Simplifying energy switch process boosts savings, study finds

The number of households switching energy supplier can be dramatically boosted by removing the requirement for users to provide details of their energy tariff and consumption, a pilot project has found.

A trial of 50,000 people showed that simplifying the switching process led to more than one in five people moving to a better deal, eight times as many as normal. They saved an average of £298 a year, or £3.3m collectively.

The success suggests minor reforms could tackle the energy market’s problem of poorer, older and less educated people paying over the odds for default tariffs, reducing the need for a major intervention such as the government’s price cap.

The energy regulator Ofgem worked with the comparison site Energyhelplineto pick 50,000 customers who had been on the default tariff of an unnamed big-six supplier for three years. The company was ScottishPower, the Guardian understands.

Rather than those consumers having to provide their existing tariff and energy usage in order to switch, as they usually do, the information was supplied automatically. That allowed the comparison site to send letters offering a personalised saving.

Between February and April, 22.4% of those in the trial switched as a result of the approach, compared to 2.6% for a control group of 5,000 who did not receive letters. Around half moved to an E.ON tariff negotiated by Energyhelpline. The rest chose other deals.

More than a quarter were over 75 and 71% chose to switch over the phone, suggesting a digital and age divide also holds back switching.

Far more people were encouraged to switch among the half who received letters with their existing supplier’s branding (26.9%) than the other half which had Ofgem branding (15%).

Ofgem hailed the trial as its most successful to date. “Offering a simplified collective switch and providing personalised savings can be a big help in giving these customers the confidence and reassurance they need to start a switch,” said Rob Salter-Church, interim executive director for consumers and markets.

The positive results have sparked plans for a bigger trial of 200,000 in the autumn, expected to involve either British Gas or SSE.

The energy regulator said, however, that it was too early to say if having energy tariff and consumption information pre-supplied would become the default way to switch in future.

In total, 3.27 million people switched in the first seven months of 2018, up 8% on the same period last year. There are fears, however, that switching could stall with the price cap lulling people into a false sense of protection and reducing switching savings.

A startup that promises to automatically switch energy supplier on households’ behalf won the backing of investors on Dragon’s Den on Sunday. Two of the dragons took a 3% stake in Look After My Bills for £120,000.

The company effectively recreates the Ofgem test, allowing customers to be automatically switched into the best offers on the market.

 

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Big Six energy companies set to lose 2.4 million customers in 2018: how to switch

If the number of switches continues at the current rate then the biggest suppliers will have lost 2.35 million customers to small and mid-size companies by the end of 2018, according to figures released by the industry trade body Energy UK.

British Gas announced its second price increase of the year last week. In the two days following the announcement there was a 40pc increasein switching activity, according to price comparison site Uswitch.

Small suppliers are rapidly gaining ground, with companies such as Bulb now boasting close…

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Switch on to LED lightbulbs before September’s halogen ban

From the end of this month halogen lightbulbs are to be removed from the market across Europe, with households expected to switch to LED lights – which cost more but last far longer and use much less electricity than energy-hungry halogens.

According to Philips, the lighting manufacturer, the average UK household has 10 halogen bulbs and uses them for 2.7 hours a day. If that is correct, then hundreds of millions of halogens are going to have to be replaced. So why are they heading for the scrap heap – and what do you have to do?

What is the ban? Old-fashioned incandescent bulbs were the first to go, in 2009, and in 2016 the phased removal of halogens began in an EU-wide effort to improve energy efficiency and cut carbon emissions. Halogens are hugely wasteful of energy – the Energy Saving Trust estimates that the typical halogen uses £11 of electricity a year while a replacement LED would use only £2 worth. What’s more, halogen bulbs typically fail after about two years, while LEDs should last for around 15 to 20 years on the same usage.

Do I have to replace all my halogens now? Don’t panic, you won’t have to whip them all out for fear of an EU fine. Replace with LEDs as and when the old halogen bulb expires.

Will shops stop selling halogens on 1 SeptemberNo. They will be able to sell their existing stock but won’t be able to reorder more. So if you are obsessed about keeping your halogens, then there’s still time to buy some. But you’ll be throwing money away in the long term.

Will the LEDs fit existing light sockets? In most cases, yes. You can buy “bayonet” or “edison” (screw-type) LED bulbs at most outlets. But there may be a problem if you have halogen lights fitted in your ceiling (especially common in kitchens) which are connected to transformers. According to Philips:“The low wattage equivalent LEDs sometimes mean some transformers cannot detect that the light is actually switched on and therefore lights can flicker. In this case it is worth seeking advice from your electrician.”

 

Is this a total ban? There remain a few types of halogens that are outside of the EU ban, for now. For example, there are some oven lights that are halogens that will still be permitted for sale, as well as some “capsule, linear, low-voltage reflector bulbs”, says Philips.

How do I know which LEDs to buyA generation brought up on bulb brightness expressed in terms such as 100w or 60w has to learn the new vocabulary of “lumens”. Wattage measures power or energy, while lumens measure light output. Broadly speaking, a 60w bulb gave off around 700 lumens, while a 100w one is equivalent to more than 1,300 lumens. But stores such as John Lewis still label LED lights primarily with watts; it says its 8.5w “classic” LED bulb is equivalent to a 75w incandescent bulb, while a 13.5w LED is equal to a 100w old-style bulb.

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British Gas loses 340,000 more accounts

British Gas lost 340,000 customer accounts in the UK in the first half of this year, the chief executive of the firm’s parent company has told the BBC.

The lost accounts represent about 270,000 customers.

However, Centrica chief Iain Conn said the rate of customer losses had halved since last year and he hoped numbers would stabilise.

His comments came as Centrica said operating profits at its consumer business had fallen by 20% to £430m.

Price cap

British Gas is the biggest energy supplier in the UK. It still has 3.5 million customers on standard variable tariffs, which are often the most expensive.

However, that number is down from 4.3 million at the start of the year as the company has encouraged customers to switch to cheaper fixed-rate deals ahead of a cap on more expensive tariffs that is expected to come into force at the end of this year.

The way the cap is worked out will be published in August and will vary around the UK according to regional market conditions. It will be reviewed and reset by the regulator, Ofgem, every six months.

Mr Conn told the BBC he remained concerned that the cap would mean some customers would end up paying more.

“Prices may well bunch around the level of the cap so some of the cheaper deals in the market may disappear which means that some customers will end up paying more.”

Instead he suggests ending the standard variable tariff as it now stands, so that no customer languishes forever on the same tariff but is prompted to change at some point.

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British Gas owner hints bills could rise for second time this year

Centrica, the owner of British Gas, has hinted that bills could go up for a second time this year, after reporting a 20% drop in profits at its consumer arm and more customer account losses.

British Gas, the UK’s biggest energy supplier, lost 341,000 customer accounts in the UK in the first half of the year, although the rate of losses slowed. Operating profit at the business fell to £430m.

Centrica said it was keeping its tariffs under review, noting that wholesale energy prices had continued to rise since it increased its prices in April, and that a number of its rivals had raised their tariffs.

The 5.5% price rise in April, taking the average bill to £1,161 a year, affected 4.1 million out of 7.5 million British Gas customers, and prompted criticism from the government and consumer groups

Centrica said it still had 3.5 million customers on standard variable tariffs – usually the most expensive – although the number is down from 4.3 million at the start of the year.

The company said it was encouraging customers to switch to one of its cheaper fixed-term tariffs. It has withdrawn the SVT for new customers, and 428,000 accounts have moved on to the new safeguard tariff for vulnerable customers.

The government’s cap on all standard energy tariffs including SVTs is expected to come into force at the end of this year. A price cap for vulnerable households already came in early last year.

Iain Conn, Centrica’s chief executive, reiterated concerns that some customers would end up paying more once the wider cap comes in.

“Prices may well bunch around the level of the cap, so some of the cheaper deals in the market may disappear, which means that some customers will end up paying more,” he told the BBC. Conn suggested ending the SVT instead.

Centrica’s overall adjusted operating profit fell 4% to £782m. The group’s shares were one of the biggest fallers on the FTSE 100 after the results were announced, losing more than 5%.

During the cold snap in February and early March, when the “beast from the east” brought large parts of the UK to a standstill, British Gas incurred additional call-out costs of £15m. It had its busiest week for boiler repairs.

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UK energy supplier Iresa has ceased trading – Ofgem

LONDON (Reuters) – British small energy supplier Iresa Limited has ceased trading, market regulator Ofgem said on Friday, after the company was banned from taking on new clients due to poor customer service.

Iresa, based in northwest London, has less than 100,000 domestic customers.

Last month, Ofgem extended a ban on the firm taking on new clients after it failed to improve customer services.

Under energy market rules, Ofgem also had the power to revoke the firm’s license if it failed to meet requirements.

Iresa was not immediately available for comment.

Ofgem said the energy supply of Iresa’s customers would continue as normal and their outstanding credit balances protected under the regulator’s safety net.

Ofgem added that it will choose a new supplier to take on the company’s customers.

There are over 60 energy suppliers in Britain. An increasing number of people are switching to smaller energy companies due to price hikes from the big six firms – Centrica’s (CNA.L) British Gas, SSE (SSE.L), E.ON (EONGn.DE), EDF Energy (EDF.PA), Innogy’s (IGY.DE) Npower and Iberdrola’s (IBE.MC) Scottish Power.

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Decom Energy taps £58bn UK decommissioning market

Looking for new finds is traditionally thought the exciting part of the oil and gas industry. However, Graeme Fergusson is more interested in the opposite end of the process — plugging old wells and dismantling platforms.

“Our pitch is, ‘dear operators, you don’t want do to this, but we do’,” said the managing director of Decom Energy.

Britain has been investing in the North Sea for more than 50 years. The industry estimates that it could take another 50 to plug thousands of wells and remove hundreds of platforms and thousands of kilometres of pipelines. Executives believe the decommissioning industry, still in its early years, will grow and potentially become a lucrative business in its own right.

The Oil & Gas Authority (OGA), the industry regulator, in June said it estimated the cost to decommission all the infrastructure on the UK Continental Shelf at £58bn from 2018 onwards.

Mr Fergusson hopes his company can capture a slice of the action by taking ownership of declining fields in the final years of production and guiding them through to the end. Decom Energy, he argues, has a key selling point as it can bring its history and expertise as an operator to bear on the challenge. “We see a gap in the market for an operator-led decommissioning specialist,” he said.

It has not been a straightforward journey to reach this point. Decom was formed in 2016 to buy out its operating subsidiary, Fairfield Energy. The latter was launched in 2005 with backing from a clutch of private investors led by private equity group Warburg Pincus to acquire North Sea assets that were being shed by the oil majors and breathe new life into them. Fairfield went on to build a portfolio of fields and in 2008 the company became the operator of assets in the Greater Dunlin Area in the East Shetland Basin, close to the boundary line with Norway.

Fairfield considered an initial public offering in 2010 but this was pulled in part because its portfolio was not broad enough. However, the oil price crash in 2014, which hit the industry hard, finally put paid to its ambitions of becoming a leading North Sea exploration and production group.

In the second half of 2015 the company decided it was time to change direction, said Mr Fergusson. It would transform itself into a decommissioning specialist and start with its own assets in the Dunlin area.

Fast forward to 2016 and Decom Energy Limited was born, backed by its four founders including Mr Fergusson who had joined Fairfield in 2011.

The aim, said Mr Fergusson, was to turn decommissioning into a positive move. Despite the change in strategic direction the company managed to retain most of its core workforce of around 75.

“Engineers like problems,” said Mr Fergusson. The company has already learnt a lot from tackling some of the complex issues in the Dunlin area where three approved decommissioning programmes are already under way. It hopes to offer that expertise to others. Recommended Scottish economy Scotland’s ports gear up for the day North Sea oil runs dry

“Now it’s about striking a deal with the operator,” said Mr Ferguson, adding that talks were under way with several companies about a number of assets. The company will consider different approaches, from offering its expertise as a contractor to taking over the operatorship of mature assets that are beyond the point of major investment.

For Britain’s oil and gas industry it is a steep learning curve. To date, much of the decommissioning activity in other parts of the world such as in the Gulf of Mexico has been of much smaller platforms than in the North Sea. The rough seas also pose a challenge.

Industry executives nevertheless believe decommissioning could become a profitable business with the potential to export the know-how abroad. Aberdeen, the oil capital of the North Sea, was hard hit by the price crash and could also benefit from increased activity.

“Decommissioning is an evolving industry,” said Fiona Legate, senior analyst at Wood Mackenzie, the energy consultancy, adding that “it offers a prize for the supply chain via new business development opportunities”.

Winners will be all the stakeholders involved — from E&P companies if they can reduce their costs as it reduces the total decommissioning bill, to the supply chain in the form of new business opportunities at a time when North Sea development work has been at an all-time low.

“It’s too early too tell when it comes to late life/decommissioning specialists, there is no proof of concept yet,” she added. Reputation is important. The downside to decommissioning is very big Graeme Fergusson

Some work is already under way. Royal Dutch Shell hired the huge, twin-hulled Pioneering Spirit vessel to remove the Brent Delta platform and transport it to Teesside for dismantling last year.

Research is also progressing into new approaches that could reduce costs. A new technique to plug and abandon wells developed by Norway’s Interwell was recently tested for the first time in Europe by Spirit Energy, on an onshore gas well in Yorkshire.

The more experienced companies become, the lower the eventual bill. In its most recent report the OGA said companies already executing decommissioning programmes had made significant efficiencies in the costs of plugging and abandoning wells. Operators are also learning to save money by tackling a large number of wells as part of a single campaign.

“Spreadsheet decommissioning is a thing of the past,” said Mr Fergusson. “Reputation is important. The downside to decommissioning is very big.”

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Co-op Energy hikes gas and electricity bills for thousands of customers

Co-op Energy is raising its gas and electricity prices by 5.2 per cent from next month, a move that will affect up to 128,000 households.

The change, which takes effect from 20 August, will see bills for customers on the standard tariff rise by £61, from £1,158 to £1,218 – a total of £7.8m nationwide.

The bill hike will also impact GB Energy customers, who have been supplied by Co-op Energy since GB ceased trading in 2016.

A spokesperson for Co-op Energy said: “As the largest member-owned energy supplier in the UK, our customers are at the heart of everything we do. That is why we do our best to protect them from price fluctuations wherever possible.

“For that reason, we were the first major energy supplier to automatically move customers onto a new fixed-price default tariff rather than our variable tariffs, and why we have sought to absorb the significant increases in wholesale energy costs this year.

“However, this is not sustainable indefinitely and we have therefore reluctantly taken the decision to pass on some of these costs to customers on our Green Pioneer tariff.”

Rik Smith, uSwitch.com energy expert, said: “The news from Co-operative Energy today is the 25th overall increase announced this year. We have now seen at least one price rise from Britain’s ten biggest energy suppliers in 2018 as well as hikes from numerous smaller providers.”

Mr Smith said that in spite of the recent warm weather, “it has been a tough year for energy customers” who have seen their bills skyrocket by an average of 5.6 per cent, or £58.

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Fuel and energy prices to push UK inflation to four-month high

RECENT hikes in energy costs and petrol prices are expected to send UK inflation to its highest level in four months when official figures are disclosed on Wednesday.

A consensus of economists expect the Office for National Statistics’ (ONS) June Consumer Price Index (CPI) to come in at 2.6 percent, up from 2.4 percent in both May and April.

The last time CPI was higher was in February, when inflation was 2.7 percent.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, expects a stronger reading to match February’s figures.

“The contribution to inflation from motor fuel, electricity and natural gas prices likely leapt.”

He noted that 10 of the 12 largest energy suppliers – including British Gas, Scottish Power, EDF Energy – have announced price rises which will kick in over the summer.

“In addition, BRC (British Retail Consortium) data suggest that core goods inflation rose.”

Mr Tombs was pointing to figures which showed that BRC’s non-food shop price index jumped by 0.9 percent month on month, marking the biggest June increase since the BRC’s records began in 2006.

That increase was due to higher prices for clothing and recreational goods.

A further rise in CPI is likely to strengthen the case for a Bank of England interest rate hike next month, though concerns that prices are rising faster than wages could see rate-setters have second thoughts.

The latest data from the ONS show that average earnings increased by 2.5 percent in the year to May, up just slightly from 2.4% the previous month.

Ed Monk, an associate director for personal investing at Fidelity International, said: “If inflation does jump back up after this weakening in pay growth, then it adds to the conundrum for the Bank of England’s Monetary Policy Committee who are desperate to deliver a rate hike in August’s MPC meeting.

“Higher inflation would support that position but an absence of sustained real wage growth as well as ongoing fears about the impact that Brexit will have on the UK economy means that we could see the ‘unreliable boyfriend’ make an appearance again if Mark Carney and the central bank is forced to make another U-turn come August.”

The EY Item Club earlier this week said it expects a steady slide in CPI over the remainder of the year.

It said: “The steady downward progression in Consumer Price Index (CPI) inflation observed earlier this year looks likely to reverse course, at least temporarily, over the next few months.”

The think-tank said it expects CPI to rise back up to 2.7 percent in the near term before “softening” to end 2018 at 2.3 percent.

That is up from its 2 percent year-end forecast released in the spring.

 

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Opposing onshore UK windfarms ‘means higher energy bills’

The portfolio of global offshore wind projects in operation, under construction or in development grew by over 10% in the last year according to new data RenewableUK is publishing at our Global Offshore Wind 2018 conference in Manchester.

The new figures from RenewableUK’s Offshore Wind Project intelligence show that the global pipeline of offshore wind projects stands at over 104 gigawatts (GW), up from 95GW in June 2017.

The new figures show the UK retaining the top spot as the largest offshore wind market in the world with a portfolio of 35.2GW, followed by Germany (23.4GW), Taiwan (8.3GW), China (7.7GW) and the USA (7.5GW) rounds out the top 5. These countries share just under 80% of the global market.

The latest figures do not include possible extensions of existing wind farms totalling nearly 3GW recently announced by The Crown Estate – which could push the UK even further ahead when they are confirmed next summer.

Taiwan made the biggest gains in the last 12 months adding 6.7GW which accounts for over two-thirds (68%) of global growth. Although it was not in the top 10 in 2017, Taiwan has powered past the USA and China to become the third largest market in the world and the largest outside Europe.

The UK retains its global number one position in a year which saw auctions for new power contracts (Contracts for Difference) secure offshore wind at half the price of auctions in 2015, making new offshore wind cheaper than new gas and nuclear power plants.

The offshore wind industry in the UK recently announced details of its 2030 vision for the sector which would see 30GW of operational capacity installed by the end of the next decade, providing 30% of UK power needs (up from 7.1GW at present). This would lead to a doubling of jobs to over 27,000. Industry is currently working with Government on a Sector Deal to secure this. Between 2017 and 2021 investment in new offshore wind capacity is expected to total over £18.9bn.

Commenting on the new figures, RenewableUK CEO Hugh McNeal said:

“Our industry is already delivering for the UK and we want to go further, with offshore wind as the backbone of a clean, reliable and affordable energy system. To achieve this ambition, the industry will invest tens of billions of pounds, creating thousands of skilled jobs and supporting prosperous communities across the UK.

Offshore wind is a global growth opportunity and a major energy source. The sector will be worth over £30bn worldwide by 2030 and UK companies must be ready to seize opportunities in new markets. We are transforming the UK supply chain, as we grow our exports five-fold by 2030.”

innogy’s largest offshore market is in the UK, where it operates over 1GW of offshore wind power.innogy’s Director of Offshore Investment & Asset Management, Richard Sandford, said:

 

“The UK has demonstrated true transformational growth, from the early days of our North Hoyle project, the UK’s first commercial scale offshore wind farm, to the modern technologically ground-breaking turbines being installed today. We’re seeing bigger more powerful turbines, further from shore and in deeper waters, with developers like ourselves installing faster than ever. At the same time, the growth in offshore wind has created an industry of manufacturers and suppliers that are becoming increasingly innovative and expert, and are helping positioning the UK as a world-wide hub of offshore expertise.”

Jonathan Cole, Managing Director for Offshore Wind at ScottishPower Renewables, said:

“The UK continues to lead the world in offshore wind, and the industry here is in a strong position to capitalise on export opportunities in growing markets across the globe. We have the skills, knowledge and expertise that other markets need.”