Why The UK Energy Market Is Such A Turn-Off

Some analysis I did for the Social Market Foundation on energy prices

1. You may have heard a few rumblings about UK energy prices of late

Via Department for Energy and Climate Change

Yes, it's the topic that politicians and newspapers alike just can't seem to stop gassing about (sorry).

Energy prices have risen rapidly over the past decade and UK households are now spending more of their incomes on energy bills than ever before.

2013 has again seen steep increases in the price of gas and electricity. On Saturday British Gas raised their dual fuel price by 9.2%, while this weekend npower are putting up their prices by 9.3% for electricity and 11.1% for gas.

2. Despite this, our energy prices aren’t as bad as some of our European neighbours

Via Department for Energy and Climate Change

3. But years of price rises have taken their toll...UK consumers now distrust energy companies more than car dealers, banks and train operators. Ouch.

With wages stagnating and energy companies' profits rising at record rates, it's no wonder consumers are rather miffed.

4. Politicians are angry too...Labour want to freeze your energy bills for two years

ibtimes.co.uk

Ed Miliband claims to be really quite angry with the energy companies. He certainly looks it. Grrr.

Ed will freeze bills until 2017, if Labour win the next election, so that he can fix the energy market with a ‘tough new regulator’.

...while the Coalition wants you to switch to a cheaper provider

theguardian.com

Instead of implementing a price freeze, another angry Ed, Energy Minister Ed Davey, wants to give people better information on energy bills so that they 'vote with their feet' by switching to cheaper providers.

5. Those who do switch tend to make significant savings

Via ofgem.gov.uk

People think that switching saves them £195 per year (and even more for people on low incomes). That's roughly equivalent to the cost of the green levies which energy companies complain about.

6. The old switcheroo...consumers do appear to be increasingly on the look out for the best energy deals...

google.com

...and there are more and more ways of comparing energy prices...

There are now over twenty separate price comparison websites which allow you to compare energy tariffs. A 2011 report from the Office of Fair Trading (OFT) found that over 73% of online consumers had used a comparison website in the past year.

7. But despite the potential savings (and the price increases) switching rates have been in steady decline since the 2008 crash

Via DECC (2013)

8. So why are people more likely to get divorced than switch energy providers in their lifetime?

Via Office for National Statistics

9. Well, sometimes having more information doesn't always help, especially when it comes to complex energy tariffs. Information overload, anyone?

The OFT found that only 15% of consumers who used price comparison sites actually went as far as making a purchase through them

...so we need better information.

10. But even if we get clearer information it's still not going to be plain sailing. On average it can take up to 6 weeks to switch energy provider in the UK

iea.org

This compares poorly to other European countries such as Norway (6 days) and Portugal (10 days).

The Coalition's aim to provide a market where switches take no longer than 24 hours is ambitious but the change won't happen overnight....

11. The government needs to do more to ensure that people on low incomes (who will gain most from switching) are encouraged to get the best deal

ofgem.gov.uk

People on low incomes are less likely to switch than those on higher incomes, despite energy taking up more of their income.

12. Without these changes consumers will be left in the cold... and our energy market will be stuck in a cycle of low trust and low competition

Thanks to Sean O'Brien at the SMF for helping me put this Buzzfeed together and especially for his excellent New Girl gif ideas...