Energy companies price hikes aren’t evil; they’re just doing their job!
6 months ago admin 0
It’s freezing, the heating’s on full blast, yet the bitter irony is the energy companies price rises are happening THIS WEEK. While I know many feel spit inducing anger, hold on, are you really venting it at the right people?…
The timing really couldn’t have been any worse, a month ago when Scottish & Southern Energy announced its price hike, I started yelling even more fervently “switch to a cheap online tariff now in time for winter”, yet even if you did it on that day, few would’ve actually got in under the wire of this early supercold snap.
You should still be switching urgently though, especially as EDF is planning to drop its big cashback tariff on tomorrow, see gas & electricity switching guide.
The timing of the price hikes is uncanny
Just look at the dates of the big 6 companies rises so far (EDF has said it’ll hold hikes till at least March)…
- Scottish Power price hike 25 Nov
- Scottish & Southern price hike 1 December
- British & Scottish Gas price hike 10 December
They’re almost zoned around the weather turning. A cynic might say they’d planned the snow fall and got their hikes in – just in time. Yet, as Mrs MSE tells me, meteorologists can only look roughly five days ahead, after that you’re in the realms of climatology, which is an imprecise science when it comes to predictions, and the fallout of negative PR is probably something they wanted to avoid. So in reality this is just ‘luck’ or ‘bad luck’ depending how you view it.
In MSE Towers we were expecting to hear from one or both of the remaining big six last Friday, as that’s become when the traditional energy rise announcements are made. Except the Ofgem price probe was launched in the morning, and if I were an energy company boss the last thing I’d want is to then put out a price rise announcement and get caught in the flak of anger from that – so if they were due I suspect they were put on ice (so to speak).
So why aren’t they evil?
First of all, evil is a highly emotive word, yet I’ve seen a good number really using it in this context. However, we have to remember what the job of energy companies actually is.
They are not state-owned companies; during privatisation we sold them to the markets. So their primary job is not to keep us warm, or save, or supply; it is to create value and make money for their shareholders. So where their duty to the customer and the duty to shareholders conflict, the shareholders win, and in this case they do that by putting prices up.
Who should we blame?
There are two sets of people with responsibility for keeping us warm and costs down.
- We need to first take responsibility ourselvesMany are complaining about price rises and the unaffordability of energy, without spending the time and effort to sort it out. Whenever I hear: “I’ve been with my energy company for years and think this is disgusting” I want to say STOP COMPLAINING AND LEAVE ‘EM (see energy switching guide).
Of course, there are some on pre-pay meters or in fuel debt who are trapped, and that is a much more difficult scenario. Yet this is about the many who could act, and cut their bills by 25% but don’t, and get energy grants, and help, but don’t.
- Politicians and regulatorsThe other people who should be protecting us are the regulators and politicians – they’re the ones to bitch to if you’re upset with the behaviour of the energy companies.
Last week Ofgem did launch a price probe, though I would be delightfully surprised if it did result in anything (and by the time it does it may be too late for many). Yet MPs can’t sit on the sidelines. Many spout about anger on this, yet they are the ones in a position to do something.
It’s time as a nation we worked out how the system should operate, what ‘fair profits’ for these former monopoly utilities are, and whether the free market solution has worked (I’m not taking a judgement, just saying we must raise the question).