ANOTHER ONE of the Big Six energy companies has announced a price hike. EDF energy prices will rise by 3.9% on average. The company joins SSE, Scottish Power, British Gas and npower in hiking the retail price of energy in the past few weeks. As of writing, e-On is the only one of the Big Six that has not raised prices, but is likely to follow shortly.
EDF – 3.9% rise (the average annual dual fuel bill now costs £1,300)
SSE – 8.2% rise (£1,380)
Scottish Power – 8.6% rise (£1,385)
British Gas – 9.2% rise (£1,388)
npower – 10.4% rise (£1,396)
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%0A">Information taken from EDF Energy website.
Generating versus consuming electricity
With a long winter expected, year-on-year energy price hikes and a new climate pattern of hotter summers and colder winters becoming the norm in the UK, consumers are paying higher bills for longer periods of time.
The alternative to consuming energy is to generate electricity using renewable technologies. The Eco Experts was interviewed on BBC 4 recently about the increased take-up of solar PV across the UK.
(The reasons being as follows: 10% ROI, lower fuel bills, free electricity during daylight hours, index-linked profits over 20 years and overall panel lifetime of up to 50 years.)
What the energy companies are saying
Energy companies protest that the price hikes are the result of circumstances they cannot control. Their argument is that they themselves must pay higher costs and subsidise government initiatives. Trade body Energy UK says, “The energy industry is vital to the UK. It is a major employer, a serious investor and a significant taxpayer… [We are] working hard to ensure everyone can keep the lights on and stay warm this winter.”
Growing distrust?
Secretary of State for Energy and Climate Change Ed Davey is set to deliver a speech warning the industry to beware public opinion, comparing growing distrust of energy companies (trust down from 27% to 15%, according to an early October Which survey) to the distrust of banks following the financial bubble.
Meanwhile, Labour MP Caroline Flint says it’s inaccurate for the Big Six to quote a 5% profit margin in their energy retail businesses when elsewhere, in energy generation, their profit margins are closer to 20%.
SSE’s retail head William Morris claims a 5% profit is less than supermarkets make. However, the associate director of Institute for Public Policy Research (ICPP) Will Straw disagrees: “the supermarkets make do on as little as 2 or 3%...”
Food or warmth?
The Financial Times wrote recently about families being forced by rising prices to choose between warmth and food. Research comes from the supermarkets, which have noticed reduced spending in winter months by poorer households that cannot otherwise heat their home. Asda and Morrisons have both conducted surveys that yielded similar results. “What we are seeing is customers having to make trade-offs. The hardest hit households are having to make really tough decisions… The worst case is you have a family, you have a house that has to be heated, and you have more mouths to feed. For those hard-up families, they are the ones that feel this most,” says Alex Churszcz, head of insight at Asda.
Punch & Judy
How does Energy UK describe all this? As a, “tit-for-tat Punch and Judy show of insults…”!
As expected, Ed Miliband joined the debate some time ago, and has been pledging that Labour would guarantee a 20 month energy price freeze if elected. He claims this price freeze would save public services £100m. The savings to the NHS would, he says, be £40m. The Tories say this is not so.
