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Thursday, February 07, 2008

The cost of staying warm

This morning's Independent confirms what we have suspected for some time, that some gas and electricity suppliers are operating a two-tier pricing structure which leaves at least 13 million households paying more for energy than the cheapest deals on the market.

They tell us that utilities operators such as Npower and EDF have been found to have kept online deals low to attract "price-sensitive" consumers while raising the cost for those paying by direct debit or quarterly payments:

When the biggest supplier, British Gas, raised its prices 15 per cent for millions on 18 January, the company failed to publicise the fact that it was not increasing tariffs for customers who manage their accounts online.

A medium user on the Click Energy 4 tariff would save more than £300 a year, paying £742 compared with £1,055 for a quarterly bill, according to research by the price comparison website uSwitch.com. Online tariffs offered by the other big five energy companies offer discounts of between £98 and £214.

Ofgem, the energy regulator, estimates that customers could save £1bn a year by switching to cheaper deals while one industry expert claims the selective overcharging is as high as £5.8bn. The 13 million consumers who have stuck with their existing supplier since privatisation in 1999 are most at risk of overpaying. However, the regulator is urging all customers to check whether they can switch to a cheaper deal, cutting 10 per cent off their bill – about £100.

Many customers with families or houses of above-average size will save up to £400.

Some of the most vulnerable customers will be using pre-payment meters. The paper confirms that they are being royally screwed-over: Customers on pre-payment meters are paying the most for their power even though they usually have lower incomes than those using direct debit. In the most extreme case, a north-east England prepayment customer with British Gas and Npower can over-pay by £486 more a year, according to Energywatch, the industry watchdog.

Coming on top of the news that consumers in Wales are paying up to 18% more for electricity than customers in England the case for tighter regulation has now become over-whelming. Whether that happens will depend on the outcome of the inquiry by the House of Commons' Business, Enterprise and Regulatory Reform Select Committee and whether the Competition Commission takes up the call by Energywatch to look into the industry.

Surely the government cannot hold off acting for much longer, even if it is only to put those on pre-payment meters onto a level playing field with everybody else.
Not surprising, but still shocking and VERY wrong. Former PM Edward Heath's phrase, "The unacceptable face of capitalism" seems to have a "ring of truth" here.

It doth seem that the Gazprom mentality is alive and well in the UK Gazproms.
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