October 6, 2016
A brief recap of what's been happening in the energy industry over the last 7 days.
Loyal Energy Customers Left out from Cheapest Tariffs (Saturday 1st October)
Four of the "Big Six" energy suppliers won't put existing customers on their cheapest tariffs. With the lowest priced deals only being available to new customers. In some cases the deals for existing customers are hundreds of pounds more a year. The four companies, E.ON, EDF, SSE and British Gas said they were simply responding to changes in the market.
While the British Gas tariff has now been withdrawn, other suppliers are still restricting their offers to new customers only.
Such deals were originally banned by the regulator Ofgem in April 2014. Following a recommendation from the Competition and Markets Authority (CMA) in April this year, Ofgem let it be known it would no longer enforce these rules.
Ken Geddes, the chief executive of Energylinx, the largest energy price comparison business in the UK was "gob-smacked" on finding out how large the difference in cost new customers pay in comparison to existing customers.
Mr Geddes tested a new-customer-only tariff from E.ON, launched in mid-September.
He first applied as an E.ON customer and then as a customer of another company. The difference in the two prices he got from E.ON was £260.
"Having spent over a decade doing this job, I don't think I've ever seen that differential", Mr Geddes told the BBC. "I'm just gob-smacked as to the difference in price".
Not all major energy suppliers plan to offer such tariffs.
Scottish Power's Colin McNeil, Commercial Director:
"These tariffs must stop. We must recognise that we are still not a trusted industry, and perceived sharp practices do the industry no favours."
"Any of our customers can switch freely to any of our tariffs at any time."
The four energy companies which have offered the new-customer only tariffs, E.ON, EDF, SSE and British Gas, all say that they are responding to changes in the energy market and that their new tariffs are part of a strategy to serve a wide range of customers.
Ofgem's chief executive Dermot Nolan said that Ofgem had acted on the CMA's recommendation "to make energy competition more similar to telecoms because on the whole that will mean lower prices and better deals for consumers"
Prime Minister Sets Out Energy Retail Intervention Plans (Wednesday 5th October)
Speaking at the Conservative Party conference today, the prime minister pledged that the government "can and should be a force for good, that the state exists to provide what individual people, communities and markets cannot, and that we should employ the power of government for the good of the people."
May continued "That's why where markets are dysfunctional, we should be prepared to intervene. Where companies are exploiting the failures of the market in which they operate, where consumer choice is inhibited by deliberately complex pricing structures, we must set the market right."
The point being that it's just not right that two thirds of energy customers in the United Kingdom are stuck on the most expensive standard tariffs.
This builds on comments earlier in the party conference from business and energy secretary Greg Clark, who said the government "will act" on the £2 billion of consumer detriment outlined by the Competition and Markets Authority (CMA) "in the next few weeks and months".
The PM's comments follow rumours that the government plans to extend price caps after the CMA recommended a transitional price cap for prepayment customers until the completion of the smart meter rollout.
Fracking Approved by UK Government (Thursday 6th October)
Horizontal fracking can go ahead, the government has said, in a landmark ruling for the UK shale gas industry.
Communities Secretary Sajid Javid has approved plans for fracking at Caudrilla's Preston New Road site in Lancashire.
A second site, Roseacre Wood, has not yet been given the green light amid concerns over the impact on the area.
It means, for the first time, UK shale rock will be fracked horizontally, which is expected to yield more gas.
Environmentalists and local campaign groups reacted angrily to the decision, with Friends of the Earth campaigner Pollyanna Steiner calling it a "betrayal of local people".
"Fracking goes against everything we need to do to tackle climate change. The government must end its fixation with dirty fossil fuels and focus instead on harnessing the UK's huge renewable energy resource."
In 2011, all fracking was suspended in the UK after it caused earthquakes near Blackpool. The ban was lifted in 2012. It is not the first time fracking has been approved since the ban was lifted - but it is the first to involve horizontal drilling.
In horizontal fracking, the well is turned horizontally at depth to extract gas from a layer - or layers - of shale rock.
It is seen as far more productive than conventional vertical drilling, which goes directly through the seam and reaches a smaller area.
Posted on October 6, 2016 at 01:09 PM