Government energy tariff reforms doomed to fail without radical new measures

With trust in the energy industry collapsing, confusing adverts from energy companies and consumers still reeling from the recent spate of inflation busting price rises, Which? calls for radical new measures to increase competition in the broken energy market.

A new Which? report, The Imbalance of Power, today lays bare the full extent to which the retail energy market is failing consumers.  Which? argues that the Government’s proposals for reform are doomed to fail unless they are beefed up with radical new measures to increase competition in ways that can keep rising energy prices in check.

The report comes as we reveal a shocking 19 point increase in public distrust in energy companies over the last six months.  More than half (54%) of the public now say they don’t trust energy companies, with only car salesmen distrusted more.

New Which? analysis has also found that suppliers aren’t playing fair when they announce and advertise energy prices. Which? found energy companies bamboozling customers with tempting price offers in adverts that could actually leave some households worse off.  And the reality of recent average price rises in the headlines in fact varies widely depending on where you live and how much energy you use. For example, some SSE customers in the North East are facing a hike of as much as 17.15% for electricity.

Rising energy prices are one of consumers’ top financial concerns yet some 75 per cent of customers remain stuck on the most expensive tariffs.

Which? argues that the Government’s commitment to force energy companies to move people onto their lowest energy tariff will not be enough to guarantee a fair price for consumers because of the complexity and lack of competitive pressure in the market.

The Imbalance of Power report calls for new radical solutions to deliver a fairer deal for consumers including:

  • The introduction of a single unit price so that energy prices and new deals can be easily compared at a glance – just like they are on petrol forecourt displays –  allowing people to find the best deal with ease;
  • Changes to improve the switching process, including cutting the time it takes to switch, to make it quicker and easier for consumers to move to a better deal; and
  • For energy companies to make all tariffs available across all payment methods.

These measures, together with the Prime Minister’s energy commitment, should make competition work and keep prices keen.  But in case the outcome for consumers has not improved by 2015, Which? wants the Government to reserve the right to take a further step and guarantee a fair price for people that are put on the default tariff.

Which? executive director, Richard Lloyd, said:

“There has been a collapse in trust in energy companies in the last six months. After the recent round of inflation busting price hikes and announcements about the cost to consumers of investment in the energy system, it’s no wonder people are left questioning whether the price they are paying is a fair one.

“The Government’s energy tariff reforms are doomed to fail without more radical action to increase competition.  Only with tougher action to tackle this broken market will consumers be confident they’re paying a fair price.”

Notes for editors

  1. The Imbalance of Power report can be accessed on our website.
  2. Populus, on behalf of Which?, surveyed approximately 2000 UK adults every month from June as part of the Which? Consumer Insight Tracker to establish consumer levels of trust in industries to act in their best interest. Data were weighted to be representative of all UK adults. 
  3. Read more about our investigation in to energy adverts in January’s Which? magazine.
  4. The largest price increase for each of the major energy suppliers can be found here.
  5. If you think you might be missing out on the cheapest energy deal you can use Which? Switch to compare energy prices. Research from Which? Switch shows that the average saving when switching both gas and electricity is £217* per year. Which? Switch is an independent service that searches the market to provide a comprehensive, transparent and impartial view of your gas and electricity options, including supplier and tariff ratings to help you decide on service as well as price. Visit Which? Switch to compare and save. *Based on 53,459 households who switched suppliers using Which? Switch and The Big Switch between 1st September 2011 and 31st August 2012

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