Existing energy customers barred from cheapest deals

Four of the UK’s largest energy companies have been barring their own customers from some of the best deals for gas and electricity, the BBC’s Moneybox programme has learnt.

The cheapest deals are often reserved for new customers only.

Meanwhile existing customers have been offered deals which can be hundreds of pounds a year more expensive.

The four companies, E.ON, EDF, SSE and British Gas said they were simply responding to changes in the market.

While the British Gas tariff has now been withdrawn, other suppliers are still restricting their offers to new customers only.

Such deals were originally banned by the regulator Ofgem in April 2014. Following a recommendation from the Competition and Markets Authority (CMA) in April this year, Ofgem let it be known it would no longer enforce these rules.

‘Gob-smacked’

The discovery of such deals has as come a surprise to some leading industry figures.

Ken Geddes is the chief executive of Scottish-based Energylinx, the fourth biggest energy price comparison business.

When the BBC told Mr Geddes about the new tariffs, he declared himself “stunned” by the difference between the prices some companies offered new and existing customers.

Mr Geddes immediately tested a new-customer-only tariff from E.ON, launched in mid-September.

He first applied as an E.ON customer and then as a customer of another company. The difference in the the two prices he got from E.ON was £260.

“Having spent over a decade doing this job, I don’t think I’ve ever seen that differential”, Mr Geddes told the BBC. “I’m just gob-smacked as to the difference in price”.

four gas rings

 

‘Filtered out’

Large differences in price between new and existing customers are not confined to E.ON.

In the summer, British Gas launched a new-customer-only one year tariff offered exclusively through Uswitch – the UK’s biggest energy price comparison website.

For new customers with average household energy consumption, the British Gas “Home Energy Exclusive Jun 17” tariff cost £735 a year. But for existing customers – barred from that deal – the best British Gas price for the same amount of energy was £989.

That British Gas tariff has now been withdrawn but others are appearing.

The SSE new-customer-only tariff, launched in September, offered new customers on average consumption a year’s energy for £759 . For existing customers, SSE’s best deal cost £972 – a difference of over £200.

Customers were unlikely to have learned such low-priced tariffs were available from their companies even if they searched Uswitch and Energy Helpline.

That’s because such websites start by asking users for the name of their existing energy supplier. New-customer-only deals from that supplier are then filtered out.

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EDF and British Gas bills

‘Very sorry’

As a long-standing customer of EDF, I wanted to find out what tariff I would be offered.

In a web-chat, I was told the tariffs available to me were: “Blue+ Price Protection Sep 2017” – costing £133 more than EDF’s new-customer-only tariff, and “Blue+ Price Freeze Sep 2018” costing almost £300 more.

Were these the “very best tariffs EDF offers?” I asked the agent.

“Yes” was the emphatic reply.

When pressed about the much cheaper new tariff EDF had just launched, the agent replied, “I’m very sorry. This is only for new customers – not existing customers”.

On Friday, EDF relaunched their new-customer-only deal, cutting the price by around £50 a year. So it’s a better deal than before but it’s still not for existing customers.

Strategy

Not all major energy suppliers plan to offer such tariffs.

Scottish Power’s commercial director Colin McNeill told the BBC his company would not offer them.

“These tariffs must stop,” Mr McNeill said. “We must recognise that we are still not a trusted industry, and perceived sharp practices do the industry no favours.”

With Scottish Power, he added: “Any of our customers can switch freely to any of our tariffs at any time.”

The four energy companies which have offered the new-customer only tariffs, E.ON, EDF, SSE and British Gas, all say that they are responding to changes in the energy market and that their new tariffs are part of a strategy to serve a wide range of customers.

All four companies declined the BBC’s invitation to be interviewed about their new exclusive offers.

Ofgem’s chief executive Dermot Nolan told the BBC that Ofgem had acted on the CMA’s recommendation “to make energy competition more similar to telecoms because on the whole that will mean lower prices and better deals for consumers”.

Energy supply cuts may send fuel bills soaring

Householders are being warned to brace themselves for a rise in their electricity bills as a series of freak events conspires to send wholesale prices rocketing.

Safety concerns at France’s nuclear power plants operated by the energy company EDF have led to many reactors being temporarily shut down. There have been similar suspensions in Belgium. In addition, a lack of rain in Norway and Sweden – whose hydro plants generate large amounts of electricity for their European neighbours – has limited both countries’ energy production.

The combined effect has been to send the price at which energy companies buy their power through the roof.

 

Last Monday, a UK energy company buying power on a next-day contract would have paid about £150 a megawatt hour. The average price a year ago was £38.10. For companies that had not agreed forward contracts, the cost has soared to more than £1,000.

Several smaller electricity suppliers have already raised prices or withdrawn competitive tariffs. Energy analysts say it will not be long before the big operators follow if, as looks possible, this winter starts with a protracted cold snap.

An index tracking the price power companies pay for electricity, produced by the consultancy Cornwall Energy, is at its highest since it started in 2012. “It is unusual for there to be significant volumes of outages in the French nuclear fleet, however this is also one of our tightest winters in recent times in terms of extra capacity, which has also influenced how high prices rise,” said Cornwall analyst Tom Edwards.

Twenty of EDF’s nuclear reactors have been stopped for checks on their steam generators, five more than would normally be shut down for maintenance at any one time. In July, EDF was forced to lower its 2016 nuclear output target to 395-400 TWh (terrawatt hours) from 408-416 TWh because of the need for “additional controls during the second half of the year” to show its reactors can operate safely. Last month, the group revised its nuclear output target again, from 380-390 TWh to 378-385 TWh.

A spokeswoman said it was looking at ways to ensure it could maintain electricity generation by using its thermal and hydraulic plants. She said EDF would buy more electricity on the European wholesale markets if necessary and use “contractual flexibilities with some industrial customers and individuals to limit their electricity consumption”.

Edwards said supply issues were currently to blame for price rises, but extra demand could soon be a factor. “The increase was primarily driven by rising wholesale prices, so the effect will be driven by supply and demand issues,” he said. “If it’s a cold winter and supply issues remain, then this should persist for the next three to four months. There has been some concern raised about how suppliers will cope over the winter if they aren’t able to hedge against these short-term price rises.”

 

Earlier this month, the Met Office predicted that the chance of the UK experiencing temperatures in the “cold” category was 30% – 1.5 times the usual risk – and warned that “contingency planners and others with sensitivity to cold weather might need to consider this elevated level of risk”.

Larger operators that generate their own electricity can protect themselves against rising wholesale costs. But this is not so for smaller operators. Earlier this month, Southend Energy, one of the larger independent operators, announced rises of 9% and 8.4% respectively on its fixed and greener tariffs.

“Some suppliers have increased the price of their fixed tariffs following the recent rise in wholesale energy prices, which is putting pressure on all suppliers’ costs,” said a spokesman for the energy markets regulator, Ofgem, which suggested many consumers could save about £300 a year by switching.

Edwards said the current uncertainty would be felt by consumers in the longer term. “Suppliers will increase their standard variable tariffs if costs do rise substantially, but this

will be affected by their hedging ahead of this winter. We would expect fixed tariffs in the future to be higher to take into account expected risk of short-term price volatility.”

B7EFWN ELECTRICAL POWER PYLON WITH SUPPLY CABLES OR LINES AGAINST A CLOUDY SKY ELECTRIC. Image shot 2008. Exact date unknown.

POWER PRICE SURGE Energy bills set to soar as Big Six gas and electricity giants prepare to pass on wholesale price rise

Sources say the average standard variable tariff could be set to rise 13 per cent from £1,063 to £1,201 per year

FAMILIES face a hike in their energy bills as power giants get set to pass on increases in the price they pay.

Wholesale gas and electricity prices are rising after a period of staying steady or falling.

 

Sources say energy firms are looking to pass on the price rises — despite The Sun’s campaign to highlight how customers are already overpaying.

It could see the average standard variable tariff rise 13 per cent from £1,063 to £1,201 per year.

Some firms could delay an increase as they “hedged” against wholesale costs rising by pre-buying power at lower rates earlier this year.

A source at one of the Big Six suppliers said: “Price rises are coming.

“None of us bigger firms will want to go first but it will come to a point where we have to.

“Hiking before Christmas will mean we get a lot of grief so firms will sit there now doing the maths to see how long they can hold off.

 

“The bigger ones can hold off a bit longer than the smaller ones.

“They pre-buy more power and also have deeper pockets to soak up tighter margins for a while.

“But don’t be surprised if some of the smaller suppliers raise prices.”

E.ON has already warned investors they have not hedged enough for their UK business.

 

Co-op raised the price of their standard variable tariff last month.

Critics said the Big Six are quick to pass on price rises but slow to pass on any savings.

Will Hodson, of consumer collective TheBig Deal.com, said:   “When wholesale prices dropped it took them forever and a day to pass those savings on.”

E.ON said it would not speculate on pricing.

£511m saved on energy bills by negotiating

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According to a You Gov survey commissioned by npower, Small and medium sized businesses (SMEs) in the UK saved £511 million on their energy bills in the last 12 months and around 45% of them saved up to £10,000 per year.

This is all because they negotiated a better deal from their suppliers, with as many as 93% of SMEs stating that taking the time to negotiate contracts really is worth while with average savings per business valued around £2,800.

However, despite the financial benefits of negotiating with energy companies, still 70% of SMEs don’t think to ask for discounts and price savings.

To encourage more businesses to negotiate with their suppliers, the Big Six has launched a campaign which offers tips on how to get the most out of their negotiations, including the importance of research and planning ahead.

Philip Scholes, Head of npower Business said: “This research shows that businesses across the UK are reaping the dividends of negotiating their supplier contracts. However, not all firms are entering discussions with their provider, which could prove to be a missed opportunity in the long term.

“That’s why we launched this campaign – we’d encourage all British businesses to look at their supplier costs and particularly their annual energy costs to help improve their bottom line.”

Earlier this month, the CMA stated SMEs paid around £280 million more per year between 2007 and 2014 to the Big Six.

Gas Bills to be cut by 7% announce Ecotricity

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Britain’s greenest energy company, is cutting its customers’ gas bills by 7% from April. Ecotricity believe the cuts, available to both new and existing customers, will save the average customer nearly £50 a year on their only tariff – ‘Green Gas.’

The company said it was making the cut following recent falls in the wholesale gas price – and called for other energy companies to better reflect wholesale reductions in their own price cuts.

The price cuts follow similar price cuts from large energy suppliers in the wake of plummeting wholesale gas prices. However, Ecotricity’s cuts are the largest in the industry so far. Earlier this week British Gas and EDF Energy cut their gas prices by 5%.

In the past 12 months the price of wholesale gas has fallen by as much as 35%, caused by lower global commodity prices and a mild winter.

Ecotricity said the price cuts would save the average customer £46 a year. The utility, which has one flat-rate gas tariff for all its customers, called for other utilities to make more aggressive price cuts in light of the fall in wholesale gas prices.

Founder Dale Vince said the 5% cuts from the rest of the industry do not go far enough.

He added: “We think 7% better reflects the reduction in wholesale costs. The 5% reductions that we’ve seen so far around the industry just aren’t enough.

“It’s all of our customers who’ll get this reduction, too – no matter when they joined us or how they choose to pay; that’s part of our ethical approach – one tariff and one price for everybody. We think that’s how it should be.”

Ecotricity’s Green Gas tariff is the only one in Britain with a green component and the only one with a frack-free promise – the company also recently announced that they’ll be making their own green gas from grass using its Green Gas Mills.

Mr Vince added: “A new kind of gas is entering the energy market, the green kind – and it’s the genuine alternative to fracking in Britain.

“Oil prices have fallen, so we’re seeing reductions in gas prices across the industry now – but one thing is for sure, they’ll go up again. It’s only by making our own green gas in Britain that we can keep energy bills affordable in the long term by creating energy independence – and we won’t need to frack the countryside to get our gas.”

Last month, Ecotricity lodged a planning application for its first anaerobic digestion plant, which if approved will be the first of three Green Gas Mills from the energy provider.

The plant will create gas from grass and rye sourced from within 10 miles of the plant, and will also include training facilities to offer local college students work experience in the anaerobic digestion industry.

100,000 people could die over the next 15 years because they can’t afford to heat their homes.

 

gas 1

ScottishPower to cut gas prices by underwhelming 5.4% from March

 

ScottishPower has become the third large energy company from the ‘Big Six’ suppliers to announce household price cuts this year, these cuts are scheduled to reduce average annual bills by £32.

 

ScottishPower have announced they are to cut its standard gas prices by 5.4% from mid-March, saving a typical household £32 a year.

 

The Glasgow based company is the third of the ‘Big Six’ suppliers to announce a gas price reduction this year, after pressure from politicians to reflect the falling price of wholesale costs in a fairer tariff.

 

The reduction, which will affect about one million households on the supplier’s standard variable tariff, will not come into effect until March 15, meaning customers are still paying more during this colder winter weather.

 

Earlier this year E.On was the first to announce a 5.1% price, effective from February 1, this was subsequently followed by SSE, who announced they will slash their prices by 5.3% after Easter.

 

Stephen Murray, of MoneySuperMarket, said ScottishPower’s price cut was “hardly worth shouting about”. Murray stated “These price cuts are long overdue considering the sharp falls seen in wholesale gas prices over the last year, but they just don’t hit the mark.

 

“It will still leave these customers paying on average nearly £300 more than those who have shopped around and switched to one of the many fixed price deals already available.”

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