday, 18 October 2011

"Neville" Huhne what a hero.

Yesterdays summit with Prime Minster Dsvid Cameron Energy secretary Chris Hunhe the six biggest power firms, consumer groups and regulator Ofgem. Resulted in the expected spin in which everyone said something should be done to reduce prices especially to the most vulnerable. But showed that since privatisation Governments of all colours are impotent, or more accurately haven't the stomach to do anything about it .

Huhne response was for people have to check that they are on the cheapest available energy tariff and whether they could save money by paying by direct debit.

What about the poorest members of society who can't afford the risk of a direct debit bill leading them into the Black and therefore finding themselves accumulating Bank Charges?
What about those who are forced to reduce their energy use to the extent that they find that any savings are minimal. A 5% saving on £2000 is £100 but on £500 is £25 still are saving it might be lost in the process of switching .
Who actually can understand the Tariffs and how to work out whether paying a standard charge and less for the units and simply paying for the units?

David Cameron may call for a "trusted, simple and transparent" market. as Labour's Shadow Energy Minister Caroline Flint does . But why doesn't he legislate for it and why didn't Labour do so when in power

What we have is the three major parties giving the impression that they reconise the problem but are so in thrall to the "Free Enterprise Thatcher" concept that they are unwilling to come up with a real plan.

There are some simple things that can be done.

  • All utility companies should bill customers on the use of units only so people can easily see what they are using and the price charged
  • All bills payed quarterly should have no increases during that period and people should then be able to immediately and easily switch at the end of that quarter.
  • Utility companies should provide customers with information on tier profits and dividends payed to share holders
  • All companies should provide a yearly summary bill to customers showing the units used that year and the total bill charged. Banks should give customers a period of grace (say a month) on direct debits from utility suppliers to allow people to add funds and not occur bank charges.
I bet not one of those at the summit will be basically living in one room over the Winter as they seek to reduce their usage and look with dread for their quarterly bill or are constantly .checking their meter if they are on a Pay as You Go Tarrif

Words are not enough and Huhne's call for people to simply switch, shows that he hasn't a clue how ordinary people are struggling to pay their bills. 


  1. Annual statements are now standard, and include details of what was used last year and how much it cost and projected usage for the next year and how much it will cost at the tariff that the customer is on or will be on (if a fixed rate ends during the next year or part way through it) - so one of those items is in place already.

    Instant switching can't happen due to the need to exchange technical metering information and other reasons, Switching includes several elements:
    1 - Cool Off - everyone has a 14 day period from agreeing a contract by phone in which to cancel. The other supplier is not notified until that cool off period ends.
    2. A 14 day period where the existing supplier can object to an account leaving. The only remaining reason that a person can be prevented from leaving is debt, which is a safeguard for the customer as without it they could potentially face a large and immediate bill.
    3. A 14 day period of exchange of technical information on the meter and meter readings.

    28 days is the quickest possible time for a transfer, more commonly about 6 weeks.

    And that is between the Big 6 - smaller companies may be slower, and worse if your local gas network is managed by one of the several independent gas transporters, this can slow things down again.

    Pay as you go tariff for the Big 6 is now the same as cash cheque quarterly tariff.

    Companies at the moment can either charge you a fixed standing charge and a single unit rate, or they can have a two tiered rate structure with a certain number of units at a higher rate and the remainder at a lower rate. This is because the standing charge/Higher rate initial units pay for the transmission costs, which are fixed per supply and are charged to the suppliers by the local gas and electricity distributors. You abolish the standing charge/initial units charge and you have to increase the rest of the units to compensate - and as distributors put up their charges to the energy suppliers so the single charge will rise.

    Currently the big six suppliers have to give 28 days notice of any increase, and if customers notify their suppliers that they are switching then they have their tariff frozen until they switch (providing the incoming supplier notify the outgoing supplier that the switch is going ahead).

    Even if you eliminate all profit (which would prevent the funding of the improvements we have to make the the generating and distribution of gas and electricity) then you would only have a small reduction in the actual price to customers.

    The question is how do you get private companies who have to make a profit for investment and for payment of their shareholders to sell gas and electricity below cost price. The only method is to subsidise through taxation, likewise if we nationalised the industry we would still be paying much the same as we are now.

  2. Cibwr,
    I'm sure you are right but I've never seen a yearly statement and I still contend that abolishing the standard charge would make the tariffs more transparent and therefore more competitive. I don't think that it is not beyond reason to treat standing Charges for utility bills as I suggested.

    Whatever your viewpoint on how much profit the companies are making it is clear that a substantial proportion of the population cant afford it and we must find a way of reducing costs.