Thursday, 3 April 2014
Energy price freeze
At the end of February, I received a notification from Good Energy that my electricity bill would be going up as from yesterday. What struck me in their helpful explanation was that the wholesale cost of electricity was not the major factor - indeed, GE have budgeted for a fall of around 1% there. No, the major rises are in government impositions: the cost of preparing for the roll-out of smart metering (+1.88%) and Retail Market Review (+1.74%). Even so, the success of smaller firms like Ovo, Good Energy, Ecotricity and others is a sign that the market for electricity is working better than ten years ago.
The picture for gas is not so rosy. The means of production are limited and in large part in the hands of big companies who can influence the price.
The recent announcement by SSE of a price freeze until 2016 has more to do with the Treasury's freezing of carbon taxes than a response to Labour's policy. In fact, if the big six energy companies believed there was a serious chance of Labour winning the next election, they would be putting up prices now in order to beat a government price freeze.
There was a debate on the issue in the Commons yesterday.