SNP warns UK energy policies are failing consumers

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By a Newsnet reporter

SNP MP for Banff and Buchan, Dr Eilidh Whiteford, has said that the continually rising costs of fuel are evidence that the UK government’s energy advice is failing consumers. 

The remarks come as the UK government advises consumers to adopt energy saving measures and to shop around different energy suppliers for the best deal, however a Parliamentary question revealed that the number of consumers who are switching suppliers has fallen substantially in recent years.

With the winter weather now making its impact felt across the country, many households are faced with the worry of additional fuel costs.  With prices of fuel constantly rising, the UK Dept of Energy and Climate change has released figures which show that the average annual household fuel bill will be up to £100 more this year than last year.  As 2011 drew to a close, the average household will have paid energy companies £1,175 over the preceding 12 months, compared to £1,075 for the same energy consumption over the course of 2010.

In 2010 4,746,000 households had switched their electricty supplier in the previous five years, while 3,558,000 households had switch gas suppliers.  However in 2008, 5,427,000 households had switched electricty suppliers in the preceding 5 years, and 4,158,000 had switched gas suppliers.  The number of households changing their energy supplier is dropping sharply.  

Dr Eilidh Whiteford said that, if the UK government was serious about reducing domestic energy bills, they needed to look at how prices rise quickly when the wholesale price goes up, but fall slowly, if at all, when the wholesale price falls.

Commenting, Dr Whiteford said:

“Encouraging customers to switch between energy suppliers has been the UK Government’s answer to tackling the problems of sky high bills, but it is clear from these figures that this strategy is not working.

“The sad fact is that most people who are already on a direct debit payment are unlikely to make a significant saving by switching and, indeed, research has shown that many of those who switch have actually ended up on a worse deal.

“Over the summer we saw the big six energy suppliers go through a follow-my-lead of rising energy prices.  How is the average consumer supposed to know what is a good deal without knowing when the next company is going to hike prices?

“Prices are rising much faster even than the ability to cut costs by reducing consumption.

“If the UK government were serious about the reduction in energy bills they need to look at how prices rise quickly when the wholesale price goes up, but fall slowly, if at all, when the wholesale price falls.”

Meanwhile SNP MSP Maureen Watt, has drawn attention to the issue of incorrect billing and highlighted the fact that the big energy companies do not have proper safeguards in place to warn consumers of unexpectedly large bills.  Ms Watt has written to all six companies urging them to put safeguards in place so customers are alerted when something is wrong with their bill.

The MSP for Aberdeen South and North Kincardine says all of the UK’s leading energy suppliers should have automatic warnings in place that would lead to unexpectedly high or low energy use being investigated.

Ms Watt says customers should be alerted when they are billed for an amount markedly different from their previous bill or energy consumption for the same period the previous year.

She added: “My understanding is all six of the UK’s leading energy suppliers currently have no automatic warning system in place – and given mistakes can easily be made and such a bill could be incorrect, this is something that needs to be urgently revised.

“Incorrect bills cause great distress and hardship for those involved, particularly for those in fuel poverty.  If a vulnerable individual was overcharged, they may not have the knowledge or confidence to ensure it is swiftly rectified.

“Instead they may unnecessarily suffer in silence – potentially disregarding heating and food, to ensure they are able to pay a bill they believe to be correct.

“Alternatively, a bill with a charge far lower than expected could result in the savings being spent on other parts of their household budget leading to financial difficulties when the error is spotted.

“I have written to all of the big six energy companies asking them to introduce a system where if a customer’s consumption in a bill varies by a certain threshold up or down in comparison to normal usage, it is automatically flagged up and investigated prior to a bill being sent out.

“With winter weather now upon us, and heating a necessity for all, I believe this is a matter which deserves to be treated with the utmost urgency.”