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Record numbers switched energy provider last year amid price hikes

A record number of people switched energy supplier last year as consumers were hit with the highest number of price hikes in recent history.

However, the energy industry warned that progress risked being undermined by fewer people shifting because of the government’s price cap.

A total of 5.8m households moved to another electricity supplier in 2018, up 6% on 2017, according to Energy UK.

The trade body hailed the figures as a sign consumers are highly engaged in the market, but the high is likely to simply reflect people moving in response to a record 57 price increases as wholesale costs rose.

About 11m households on default tariffs have seen their bills capped since 1 January, narrowing the gap between the best and worst deals to £150-£200, compared with more than £250 previously, according to switching site MoneySuperMarket.

The smaller savings had led the energy regulator to admit that switches may reduce by as much as 40%, which would wipe out the growth in recent years.

Lawrence Slade, chief executive of Energy UK, said: “My hope remains that, with the recent introduction of the price cap, we don’t see this element of competition undermined and switching levels fall, as is predicted in Ofgem’s impact assessment.”

Across the year, a net 1.7 million customers moved to small and mid-sized suppliers, rather than the big six that hold four-fifths of the market.

Small suppliers dominate the top of a new league table of customer satisfaction, with Which? reporting Octopus Energy the best in the market.

Bucking the trend was another small firm, Solarplicity – it came bottom of the consumer group’s ranking which surveyed 8,000 people on suppliers’ value for money, customer service and billing accuracy.

The big six occupied the bottom third of the table, with Scottish Power the worst of the six and SSE the best.

Rachel Reeves, Labour MP and chair of the cross-party business, energy and industrial strategy committee, said: “The Which? survey highlights once again that the big six are miserably failing their customers. Having ripped off loyal customers on SVTs (standard variable tariffs) for far too long, this survey shows that they aren’t delivering a service which is up to scratch either.

“Customers should continue to shop around because they cannot rely on energy suppliers giving consumers a good deal or delivering the quality customer service which they deserve.”

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More people walking away from ‘Big Six’ energy firms

Consumers are increasingly switching to small and medium sized energy providers and shunning the “Big Six”, according to new figures.

One in five customers switched their energy provider in 2018 – an increase of 6% on the previous year.

Data from industry association Energy UK found that 5.8 million changed their supplier last year, or an average of just under half a million each month.

It continues a trend of year-on-year increases in energy switching, Energy UK said, with around 30% – or 1.7 million customers – moving to a small or mid-tier supplier.

Recent research by consumer watchdog Which? found that five small energy suppliers topped the rankings for customer satisfaction.

Octopus Energy came top with a satisfaction score of 80%, closely followed by Robin Hood Energy and So Energy in joint second place with 78% and Ebico and Tonik Energy in joint fourth position on 76%.

But bucking the trend was small supplier Solarplicity – it was the worst energy firm according to its customers, with an overall score of just 44%.

Which? also noted that three small firms – Spark Energy, Extra Energy and Economy Energy – have ceased trading since the survey was carried out, although Spark still operates as a brand name after being taken over by Ovo.

Their results aren’t included but all performed poorly, Which? said.

The Big Six – British Gas, EDF Energy, Eon, Npower, Scottish Power and SSE – were relegated to the bottom third of the rankings.

None received an overall customer score higher than 58%.

Alex Neill, Which? managing director of Home Products and Services, said: “Our survey shows the importance of value for money and good customer service – energy suppliers delivering both to their customers tend to be thriving, while the Big Six and other poorly-ranked firms are paying the price for not giving customers what they want.”

Rachel Reeves MP, chair of the Business, Energy and Industrial Strategy Committee, said: “The Which? survey highlights once again that the Big Six are miserably failing their customers.

She added: “Customers should continue to shop around because they cannot rely on energy suppliers giving consumers a good deal or delivering the quality customer service which they deserve.”

The figures come at the start of “Big Energy Saving Week” – an initiative run by Citizens Advice and the Department for Business, Energy and Industrial Strategy.

A spokesman for Citizens Advice said despite the introduction of a price cap on energy bills last year, households could save more than £150 each year by switching supplier.

Gillian Guy, chief executive of Citizens Advice, said: “These figures show that there are still large numbers of people paying over the odds on their energy bills.

“While the price cap will mean people paying a fairer price, there are still substantial savings to be made.”

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Brexit: Losing energy links to Europe after no-deal will cost UK more than £2bn every year, experts warn

no-deal Brexit could cost the UK £2.2bn every year as the network connecting the nation’s electricity supply with its European neighbours would no longer function effectively.

Environmental think tank Green Alliance issued the warning as Britain’s future clean power supply looked uncertain following a string of failed nuclear power projects.

With Japanese firm Hitachi pulling out of the planned Wylfa plant in Wales, the UK now faces a “nuclear gap” of about 15 per cent in its future electricity supply.

Environmental groups say the gap can be plugged with renewable energy, and business secretary Greg Clark acknowledged the tumbling price of wind powerwas making it a more desirable option than nuclear.

However, concerns still remain around how variable power supplies, such as wind and solar, can provide the grid with reliable power.

One way around this problem would be to invest in networks that span multiple countries, meaning when the wind is not blowing in Britain energy can be provided from somewhere else.

Such a network would also provide a market for the country’s renewable electricity at times of surplus. In 2017, energy trading across borders brought £700m into UK markets.

Despite these benefits, and projects in the pipeline to link the UK up with Belgium and Norway, Britain remains one of the least connected countries in Europe.

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Report: Renewables to overtake fossil fuels in UK energy mix in 2020

Renewables are on course to overtake fossil fuels for the first time as the UK’s primary electricity source as early as 2020, according to the latest market forecast from EnAppSys.

If current trends continue, the market analyst predicts growing renewable power sources such as wind and solar will generate 121.3TWh or electricity over the calendar year of 2020, pushing ahead of declining coal and gas-fired power sources with a forecasted 105.6TWh of generation.

It would mean that, for the first time, more of the UK’s electricity would be provided by renewables than any other aggregated power source, including fossil fuels, nuclear, and interconnectors, according to yesterday’s report.

The forecast assumes current trends of declining fossil fuel generation and rising renewables generation continue at the same annual rate. In 2018, coal and gas fired power stations produced a combined 130.9TWh, a 6.7 per cent fall from the previous year’s 140.3TWh, the report states. Meanwhile, renewable sources delivered 95.9TWh last year, rising 15.2 per cent from 2017 – a strong performance bolstered by the UK’s increasing offshore wind capacity.

Overall, renewables accounted for a third of all power generation in the UK, with wind providing 17 per cent, solar four per cent, and biomass 11 per cent, analysis by Carbon Brief found earlier this month. Nuclear also accounted for a fifth of UK generation, taking low carbon power’s share of the mix to a record high of 53 per cent. Gas and coal, meanwhile, provided 39 per cent and five per cent respectively.

Paul Verrill, director of EnAppSys, said the rise of renewables, particularly offshore wind, was driving major changes in the UK energy market, with conventional power generators having to adapt to lower levels of activity and find ways of offsetting any lost income as a result.

He said he expected wind and the wider renewables sector to continue squeezing levels of output from fossil fuel generators in the coming years. “With the moratorium on onshore wind and reductions in capital cost of offshore wind farms, it is likely that more of these offshore projects will come on stream in future years, which will drive even higher levels of renewable output,” he said. “New electrical transmissions infrastructure that came on line in 2018 will increase further the contribution of renewable energy to the UK fuel mix but constraints still persist despite the investments.”

Verrill also pointed to further ongoing challenges for fossil fuel generation in light of the suspension of the Capacity Market mechanism late last year, which was aimed at ensuring back up baseload power from conventional generators on days of low renewables generation and high demand.

“Against this backdrop, the margins for thermal power generation fell to 2014 price levels as the impact of reduced demand, increased levels of wind generation and very competitive market dynamics placed downward pressure on profits,” he explained. “This dynamic should settle down over time, but with rising competition in the market driven by the growth of renewables it will become necessary to reinstate the Capacity Mechanism payments or some other alternative to fill the gap created by the lost income. If this is not the case, it’s likely that plant closures will be necessary to remove oversupply from the system and this will lead to decreased security of supply.”

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Energy companies ‘hold millions’ in UK business cash

Energy companies are holding more than £730 million belonging to Britain’s small businesses – seriously impacting vital cashflow.

That’s according to an independent study commissioned by leading challenger brand, Utilita Energy.

With 5.5 million micro-businesses across the UK – accounting for 96 per cent of all UK businesses – Utilita’s second annual Powering the UK High Street report revealed that more than half of those surveyed (53 per cent) have paid at least £250 just to secure their energy supply. However, with the survey findings also showing the average deposit is £649, the true cost to Britain’s businesses could be far more severe.

Some have even had to fork out over £2,000 – that’s before being charged for any energy usage.

The national study looking into the treatment of small businesses by energy companies also found that three quarters of the small firms studied have seen the cost of their energy supply rise by up to £500 per year. This is more than double the increase recorded last year, at £215.

And more than half of micro-businesses surveyed still believe they get an unfair deal on energy, up from 42% in 2017.

But it’s the finding that some energy companies are charging an upfront fee, which is causing outrage amongst small firms who are already facing tough economic trading conditions.

Utilita CEO, Bill Bullen, said: “We never charge our new business customers an up-front fee. “It’s outrageous and we are astonished that our survey has found many small companies feel they are being distrusted and ripped off at a time when we should be doing all we can as a country to help them. It’s shocking to see that energy companies are holding almost three quarters of a billion pounds from micro-businesses paying £250 or more upfront – and with the average deposit at almost £650, we believe the real picture is far bleaker. Energy companies could be withholding billions.

“We offer our customers a fair deal – and provide our customers with a smart meter to put firms in control of their bills.”

Utilita customer, James Mawby, who manages the Osborne pub in Southampton, said: “We’re a small business and we have to work hard to keep our overheads under control. When we looked to change energy supplier, we were told by one of the ‘big 6’ that we would have to pay a £3,000 up-front deposit to get connected. A payment of that size would have a significant impact on our business. If our overheads increase too much we’d be in the unfortunate position of looking to reduce staff hours or the stock we buy, which would limit choice and have a negative impact on our customer numbers.”

The survey also found that more than a quarter of micro-businesses are being turned down flat for energy supply – with figures up from one in five compared to a similar research study carried out by Utilita in 2017.

Less than half of the small firms are shopping around for a better energy deal every year, with almost a quarter only looking once every three years or more.

“The findings of our survey are fascinating and we find it incredible that some energy suppliers are turning down new customers because of their rating,” added Bullen.  “At Utilita, we will never turn down a small business just because of a credit score.”

Other key findings include the fact that 74 per cent of micro-business workers spend up to 10 hours per week on admin – that’s 65 working days a year. On average, they work over 45 hours a week, with more than a third working over 50 hours a week, according to the survey.

In 2017, there were a reported 5.7 million private sector businesses in the UK. Last year Britain’s micro-businesses generated £552 billion in sales and employed around 4.1 million people.

Utilita is one of Britain’s fastest growing independent energy suppliers. It has seen its customer base treble in nearly three years to more than 675,000.

Last month it opened its first ever high street store in Gosport, Hants and recently revealed it has plans to open a further ten shops across the country.

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Windy weather carries Britain to renewable energy record

Storm Diana brought travel chaos to road, rail and airports, but the clouds did have a silver lining: the strong winds helped set a renewable energy record.

Windfarms supplied about a third of the UK’s electricity between 6pm and 6.30pm on Wednesday, a time of peak energy demand. Output hit a high of 14.9GW, beating a previous record of 14.5GW.

The milestone coincides with the official opening on Friday of E.ON’s Rampion windfarm off the coast near Brighton, which is the first in the Channel and can power about 350,000 homes.

Blustery weather has buoyed wind output in the past few days, with National Grid reporting thousands of wind turbines were the UK’s No 1 source of power across Wednesday and Thursday, at about 32% of generation. Gas power stations are usually top.

Windfarms have moved from a niche source of electricity generation a decade ago – when they supplied less than 2% – to a cornerstone of Britain’s power mix, at nearly 15% of supply last year.

The 400MW Rampion project is one of four big offshore windfarms to come online this year, along with a 92MW windfarm in Aberdeen Bay, a 353MW windfarm off the Suffolk coast and a 659MW windfarm off Cumbria, which is the world’s biggest.

More vast schemes are in the wings, with a 588MW windfarm in the Moray Firth due to become fully operational next year. The title of world’s largest windfarm will be taken by a 1,218MW project off east Yorkshire a year later.

Emma Pinchbeck, the executive director of the industry body RenewableUK, said: “It’s great to see British wind power setting new records at one of the coldest, darkest, wettest times of the year.”

Onshore windfarms are cheaper and provide more power than those offshore, but the government has blocked them from competing for subsidies

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Smart meters ‘to add £500m to energy bills’

Consumers are being forced to pay higher energy bills thanks to the cost of installing smart meters – and things could still get worse, according to the spending watchdog.

An investigation by the National Audit Office (NAO) into the £11bn roll-out of the meters has suggested that energy bills could rise by more than £500m in total. It criticised the Government for allowing so many first-generation meters, which can “go dumb” after a switch of supplier, to be installed.

The costs of the roll-out are being added to energy bills and work out at around £374 per dual-fuel household. While there are said to be long-term benefits of having a smart meter, with the annual saving estimated at £18 a year by 2030, the NAO said the roll-out had had a negative impact on consumers’ bills so far.

The watchdog also warned that the savings estimates were based on the current budget for the roll-out. They do not factor in any cost increases if, say, first-generation meters need to be replaced. The Government’s bill-cutting estimates also assume that the industry passes on savings to consumers.

Lily Green of Look After My Bills, a switching service, said: “The smart meter roll-out has been an utter shambles. The endless delays, technical flaws and underestimating of costs to the taxpayer are no way to instill confidence in people that smart meters are a good choice.”

Claire Perry, the energy minister, described the roll-out as “world leading” and said it would bring benefits worth £40bn to consumers and the industry.

Smart meter rollout

Budget for rollout of smart meters – at risk of going over budget and past its deadline
£11bn
Installations still needed to hit 2020 target
40m
Monthly installations needed to meet target
1.3m
Current monthly installation capacity
420,000

Robert Cheesewright of Smart Energy GB, which promotes smart meters, said they were a “vital upgrade” to the national infrastructure. “They are paving the way to lower bills, a more flexible national grid and greener, more sustainable energy. The savings for customers will outweigh the costs and the country will save billions of pounds,” he said.

In another blow to the roll-out, the NAO report found that around 5pc of households, including those in high-rise blocks of flats, would be unable to have switchable smart meters for the foreseeable future.

Second-generation meters that retain their functions after a supplier switch are able to be installed in 70pc of houses. A technical fix expected in the spring will extend this, but even then between 3.5pc and 5pc of properties will be unable to benefit. Work on a solution is under way.

Government sources said the problem is that the network to connect an in-home display to the smart meter’s communication hub is not strong enough for some large blocks of flats, and needs to be extended.

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UK energy provider Scottish Power to take on 129,000 new customers following Extra Energy collapse

Scottish Power, a Glasgow-based energy company founded in 1990, has been tapped this week to take on Extra Energy’s customer base after the company’s collapse last week.

The appointment of 108,000 domestic and 21,000 business customers to Scottish Power has been organised by Ofgem. The UK government’s regulator for electricity and downstream natural gas markets allocated Energy Extra’s client book to Scottish Power as part of an initiative to get customers “the best deal possible”, according to a report by Energy Live News.

Under the new agreement, Scottish Power will “honour all outstanding credit balances of the customers, including money owed to both existing and former domestic and business customers.”

New customers of Scottish power will be contacted by the ‘big six’ energy provider over the next week, after which “customers wishing to leave ScottishPower can do so.”

Philippa Pickford, Interim Director for Future Retail Markets at Ofgem said in a press release: “We are pleased to secure a deal with Scottish Power, where Extra Energy’s domestic and business customers will be offered a competitive tariff for their energy. Their credit balances will be honoured and their energy supply will continue as normal.”

She advised Extra Energy’s customer base to “wait until Scottish Power contacts you. They will give you more information about the tariff you are on and about your credit balance if you have one. Once the transfer has been completed, you can shop around for a better deal if you wish to.”

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Extra Energy collapse is the sixth this year

Another small energy supplier – Extra Energy – has ceased trading, the company has announced.

It is the sixth energy supplier to go out of business since the start of the year.

The company had attracted just 108,000 domestic customers and 21,000 business customers.

However the regulator, Ofgem, assured customers affected that their energy supplies will continue as normal, and any credit balances will be protected.

In due course a new supplier will be appointed by Ofgem, and customers will be transferred directly.

“If you are an Extra Energy customer, under our safety net, we will make sure your energy supplies are secure,” said Philippa Pickford, Ofgem’s interim director for future retail markets.

“Ofgem will now choose a new supplier and ensure you get the best deal possible. Whilst we’re doing this our advice is to ‘sit tight’ and don’t switch.

“You can continue to rely on your energy supply as normal. We will update you when we have chosen a new supplier who will then get in touch about your new tariff.”

The other suppliers to cease trading this year were:

  • Future Energy ( January)
  • National Gas and Power (July)
  • Iresa (July)
  • Gen4U (September)
  • Usio Energy (October)

Since the gas and electricity supply markets were opened up to competition, the industry has attracted dozens of new entrants.

As of June this year there were 73 suppliers, including 67 smaller operators. Ofgem said 13 new suppliers entered the market in the year to June.

Of customers switching provider, many have chosen small energy firms over the “big six”, who have consistently lost consumers.

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UK energy prices expected to soar after Brexit

Energy UK, the industry’s trade association has warned that uncertainty in the sector will lead to increased energy prices once the UK leaves the EU in March 2019

The trade association said that pressure surrounding plans for a carbon-pricing mechanism and cross-border trade is likely to increase bills for business and domestic customers.

Earlier this year, a House of Lords committee warned that the UK faces energy shortages and increased gas and electricity bills after Brexit, if the transition is not managed well.

At the moment, the UK heavily relies on energy imported from Europe.

Following the proposed price increases, Make It Cheaper, the business energy switching service, is urging UK business owners to switch to a better business energy deal and lock prices in for as long as possible, before energy prices are due to rise post-Brexit.

Jon Elliott, CEO at Make It Cheaper, said: “Brexit is of course a hot topic for any business in the UK, and means uncertainty around all business costs. Business energy is no different.

Energy UK’s report highlights some of the causes of these likely rises and only goes to strengthen the case for switching soon for longer fixed term tariffs, securing rates for your business before they become too volatile.”

You can find out more on the Make It Cheaper blog: How will Brexit affect your business energy bills?