Increasing Costs & Simplified Plans Drive Up Prices Across UK Energy Market
A triple-header of bad news for the energy market has come to light this week as three separate reports seem to signal another energy price increase in energy prices across the UK. Controversies surrounding pressure from consumer group Which?, an appointment by the HMRC and a price hike from energy supplier First Utility have proven to to shake consumer confidence within the energy market, which much of the news likely to have an effect on the domestic energy market.
Imminent Energy Price Increase Across UK Energy Market
In what would seem to be knock-on effect of the launch of The Energy Bill, consumer group Which? have estimated that the new simplified tariff system designed to prevent overcharging via complex options for the consumer, could end up leaching customers of up to £55m in total increased bills.
In action proposed by Ofgem, energy firms offering a simpler, smaller range of tariffs would allow consumers to easily pick the best prices for their level of usage. However, Which? say that this plan is focused entirely around consumers who use a ‘medium’ amount of energy in their home or business.
As these medium usage-level premises only account for some 26% of consumers, the remaining 74% could well be directed to tariffs which are unsuitable for their usage. In a worst case scenario, this would could lead to a combined increase in bills of up to £55m – most of which is entirely unnecessary.
“These current proposals are far too complicated and will fail to achieve their aim of making it easier for people to find the best deal, with three-quarters of people being asked to compare prices that are not based on their energy usage.
Imminent Energy Price Increase
“The Government should introduce single unit prices for each energy tariff so people can easily see the best deal for them at a glance. Only then will people have the confidence to switch, injecting much-needed competition into the broken energy market.” said Richard Lloyd, executive director at Which?.
The news comes on the back of Monday’s revelations that HM Revenue and Customs (HMRC) have offered a new position to Volker Beckers, former head of RWE npower – a company which is fresh from controversy after last week revealing that it only paid a combined £5m in tax over three years, despite raking in £766m in profits.
Finally, First Utility customers could be set for an increase of up to 18% on their monthly bills, following the energy company’s attempted to compensate for ‘Increasing costs’.
Domestic energy customers made up the bulk of the demand of First Utility’s early adopters back in December, with the firm’s ethos of breaking the hold of the ‘Big Six’ resounding with many consumers and the attraction of avoiding price hikes providing a big draw.
Now, less than 6 months later, First Utility’s 18% increase outstrips the 6% rise from British Gas late last year and Npower’s maximum 9.1% rise.
It is worth mentioning that First Utility not only had lower prices to start with, but have also promised their revised tariffs will price-check against comparable pricing schemes from British Gas, EDF, E-ON, Npower, Scottish Power, SSE to ensure theirs is lower.
“The energy industry as a whole is under pressure from increasing costs. These include charges for delivering electricity and gas to your home, mandatory government environmental schemes and social obligations, as well as the price we have to pay for energy on the wholesale markets.”, said Ian McCaig, chief executive of First Utility.