Chris Huhne, the energy secretary, has said the government can deliver some "real hits" on household energy bills by giving the country's biggest gas and electricity providers a tougher time.
Consumers will be encouraged to take steps to reduce their energy bills amid growing concerns in Whitehall over the sharp increase in prices.
Huhne and David Cameron will outline the measures after summoning Britain's six biggest suppliers to a special energy summit in London on Monday.
In a joint article previewing that event, the energy secretary and the prime minister express their determination to see a fall in prices.
Huhne will point out that a small proportion of the increase in energy bills over the last year – just £20 – has been caused by Britain's renewable energy obligations. The bulk of the increase has been caused by the dramatic rise in gas prices.
Speaking before the meeting, Huhne told BBC Radio 4's Today programme that the government would be on the consumers' side to ensure they got a better deal.
He said the government's prediction, and that of virtually everybody else, is that bills were going to go up in the medium term. But while the energy companies were not "the Salvation Army", and expected to earn respectable returns, Huhne continued, they needed to operate in a fair and competitive market.
The energy secretary said the long-term aim was to stop Britain being so reliant on fossil fuels from "volatile parts of the world" by developing domestic sources from renewable and nuclear, but in the short run, a more competitive UK market was key.
Huhne said 99% of household energy in Britain is provided by the "big six", and that 85% of consumers never consider switching supplier, so the task at hand was: "Can we actually, by making the market more competitive, get a better deal here in the UK?
"We want people to check their tariffs, we want people to switch to cheaper tariffs and we want people to take advantage of the free offers that there are to insulate their homes so they can protect themselves from rising bills this winter," he said.
On rising energy prices, he added: "If we think that fossil fuel prices are going up and up and up, over time, they're moving to renewable energy, moving to nuclear, which is going to insure British consumers against the sort of world gas price increases that we've seen over the last year, that's the sensible course of action.
"In the short term we can get some real hits for consumers by making sure that tariffs are simplified, that it's easier to switch [energy provider], that we can actually provide the 'big six' with a tougher time, and we are on their side in doing that."
Huhne has been critical of consumers who fail to shop around for the best energy prices. But in an interview with the Sunday Times [paywall], he placed the burden on energy companies.
"We know what's wrong with the energy market and we are addressing it," he said. "There have been clear examples of malpractice, and Ofgem has found that people don't switch even though it could provide them with big savings."
Phil Bentley, managing director of British Gas, said he welcomed an honest conversation at Monday's summit about the reality facing Britain's energy industry, as well as discussing what can be done to reduce energy bills this winter.
Pressed on the findings of a recent Which? survey showing that consumers are being misinformed about the best deals, he agreed that the industry needed to do more to win customer confidence.
He said his company would be writing to all its customers on Monday to ask them if they were on the right tariff. "If there are better tariffs that are appropriate for customers then they would switch to that."
But Bentley admitted the number of tariffs was confusing for customers. "We welcome a debate today about transparency to ensure we have some clear way forward to give customers absolute choice."
He said unit prices for energy were going to go up in the UK, which has the lowest gas prices in western Europe, and blamed the rises on the international markets. The way to keep energy bills down was through "using less units, by making homes as energy efficient as possible", he added.
"In my opinion, unit prices will only go one way unless someone discovers huge amounts of gas and imports it into the UK. The international price for gas, I'm afraid, is going up."
He said the industry profits as a whole last year were not high, given the huge investments needed in the sector.
Caroline Flint, the shadow energy and climate change secretary, said: "The government's warm words won't heat homes during a bitter winter. They're unable to take on vested interests, they won't tackle the spiralling prices imposed by the energy giants, they won't investigate the mis-selling of energy and they won't help the pensioners whose winter fuel payments have been cut.
"Unless the out-of-touch government gets to grips with the real issues at the energy summit, their only promise is a cold, costly winter for all."
Energy companies were attacked by the Labour leader, Ed Miliband, in his keynote speech to the Labour party conference last month when he called for "irresponsible, predatory" industry practices to be challenged .
Miliband accused the big energy companies of being involved in a "rigged market" as he called for a break-up of their dominance.
Huhne and Cameron insisted that the next stage of Ofgem's retail energy market reforms, announced on Friday, would force energy companies to sell more of their electricity on the open market.
In the MoneySavingExpert.com article, Huhne and Cameron wrote: "These radical reforms will completely overhaul and simplify tariffs, protecting consumers from price rises and hidden charges and encouraging new players, like supermarkets and co-operatives, to enter energy markets by forcing suppliers to sell more of their electricity on the open market."
Comments in chronological order (Total 218 comments)
17 October 2011 10:28AM
Why? So that shareholders can have parties and go on hot holidays while the people of Britain freeze!
Sod off Huhne.
Nationalise energy now.
17 October 2011 10:33AM
If the verbal flatulence of the Tories were harnessed to the National Grid, we could probably have massively lower energy bills tomorrow.
17 October 2011 10:35AM
Is there any sort of official government guidance on controlling Cartels?
Good news is I haven't had the heating on yet apart from a couple of hours a couple of weeks ago.
From the forecast I think it will be pushing it not to from the middle of this week.
Bet they hate this warm weather, put their prices up and the ungrateful bastards don't even bother to turn it on.
17 October 2011 10:47AM
This is just playing to the gallery in the hope of winning some cheap votes. The only way to stop this extortion racket is to renationalise the UK energy supply and they know it.
17 October 2011 10:48AM
Ive just agreed to fix my energy prices, does this mean they are going to drop? or is it more likely that the energy companies will all be offering fixed prices so that if they increase they dont affect everyone?
17 October 2011 10:48AM
Switching supplier won't make much difference when, in all probability, there is price fixing going on between the various suppliers.
17 October 2011 10:48AM
Why don't you nationalize the energy companies? There's a plan for you and I claim my £200,000 consultancy fee.
17 October 2011 10:49AM
Re-Nationalise the domestic energy industry.
Don't allow these profit driven shits to use their pricing policies to kill the elderly and infirm, who cannot afford to heat their homes.
What sort of a country allows this sort of racketeering to continue?
I despair, I really fucking do.
17 October 2011 10:50AM
As all the big increases seem to have gone through from the major energy companies it seems Huhne and Dickhead Dave are engaged in much huffing and puffing better known as spin!
17 October 2011 10:50AM
We do not need lectures on how we, the consumer, should again bear the brunt of profiteering.
We need government action to reduce energy company profits to an appropriate level and to repatriate the last round of insane profits back to consumers by repayments on our bills.
The fact that the government has not already done this - the right thing - is indicative of whose side they are one. Is our lot just to be canon fodder for the greedy forever?
17 October 2011 10:52AM
*PM vows to bring down energy bills*
Cameron: "I'm going to privatise the energy industry so that everyone has cheaper bills in the longer term!"
Aide:"er, Prime Minister, they are already privatised"
Cameron: "WHAT???? What the f*ck do we do then???? We're shafted!"
17 October 2011 10:52AM
I love how people think changing to nationalisation of these companies will make a difference.
Prices will rise from now on, just like fuel. End of, let's accept it and move on.
Yes, nationalisation will reduce bills, but it's like switching to the lowest tarrif; you save now, this year, but next year, you're screwed as the price jump will be huge.
So what's the point?
17 October 2011 10:52AM
Cameron's 'vow'...what a load of shit. That would mean him having principles.
17 October 2011 10:54AM
In 97' they dubbed it 'Cool Britannia'.
But that was an unfortunate typo by a government PR minion.
The correct nomenclature is 'Cold Britannia'.
17 October 2011 10:54AM
But it is the policy of all political parties in this country for energy prices to be high, so what's the problem ? Carbon emissions pricing is specifically designed to reduce energy use by making the price higher for cheap (but carbon intensive) sources of energy like coal and oil and thereby facilitate a switch to much more expensive forms such as wind, solar (and nuclear). It is totally illogical of you now all to moan about high energy prices - that's what you all wanted ! How did you think that carbon pricing would work ?
17 October 2011 10:56AM
I couldnt be bothered reading the full article but its all spin and bollocks.
The energy companies charge us the maximum they can get away with and I assume there is plenty of kick back to keep Dave and chums happy.
17 October 2011 10:57AM
More rhetoric .. don't hold you breath waiting for fair prices. Making profits like this is immoral. The utilities should be re-nationalized and Government should take responsibility (why else do we 'elect' them?) for the well-being of all.
17 October 2011 10:58AM
That fool Huhne is still insisting that changing suppliers can save lots of money, why can they not get their heads round the fact that energy is a vital commodity which is rapidly becoming unaffordable for a significant amount of people. I am changing suppliers not because I will save much but to express my disgust with British Gas offering to "fix" their latest price rise if I paid them an extra 5% on top of the latest price hike. Shopping for energy is akin to gambling these days and the only winners are the big 6.
17 October 2011 10:58AM
Cheap tariffs? We're talking about an energy cartel - their price rises are organised in lock-step fashion. Somebody increases their charges and, within a couple of months - and for no other reason than 'because we can' - so does everybody else. It's like shopping around for the cheapest petrol - the inexorable across the board rises will cripple you eventually, no matter how assiduous you are in trying to get the best deal. Nationalisation, with set, (as long as is maintainable) locked-in rates - with no profits hived off to shareholders and board members - is the only way to go.
17 October 2011 10:59AM
The majority of the energy price rise is mostly due to an increase in wholesale gas prices, rather than naked profiteering. Although there's plenty of that too.
I don't really think nationalisation would help at all. We'd probably be looking at a similar scale of price rises. But what really does have to happen is re-establishing control over the current energy cartel. There are two steps:
1. Better regulation by Ofgem.
2. Better diversification of the market.
We're starting to see progress from Ofgem, so that's good - but we'll see it actually means anything in practice.
Choosing smaller independent providers will help with the second point (check out Ecotricity!)
17 October 2011 10:59AM
If we employed all the resources and manpower involved in concocting and hard selling bewildering energy tariffs do you think we might have a chance of developing alternative solutions to the worlds diminishing none renewable energy resources?
17 October 2011 10:59AM
energy cartels are one ,if not THE biggest con currently making britain a fucking joke and an increasingly demoralising place to live , god knows whats coming next ,if you can - pack your bags and get the fuck out , what happensd to the ombundsman , has he been sacked ,made redundent ???
17 October 2011 10:59AM
@Dynasty2021
17 October 2011 10:52AM
Energy prices may well rise, that is not the argument; what some posters here feel, and I include myself in that number, is that it's that profits continue to rise and continue to rise at the expense of those who can least afford it.
It's not difficult, you just have to think sometimes.
17 October 2011 11:01AM
Nationalisation is NOT the answer - that would mean no choice and no incentive to provide decent customer service.
What's that you say? There's no choice now?
Well, that my friends is precisely the problem; you switch providers only to find your new one puts its price up to match the others!
That is the problem - there is no proper competition - all the companies went from making £20 per customer to £80 per customer (or whatever it is).
Why isn't there a company saying - we can still make a great profit at £30 a customer? They would get all the business and this would force the others to cut their prices too.
That is how competition is supposed to work. It works okay with supermarkets - you know Waitrose and M&S will cost you more than Sainsburys, which will cost you more than Morrisons, which will cost you more than Aldi.
So, forget nationalisation - get these profiteering bleeders to actually compete properly - and if they won't set a maxiumum profit per customer limit!
17 October 2011 11:01AM
If this is true, then why was it announced last week that profits per customer rose from £15 per year to £125 per year?
http://www.channel4.com/news/energy-firms-profits-soar
We're not idiots, you know.
17 October 2011 11:01AM
@Dynasty2021
No, let's not "accept it and move on".
Right now there are a couple of hundred people out in the cold on the steps of St Paul's Cathedral, doing what they can to fight for a better world. Round the world, thousands more are doing the same.
If our ancestors had your attitude, women would never have got the vote, trade unions would never have existed and we'd all still be tied to the land.
You "accept it and move on" if you like, I'm with the ones who want to do something about it.
17 October 2011 11:02AM
Hithertoo,Cameron's greatest contribution to energy costs is to reduce the winter allowance for pensioners.
17 October 2011 11:03AM
Why? So that shareholders can have parties and go on hot holidays while the people of Britain freeze!
Lots of emotional heat teaandchocolate, but not a lot of light. I am sure you will find that the energy companies are owned overwhelmingly by pension funds and those investments like ISA's and so on. In other words owned by pretty ordinary people like you and me.
17 October 2011 11:03AM
Where's the evidence of profittering by energy companies anyway ? E.ON made a massive loss last Q so how does that fit into the narrative ? Their profit margin per household for the whole of last year was £3.
Partly the figures are distorted by people buying fixed rate contracts, so OF COURSE the margins will look high in Summer (when the latest figures were published) and will then fall again in the Winter as wholesale energy prices rise with demand.
Anyway, as a I said, how come you all don't think high energy prices are a good thing because they reduce carbon emissions ?
17 October 2011 11:05AM
matthewmacleod:
That's the problem. They're not 'providers' - they don't generate the resources or energy, they just act as agents for its sale. We don't need them, and the fact that 'competition' has done nothing to keep prices down to a bearable level (acknowledging ever-increasing unit prices) shows that the ideology doesn't deliver.
17 October 2011 11:06AM
@OldBristolian
It's a cartel, there's no way, under the present structure, to make them compete.
The only competition is for who'll be the first to announce the next price hike.
17 October 2011 11:06AM
No worries - not long to christmas now, cheer up!
We can always wait for 4 more years to vote for the saviour party.
17 October 2011 11:08AM
If this is true, then why was it announced last week that profits per customer rose from £15 per year to £125 per year?
It was a snapshot from a particular day. If you measure it today or tomorrow it will be different and was designed to produce the knee jerk response we are now getting. This is no way to run an energy policy. On a particular day in 2010 there would have been a net loss per household simply because input prices go up and down according to demand.
17 October 2011 11:08AM
Romantic notion of course. A bit like how the Good Ol' Days of BR will somehow better than our modern rail network.
17 October 2011 11:09AM
"Prime minister and energy secretary call a summit with six biggest suppliers in effort to reduce household bills"
Please say it thus " Prime minister and energy secretary call a summit with six biggest suppliers in effort to reduce obscene PROFITS "
Language is important you know.
Kind of sickly hearing our Tory ministers talking about sorting this out, making it fairer etc etc.
Of course, they are so different to the Tory bastards who sold it all off in the first place. Aren't they ?
Piss off !
Scum.
Style of thing
17 October 2011 11:10AM
Sorry, I am not 100% sure of this, as I only heard briefly on Friday on the TV from 1 ear (please correct if I am wrong)
One of the chief executive of one major Energy company stated that for each £3 of profit received, £1 goes into investing into new energy.
Where do the other £2 go?
17 October 2011 11:10AM
@Dynasty2021
Are you for real? What an utterly demoralizing stance.
17 October 2011 11:10AM
We can always wait for 4 more years to vote for the saviour party.
Is that the party that spends other people's money. If that is your philosophy you can always go and live in Greece where I believe the temperatures are higher anyway, so you can kill 2 birds...
17 October 2011 11:11AM
I.E. "You are on yer own. Stop whingeing and find a cheaper supplier. Just stop talking about Cabinet Ministers for hire and conspiracies to pervert the course of justice. We are the Government and we will do what we like, so there!"
Hugs
Hernia
17 October 2011 11:12AM
The Energy companies make between 5-7% margin, Tesco's make much higher margins. The reason there are not a large number of people wanting to join the market is because it is actiually not really worth it.
For the 5-7% margin for domestic business they have to buy energy for their whole protfolio and at the end of each day they have to balance with the national grid, i.e they have to have purchased the correct amount of energy to balance what their customers used, bearing in mind that is reliant on the weather and lots of other variables that means they have to build in a lot of risk so that they are not having to buy or sell on the short term markets where they can loose a lot of money very quickly.
The supermarkets have storage, the energy companies cannot store their product.
All of the suppliers have to buy from the same place, i.e. the market which is why they all cost about the same , the only variables being their overheads and their ability to price risk and their ability to purchase correctly to balance their portfolio.
So to compare supermarkets is not really fair, you should maybe compair the price of milk, or even heinz baked beans, if you do so you will find its about the same price wherever you buy it because teh supply price is roughly the same.
In the commercial markets place, prices are simpler and lower than domestic energy but then again consumption is more stable and the suppliers can make easier forecasts on the amount of base load and the peaks and troughs of consumption are smaller than for domestic.
17 October 2011 11:13AM
well Dave is in power so i suppose it's appropriate.<waits for laughter and applause to die down>
he is a godsend though isn't he? if there's a bit of +ve PR to be had out of something you'll find him somewhere near. he reminds me more and more of the puffed up Lord Farquaad from SHREK.
17 October 2011 11:13AM
So that's one thing you get from a Tory government that you'll never get from Labour--hope.
Please indicate exactly how much you expect your energy bills to fall when Caroline Flint is in charge.
17 October 2011 11:14AM
Any service attending a basic need should NOT be privatised.
Come on Cameron make a positive diffence for a change!
17 October 2011 11:16AM
@mrponks
"he reminds me more and more of the puffed up Lord Farquaad from SHREK."
More like fucking Lord Snooty from the Beano.
17 October 2011 11:16AM
@Dynasty2021
"I love how people think changing to nationalisation of these companies will make a difference. Prices will rise from now on, just like fuel. End of, let's accept it and move on. Yes, nationalisation will reduce bills, but it's like switching to the lowest tarrif; you save now, this year, but next year, you're screwed as the price jump will be huge.
So what's the point?"
Privatising the energy supply companies was a huge mistake for almost 70% of the UK population - though of course it was never done with their benefit in mind, it was done to support the rich 30%.
Energy, like health and education, is not a commodity - it's a service. People need it to live. The privatised energy companies (PECs) now sell it as commodity, with one sole aim - not to mitigate price increases, which a nationalised sector would do, nor invest in better infrastructure, as nationalised sector supply would do, but to produce profits for it's share holders.
Neo-Con Tories wanted this based on the lie that "everyone would become share holders" thus everyone would win - but most people cannot afford shares and cannot play the market with their spare cash. The only people who can are the top 30 - 40%.
And then that there isn't any competition. If you look at all energy prices they are all buying from the same source supplying over the same infrastructure ... it is, in effect, a cartel, as the big 4 supermarkets are, who control 90%+ of the UK food market. There is not enough diversity of supply nor infrastructure to make true competition.
So we are stuck in a world where all the energy companies are effectively playing us off against them.
My suggestion is, in this land of false competition, false concepts of market savings and enriching the wealthy 30% of the population - and lies about how privatising anything does anything for infrastructure, lowering prices or anything else - is:
http://www.cooperativeenergy.coop/
Go and have a look. They have struck a deal with their customers to act like a co-op so you benefit. We are in the process of changing to them.
Neo-Con policies just enrich the wealthy and strip the wealth from the masses.
17 October 2011 11:17AM
Deal with the stupid "green" taxes first.
17 October 2011 11:17AM
S'alright as long as wages keep pace.
Oh.
17 October 2011 11:18AM
Sorry to interrupt the rant festival but it's high energy prices that are making bills big more than rip-off cartels. The EU tracks energy prices and UK prices are relatively cheap, especially gas.
Clearly prices rise fast and fall slow, and many people are bewildered by tariffs and changing supplier is a pain. But as ever there are many factors at work, from a lack of long-term planning over supply meaning energy companies know Britain is desperate for new generative power and can demand big subsidies to build new nuclear plants; to the devalued currency that makes imported oil and gas more expensive. As well there are subsidies to encourage wind power that are recovered via your bills. Government announcements today are a gimmick, a stunt to pretend they're doing something but unless they come with deep structural reform for generation and consumption.
17 October 2011 11:18AM
The sooner we all reduce our dependence on energy the better.
17 October 2011 11:18AM
One of the chief executive of one major Energy company stated that for each £3 of profit received, £1 goes into investing into new energy.
You obviously haven't got a clue about business so here's a short lesson. The statement you use tells you little about energy profits. The key measure for Company profits is one of the ratios involving the gross and net returns on the assets employed. That inevitably means the biggest Companies will make the biggest profits so again when it is reported that a bank( for example) makes x billions of £'s profit , in itself it is meaningless. Your local fish and chip shop could be making more money per £ of investment. So when you ask where has the other £2 gone, you really should be asking what is their investment return and if it is then shown to be excessive, ask the next questions to find out why.