There were howls of protest as British Gas and Npower revealed combined profits of more than £1 billion last week. The furore was hardly surprising as the announcements came while millions of customers were still working out how they will cope with mammoth price rises.
The £571 million British Gas made last year was its biggest profit ever. Yet it felt the need to impose increases averaging 15 per cent on its 16 million customers. Npower, owned by Germany’s RWE, lifted its UK profits 40 per cent to around £500 million but it also turned the heat on its six million customers with increases of around 17 per cent for both gas and electricity.
Even before these hikes – cruelly timed for winter – power bills were stretching more family budgets to breaking point. The number of people more than £600 behind with their gas bill has jumped by two thirds in the past three years while those with electricity arrears of the same amount is up 20 per cent. It is no wonder there was such an outcry or that the latest – remarkably similar – price increases have prompted industry regulator to investigate.
While only last month, Ofgem cleared the companies of price fixing it has decided to put the industry under the microscope to see if competition is really working. It appears concerned that while large numbers of people are switching power suppliers in the hope of finding a better deal there is a growing belief amongst consumers that the suppliers are ‘all as bad as each other".
Ofgem says half the population has never switched and it probably hopes to convince many of them that it’s worth the effort. It almost certainly is. On the surface there doesn’t appear to much more than the price of a few pints of beer between the companies average bills.
But it is worth taking a closer look as the energy companies are increasingly going in for "regional pricing", particularly for electricity. This means offering cheaper deals in areas here they’re hoping to win new business.
Viewed another way this involves stinging loyal customers in their traditional heartlands for as much as possible and using that money to subsidise price cuts in other regions. So you could benefit by finding the supplier most eager to win new business in your area.
There are other things customers will need to do in order to maximise savings which Energywatch claim can be as high as £200. Firstly they will need to buy both their gas and electricity from the same supplier. They will also need to pay bills promptly, preferably by direct debit and be willing to manage their accounts on the internet and do without a paper bill.
While this doubtless precludes some people the mere fact that you’re reading this means you’d probably be comfortable with an on-line account. Of course it also takes time to switch suppliers but in all honesty probably no more than an hour. And, after all, not many people can command anything like £200 for an hour’s work.
By CLINTON MANNING