At the beginning of February 09, the Organisation for Economic Co-operation and Development (OECD) released figures that indicate the major energy providers of Europe have increased the energy prices in the UK much more than they have in their home countries over the course of the last year. This means that where we have seen energy inflation figures of over 12%, other European countries have actually seen their prices fall and there doesn’t seem to be a lot we can do about it.

Few people know that most of the biggest UK energy providers are foreign companies and that British Gas and Scottish & Southern Energy are the only UK registered energy providers around. For example, nPower and E.on are German companies, EDF is French and Scottish Power is Spanish and all of these European countries have seen their energy prices fall over the last 12 months. Figures show that with regards to energy prices, Germany saw cuts of nearly 1%, France of 6.5% and Spain over 7% in the same time period that we saw increases of over 12%.

Strangely though, the wholesale price of gas has fallen by over 40% since the middle of last summer but it is only now that we in the UK are beginning to see cuts in our energy prices – and in some cases this is only because British Gas and Scottish & Southern Energy have announced their price cuts. Recently, British Gas pledged to reduce their prices by 10% and as a result a number of the other large providers have followed suit. The question is though, would the German, French and Spanish companies have introduced similar cuts had British Gas done nothing?

Many experts say no and that the European companies would have continued to charge high energy prices in the UK so that they could keep the prices low within their own countries. They also say that is was simply the competition with the UK suppliers that spurred them into action but who knows what their intentions were in the long run – we should just be happy that they are starting to bring our prices back down.

Saying all this though, it seems that the figures are a little misleading and that we in the UK actually pay less for our energy than the rest of Europe and even with the inflation we still pay less. This is neither here nor there though and it makes you wonder what we could be paying if we had seen the same price cuts as the countries mentioned above. Most of the big energy suppliers have now announced their price cuts to the general population and over the course of the next year everyone should start to see savings, but the question remains – how much could we have saved by now if we’d seen the same degree of price cuts as everyone else in Western Europe last year?

Guest Article by Clare Lynock

As we all know 2008 saw the price of gas and electricity go through the roof and for many domestic consumers this has meant they literally can’t afford to heat their houses and turn their lights on. In fact, reports now show that over 3 million households are suffering from ‘fuel poverty’ and that the majority of the country are paying over 10% of their income just towards their fuel bills. There is however a light on the horizon and many of the big gas and electricty providers have recently revealed their intended price cuts to the nation. But who is offering the best deal?

Scottish Power
Scottish Power cut their Price Sure fixed rate tariff by 10% in January which means that the average household will save around £80 this year as dual fuel customers. Unfortunately the company hasn’t mentioned the effect that the price cut will have on their other tariffs – if any – and so I can’t comment further on this.

Scottish and Southern
Scottish and Southern are part of a larger group however they have independently announced their gas and electricity price cuts which will come into effect from the end of March 09. As things stand they intend to cut gas prices by 4% and electricty by 9% and this will save the average dual fuel customer around £66 per year. Here there is no mention of specific tariffs and so it is assumed that the price cut is good for all customers.

British Gas
Everyone waited in anticipation to see what Bristish Gas would do when the first of the price cuts were announced at the beginning of the year. Not surprisingly they have virtually matched the other providers and are cutting prices by 10% on most tariffs from 19th February 09. For dual fuel customers this can mean a saving of well over £100 per year, depending on your annual consumption.

N-Power
And finally N-Power who have gone down a slightly different route. Their price cuts are to come into effect from May 09 and are set at a whopping 16% for gas but only 3% for electricty. This is fantastic news for households with a large gas consumption but for the rest of us – providing we are dual fuel customers – it averages out at around 10% overall saving again so no real difference from the rest.

In Conclusion
It seems that the price war has started but nobody really wants to take hold of the reins. All of the large providers are offering similar price cuts and so the one you go with will depend on your annual consumption and the unit price they’re offering. Costs are still around 50% higher than they were in 2007, even with the new reductions, and so there are still going to be millions of households struggling to pay bills. You should do your homework and shop around for the exact tariff that suits your needs so that even if the price cuts are temporary, you can still take full advantage of them.

Guest Article by Clare Lynock

Nothing works up the British blood more than being done over by that lot across the channel.

The island nation Britain has never really been comfortable with its close European neighbours; there has just been too much bad blood with France, Germany and Spain over the centuries.

We don’t like how the French call us ‘rosbeefs’, how the German’s hog the sun loungers and how the Spanish insist we eat paella rather than chips, egg and beans.

And we don’t like that thing called the euro, despite its doing better than the good old British pound.

Even now when the subject of Germany crops up in pubs, it still centres on the performance of the Spitfire, the inventor Barnes Wallace and how their national team have to rely on penalties to get them through against the heroic English boys.

All this despite the fact that the European Community controls much of the destiny of the U.K. On one level xenophobia might still be the big thing; on another, the U.K. is a cornerstone of Europe and heavily influenced by events there.

So when the U.K newspapers publish stories about how those rascals across the water are charging us more for our energy than their own countries, we get all worked up.

Whether that’s true or not, and more on that in a minute, it slightly misses the point that during the boom period, to which most of the U.K citizenship benefited, many traditional British companies were sold overseas. Some of our biggest names are no longer owned by nice bowler-hatted gentlemen from the home counties who play cricket on Sunday and drink tea with their little fingers in the air. No, they are now owned by pan-European shareholders, run by executives with names we just can’t pronounce and who are determined to be successful.

U.K. plc has had one of its biggest sales and there’s not much left on the corporate shelves. And it’s a little late to start complaining now.

But back to the xenophobia. When our tabloid newspapers scream that the energy companies, mostly owned by those old enemies across the channel, are ‘screwing’ us at the expense of their own countries, then it gets attention. Energy inflation in the U.K was over 12% last year, or so say the Organisation for Economic Co-Operation and Development (OECD). Yet in Germany it was actually minus 0.8%, France a minus 6.5% and Spain a minus 7.2%.

So, the tabloids highlight those figures, talk about good old British Gas – still an old blighty firm – has made a ten per cent cut in their prices, then add in that there has been no such action from German owned nPower and E.on, nor from French owned EDF, or Spanish owned Scottish Power, and there you have it, they’re killing us.

But, of course, it’s just not that simple.

What would be more helpful from the OECD is not just inflation figures, but a comparison with actual energy costs for all European states. The energy companies claim that the U.K. started from a very low base, that for years we have benefited from low energy costs, but now, there is inevitable catch-up as globally energy becomes more expensive. And still, say The Energy Retail Association, the U.K. has the most competitive energy prices in the world.

So, if they are ‘screwing’ us at the expense of others, in one way we needn’t be surprised, but before we go around saying it, we should make sure we’ve got our facts right.

Guest Article by Neil Camp

Are the foreign owned energy companies charging Britain more for its energy and cutting prices in their own countries?

It’s long been suspected by consumer groups that the U.K. has been singled out as a place of maximum returns for overseas companies providing energy. Throughout the last year the U.K. has faced the highest energy prices, whilst its mainland European neighbours, notably France, Germany and Spain, have fallen.

Now people are pointing out that it can be no coincidence that the major energy companies are owned by companies in France, Germany and Spain. And the accusation is that these companies are helping their own countries, at the expense of the U.K.

Figures from the latest inflation study from the Organisation for Economic Co-Operation and Development (OECD) show that the U.K. suffered the worst inflation for the year to December 2008, at 12.1%. Next in the table came Belgium at only 3.2%. Still in positive territory were Sweden and Italy with 2.3% and 1.3% respectively, but the first drop comes with Germany’s dip of minus 0.8%, Ireland’s at minus 3.3% and Netherlands at minus 3.4%. France showed a healthy minus 6.5% and Spain an even better fall of minus 7.2%. And the biggest drop of all, Switzerland at minus 10.3%.

The consumer groups bemoan the fact that since last summer gas and electricity gas prices have dramatically collapsed, by as much as 40%, many of the gains have yet to be passed on to U.K consumers.

What’s causing the most resentment is that whereas Centrica of Britain, which owns British Gas, has recently announced a ten per cent cut and another U.K. owned energy concern Scottish and Southern has promised cuts, their European counterparts have, up to the time of writing, failed to do the same.

There has been no talk of price cuts for the U.K German owned nPower and E.on, nor from French owned EDF, or Spanish owned Scottish Power.

In their defence, the overseas energy companies claim their detractors are not comparing like for like and that the U.K. started from a lower cost base than its mainland neighbours. Furthermore, state The Energy Retail Association, the U.K. has the most competitive energy prices in the world and that the inflation figures in the OECD findings show just inflation, and not the actual energy prices.

Whatever the truth, as the economic squeeze gets tighter, this is going to remain a contentious issue.

Guest Article by Neil Camp

• 4 million customers have no access to best offers
• Prepayment meters cost £118 more than direct debit
  
• Quarterly cash or cheque payments cost £80 more than direct debit

Announcing the findings of a seven-month investigation into Britain’s energy market, the energy industry regulator, Ofgem, has found no evidence of a ‘cartel’ amongst the big six suppliers, but it warns gas and electricity suppliers to stop charging customers different prices for paying by direct debit or pre-payment meters.

The report highlighted 4 million households that were £55 a year worse off because they couldn’t take advantage of the most competitive offers; households using pre-payment meters being charged an average of £118 more than direct debit customers; and households paying quarterly by cash or cheque being charged an average of £80 more than those who used direct debit.

According to Ofgem, although it found that the market works well for most consumers, many of the most vulnerable customers, including pensioners and low income households, were less likely to be able to make informed choices about tariffs under the current system. Customers not connected to the mains gas grid were losing out too.

The regulator proposes wide-ranging reforms which include a requirement for companies to help all consumers access the best deals and more transparency to show the link between the wholesale price of energy and the price charged to customers. It also wants to stimulate new competition by making it easier and more attractive for smaller suppliers to break into the market, currently dominated by six companies – British Gas, ScottishPower, Scottish & Southern Energy, EDF Energy, Eon and Npower.

Consumers have already been hit by two hefty price hikes this year and energy suppliers continue to blame soaring prices in the global wholesale gas and electricity markets. The recent Which? report on energy suppliers also reveals widespread dissatisfaction amongst customers, the lowest of all industries.

The Ofgem report is therefore likely to receive a luke-warm reception as many will feel disappointed that it doesn’t go far enough to impose its recommendations.

Mini-Post by Alan Potts