Governments Quest to Lowering Energy Prices
The government has announced that it will be legislating to ensure that all energy suppliers are giving their customers the best possible prices, in a committed bid to drive the cost of energy prices down.
David Cameron’s announcement has come on the back of several energy company announcements that their prices would be rising in the run-up to winter. These companies include Scottish Power, who announced that their prices will be rising by 8.7%, British Gas who are rising their utility prices by 6% and Npower who will be following suit, at 8.8%. These announcements follow hot on the heels of SSE, who already announced their increase in prices by 9%, in August.
Only E.ON and EDF have not yet announced price rises, although the former is maintaining a prize freeze until January.
Legislation is now necessary.
The Prime Minister told Parliament that utility companies must be forced to provide customers with their lowest tariffs. This new law will be incorporated into a new Energy Bill, which is due to be presented by December 2012. A government spokesman added that the government intended to communicate the details out further and explain how the law would be put into effective, but reiterated that the objective of the new legislation was clear.
Consumer groups concern.
However, some consumer groups are worried that changes to legislation might endanger competition and eventually disadvantage those who are already at the whim of rocketing domestic and business electric prices.
They pointed to the long term market failure, where successive government regimes have attempted – and largely failed – to encourage competition in the energy market to drive forward better market conditions for energy customers. Nick Clegg’s policy of forcing energy providers to contact their customers annually to highlight their best tariffs, was one such example.
The consumer groups are keen to encourage customers to be keenly aware of their rights in the energy sphere, where awareness may need improving. Many customers are unaware of where they can obtain help and what their rights are when dealing with energy providers. For example, if a customer has a 2 hour slot to get a meter reading taken and the supplier misses the slot, they can claim compensation from that supplier – from 22 for electricity and 20 for gas. Power cuts that last for 18 hours or above are also eligible for compensation of up to 54.
Which? and other consumer groups have since rallied together to help customers and created a guide to energy rights, which is entitled ‘staying connected’.
Meanwhile, market analysts, consumers and rights groups alike hope to see positive changes in the energy market soon, to help benefit the UK economy and divert valuable income away from fixed bills and back onto the high street, where it can be used to bolster British businesses and help to get the economy back up and running. There are also concerns that rising energy prices will drive up inflation, which is an additional worry for those hoping for a stronger British economy in 2013 and beyond.
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