Will fixed rate energy customers get reduced bills?

Update here.

There's a big debate over who should foot the bill for insulation and energy-saving measures under ECO (the Energy Company Obligation).

Up until now the suppliers have had to pay, passing the cost to customers -- adding around £90 to the energy bill.

But after the recent outcry over energy prices, those same suppliers now expect the Chancellor to shift the cost to taxpayers, with the news expected in 5th December's Autumn Statement (shouldn't it be the Winter Statement?).

EDF put up its prices by less than the others, saying it was assuming the Chancellor would lighten the burden. Other companies have said they'll scale back the price hikes they have already announced.

But millions of customers are on fixed price deals. The prices they pay are not supposed to change, raising the risk that they might not benefit from the heralded cut in bills.

Well, I hear from npower today that they will pass on any price reductions to fixed rate customers, even though -- according to the small print -- they don't have to.

Will the other suppliers do the same? They won't want to look like Christmas Scrooges, will they?

Petrol down, gas up

It's a puzzle for anyone used to seeing prices for the various types of energy we use moving backwards or forwards hand in hand.

The cost of filling up the car accelerated ahead but now it's gone into reverse. Well, slightly, by 5 and a half pence a litre.

But the gas price bubble just seems to grow bigger and bigger. More than 8% bigger with British Gas's latest price increase.

One explanation is that petrol prices are affected by movements in the dollar/pound exchange rate, because crude oil and refined petrol are both priced in dollars.

The pound has enjoyed a significant recovery against the dollar in recent months, jumping from about $1.50 in value to around $1.60.

So while crude oil hasn't moved much in world markets, the cost to us in the UK has gone down.

Gas, on the other hand, is traded in sterling in the UK. There is less of the currency effect.

Not everyone in the energy market believes there has been enough of a rise to justify the price increase.

But British Gas says the cost of getting hold of gas and electricity accounts for a third of the jump in bills.

Will the petrol drop compensate for the gas hike?

If you fill up the car once a week, you are likely to gain more than you lose.

However, occasional drivers will still have cause to shiver from this week's energy news.

The petrol benefit will be outweighed by the cost of keeping warm.

Some of your responses on twitter:

@immaggi

Shhh, don't say it out loud or they'll hike the petrol up too!

@seeperry

Lack of gas storage is a partial explanation.

@GoodfishLtd

Because #Milliband warned the #energy companies that #Labour would cap their charges, so they're all rushing to the counter now!

‏@graemeburton

real-reason-why-energy-prices-are-spiralling-out-control Basically, the reason is policies intro by @Ed_Miliband that the coalition won't reverse.

@Shinsei1967

Petrol Fuel Duty frozen and petrol co's don't need tens of billions of new investment in plant and distribution.

@obotheclown2m

different raw materials. Duh.

Why our energy bills are stupid

British Gas's 6% price rise has highlighted an absurdity about the way in which we are charged, and pay for, gas and electricity.

The point is that prices will continue to go up over time, almost inevitably. Hence, we need to reduce consumption, both to hold down our bills and to reduce carbon emissions.

Yet the pricing structure we are faced with actually encourages consumers and businesses to use more.

Most tariffs have a daily standing charge or they start high and then go down once you have burned up a certain amount.

Low users tend to pay the most per unit.

Why not turn the system on its head: start low, then impose higher tariffs if you use more, rising to penal rates?

That wouldn't be in the suppliers' interests, because they're in the weird business of trying to sell more energy, while having to fly the flag for energy conservation.

But it would cut usage of gas and electricity - and protect people and businesses who did their best to remain within reasonable consumption limits.

There's a hint today from British Gas on can be achieved.

It says that despite hefty price increases in recent years, customers bills have only gone up in line with inflation, because they are using less.

One reason is that people simply can't afford to turn on the heating.

Wouldn't it be better if they paid less for what they really needed, but a higher charge for wasting energy?

Trouble keeping warm

Last autumn's sharp gas and electricity price rises pushed an extra 400,000 English households into fuel poverty, according to the Energy Department, DECC.


It says that "price rises in the latter part of 2011 lead to an increase of around 0.4m households", taking the total to 3.9m.


Since then we've seen a modest cut in prices earlier this year, but British Gas has indicated that prices will rise significantly again before the coming winter.


So the fuel poverty total is likely to rise once more.


Fuel poverty is defined as households which spend more than 10 per cent of their income keeping warm.

£280 on energy bills

The Energy Secretary Chris Huhne has revealed that the cost of policies to deal with climate change will add £280 to household energy bills by 2020.

The policies, including support for renewable energy, will add 27% to the price of electricity.

However, he said that energy efficiency measures, such as home insulation, would cut bills by more than that. So the overall effect would be a £94 reduction in bills, a drop of 7%.

The figures ignore any increase in the underlying price of gas and electricity, which will add significantly more to the cost of heat and power.

The government is introducing a Green Deal next year, enabling households to pay for insulation out of the future savings they achieve from having it installed.

Energy companies will have to provide £1.3 billion a year to ensure everyone is able to benefit from the Green Deal, no matter their income or the type of house they live in.

Help if the energy bill is a problem

Scottish & Southern is bringing in its prices rises from today. Eon's price hikes came in yesterday and npower's arrive on 1st October. Scottish Power and British Gas tariffs have already gone up.

The CCCS (Consumer Credit Counselling Service) says that a third of people with debt problems are also in fuel poverty - they're struggling to pay their bills.

If you're having trouble paying for gas and electricity, here are some places to go to for help:

Home Heat Helpline 0800 336699

CCCS Debt Remedy

My Money Steps

British Gas, Scottish Gas Trust

Other British Gas help
And check with your supplier for help, if it's another one.

Winter Fuel Payment

Cold Weather Payment

How British Gas nudges you into paying more

Are we too trusting, too gullible or too stupid?

Like many businesses, British Gas doesn't much care which word describes us best. It's just keen to take advantage.

Hence the message the company is sending out to customers who were on its Websaver tariff, which is guaranteed to be 6% lower than its Standard tariff:

"We would just like to remind you that your WebSaver 5 energy tariff is coming to an end on 28 February 2011. As a result, you will be automatically transferred on to our standard gas and electricity tariff so you don’t need to do anything."

Granted, they include a link which explains how much the average Standard bill will be, though not comparing it to yours. And, later in the note, there is a link which guides you to a comparison of all their tariffs.

But why not provide the comparison up front and show that your charges will rise to fill that 6% gap?

The point is that customers really do need to do something, and fast. The obvious move would be to renew the Websaver tariff or they could shop around.

Plenty of them will put in some research to discover the best deal but, inevitably, a number of customers will not. They will end up paying more for their gas and electricity for months or even years.

And British Gas's profit margin will get a little bit fatter.