Which? renews call for the Chancellor to cut the costs on consumers’ energy bills ahead of the 2014 Budget

With energy prices still the top worry for consumers, more than 33,000 people have supported our campaign to fix the broken energy market, including our call for the Chancellor to freeze the Carbon Floor Price in his 2014 Budget.

  • With three quarters of people (77%) still worried about energy prices and just one in five (20%) trusting gas and electricity suppliers to act in their best interests, we believe that the Carbon Floor Price is an unnecessary burden on consumers that does little to incentivise low carbon energy production but increases wholesale costs.
  • That’s why we’re calling on the Chancellor to at least freeze the Carbon Floor Price in his 2014 Budget; ultimately we would like to see it scrapped.
  • Three weeks ago we launched our Fix the Big Six campaign that calls on the Government, regulators and the energy companies to drive forward more radical reforms to fix the broken energy market.
  • As part of these reforms we want to see the Government controlling all the costs that are added to consumers’ bills.  This means more scrutiny of energy policy costs, all investment in low carbon generation secured at the lowest possible cost and action to reduce the burden of the Carbon Floor Price.
  • At the Autumn Statement the Government listened to Which?’s ‘Cut Them Down George’ campaign and started to tackle energy bills with an announcement to cut the cost of levies, saving households an average of £50.  The next step is to deal with the Carbon Floor Price.
  • The Carbon Floor Price is a tax that energy generators have to pay on the carbon they emit when they use fossil fuels to generate electricity, which increases the wholesale price of energy. The companies pass on this increase to consumers in their bills.
  • The Chancellor introduced the Carbon Floor Price in order to help incentivise investment in low-carbon technologies and make the move away from carbon polluting fossil fuels. However, as it is an annually reviewed tax it doesn’t offer much certainty or confidence for investors in new low-carbon generation who have to think long-term.

 Which? executive director, Richard Lloyd said:

“It’s vital that the Government continues to get a grip on the massive costs that are being passed on to household bills, which is why we’re calling on the Chancellor to take further action in the Budget. The Carbon Floor Price is set to become a bigger and unnecessary burden on struggling consumers in coming years and we think it should be scrapped.

“Our Fix the Big Six campaign is calling for a full competition inquiry so that hard-pressed consumers can be confident that the market works well for them, as well as shareholders, and that the price they pay is fair.”

Background:

We are calling for six fixes to the energy market, which the Federation of Small Businesses have now supported in full:

FIX NO.1. INCREASE COMPETITION

Launch a full competition inquiry into the energy market in March 2014.

  • The OFT, Ofgem and the Competition & Markets Authority should refer the energy market for a full competition investigation looking at whether competition is working for consumers and how it could be increased it through changes to energy company structures to deliver trust, transparency and fair prices.

FIX NO.2. TRANSPARENT TRADING

The big six energy companies’ supply and generation businesses should be separated.

  • Supply and generation businesses should be ring fenced with distinct licence holders.
  • Increase the amount of trading in the wholesale energy market on exchanges to increase liquidity in the market and transparency.

FIX NO.3. PEOPLE POWER

Simple pricing and swifter switching must be introduced to help people get the best deals.

  • Simple, easy to compare pricing should be introduced to help people spot the best deal for them.
  • 7 day switching must be introduced as soon as possible.

FIX NO.4. COST CONTROL

The Government must control costs added to consumers’ bills.

  • The Carbon Floor Price should be frozen or cut at the 2014 Budget.
  • The Government should increase scrutiny of the costs added to consumers bills by programmes such as the Energy Company Obligation and the smart-meter roll-out.
  • Investment in low carbon generation must be secured at the lowest possible cost with competition introduced from day one.

FIX NO.5. CUSTOMER TRUST

Energy companies must end practices that unfairly increase costs and damage customer trust.

  • Energy companies must make sure that charges for not paying by direct debit are cost reflective and should not hold onto high levels of customers’ cash, when they’re in credit.
  • Energy companies must improve the poor levels of customer satisfaction by improving complaints handling and levels of service.

FIX NO.6. WARMER HOMES

The Government should overhaul the Green Deal to make it a fairer deal for consumers.

  • The review of the Green Deal’s first year must identify why it’s appeal is low and set out recommendations to tackle this.
  • Companies should not be allowed to charge large repayment fees if people want to pay off a Green Deal loan early.

 

 

Press Release