The UK has an ageing population, and as such the issue of energy prices is often debated by politicians, activists and the general public. It is an unfortunate state of affairs when the older members of the UK population have to choose between having enough to eat and keeping warm during the winter, and recently the winters in the UK have been particularly long.
Energy prices have risen considerably over the years, and many of the ‘Big Six’ providers were criticised last year for upping their energy prices just before winter began. This is why the gas and electricity watchdog Ofgem (Office of Gas and Electricity Markets) is launching a full investigation into the UK’s top energy providers in order to determine whether they are breaking competition laws.
Ofgem claim that forty three per cent of customers say they do not believe that energy companies are being truthful about the costs of energy prices, and the body is also concerned that most suppliers are reporting increasing profits – from £233m in 2009 to £1.1bn in 2012. Dermot Nolan, the newly installed chief executive of Ofgem, said: “Ofgem believes a referral offers the opportunity to once and for all clear the air and decide if there are any further barriers which are preventing competition from bearing down as hard as possible on prices.
“I want to make sure that consumers are put at the heart of this market, so we will continue to take action to help consumers. This includes from today putting the industry on notice that any new serious breach of the rules which comes to light will be likely to attract a higher penalty from Ofgem.” Richard Lloyd, executive director of the consumer group Which?, who is supporting the investigation, said: “This investigation must work quickly to expose what is really happening in the energy market and confirm where competition is lacking.
“It is make-or-break time for the energy suppliers, who should not wait to be forced into action but instead start now to put customers first, keep costs as low as possible and trade transparently.” However, Sam Laidlaw, chief executive of British Gas parent group Centrica, claimed that a full investigation into energy suppliers would lead to a drop in confidence from investors, which could ultimately cause rolling blackouts across the UK.
This statement has been vilified by a number of newspapers this morning, with some even going so far as to say that Sam Laidlaw is trying to scare Ofgem into calling off the investigation. Ed Miliband has claimed that under a Labour government small businesses would be more protected from big energy firms increasing their prices, and that their policy could save small businesses up to fifty thousand pounds a year. He added: “We have to mend the broken energy market and freeze bills up to 2017 not just for customers of one company but for all customers of all the energy companies and all customers.
It is also expected for him to also say in a speech to the Federation of Small Businesses later: “It is unacceptable that companies like yours do not have even basic protections that are available to households under the law from unfair energy contracts. The next Labour government would ban the energy companies from rolling small businesses on to more expensive tariffs without their consent. And we will create proper competition enforced by a new regulator to keep prices as low as possible for the years ahead.”
For landlords, the investigation into energy suppliers will mean two things: firstly, if the investigation is successful energy prices may soon fall, meaning that tenants will be less likely to fall into rent arrears as they will have smaller outgoings. Secondly, there may be more competition in the energy market, meaning that it may be beneficial for all the properties in your portfolio to switch providers.
The Coalition government has already created schemes to help the private rental sector to save energy, such as the Green Deal which helps landlords make their properties more energy efficient. However, the future of this scheme may be put into jeopardy if energy prices drop significantly in the near future, and it is not clear how these changes will affect landlord insurance policies.
Whether the investigation by Ofgem has a positive effect on energy prices or not, the UK public will be happy to see that someone is finally standing up to energy providers and ensuring that they are not abusing their power. Fair competition in the energy sector will not only benefit the UK economy, but also means that we will hopefully see less people struggling to afford their electricity and heating bills in the near future.