The revelation that most of the big energy companies are systemically overcharging customers by 3.7bn a year is national scandal that must be tackled.
Jenny Jones AM is leader of the Green Party on the London Assembly and Green Party Mayoral candidate for 2012
The revelation that most of the big energy companies are systemically overcharging customers by 3.7bn a year is national scandal that must be tackled.
After most of them hiked average bills up by over £100 – and in the case of npower as much as £137 – pushing even more struggling Londoners to make hard choices of heating or eating, Public Health England warned that an excess of 2,500 elderly Londoners could die this winter from hyperthermia unless they took action to protect themselves from cold weather.
Even before this latest annual winter energy company bonanza, gas and electricity bills had soared by 150 per cent – four times the inflation rate in the last decade.
The energy companies claim that price rises were due to factors not under their control, such as global market and government green energy levies, so called green taxes. These were shattered at yesterday’s parliamentary scrutiny which heard that electricity costs had actually fallen in the last three years.
Furthermore, analysis of the levy’s reveal that the proportion directly funding renewables such as wind and solar amount to just over £30 of the current average energy bill of around £1,300, with the rest spent on helping low income households and pensioner winter discount.
This also raises serious questions about David Cameron’s judgement, as well as the reach of the big energy companies in government when the PM brazenly blames the relentless rise in household energy prices on green measures with a promise to roll them back.
In 1998, when the energy market was liberalised, the regulator considered 1.5 per cent as an adequate margin for energy suppliers. If Cameron really had the interests of the general public in mind he would clamp down on the greed of big business and deal with this broken market.
The other way to save potentially hundreds of pounds from household bills is through a range of energy saving measures.
However, industry has raised concerns that the government’s new Green Deal and its sister scheme the Energy Company Obligation – designed to deliver up to 45 household measures including insulation, heating, glazing, micro-generation and other hard to treat works – is unattractive, uncompetitive and overly complicated. A cross party panel of MPs and experts have called on the government to introduce long-term incentives to boost this faltering retrofit scheme.
On a London level, according to the Department of Energy & Climate Change, the number of Green Deal home insulation assessment completed during the second quarter of 2013 revealed that only 5,947 assessments had been completed. The Green Deal replaced the government’s previous home insulation scheme CERT, which managed to insulate approximately 21,000 homes per quarter in 2012.
This failure has resulted in a massive drop in the number of home insulation assessments, let alone completions. This is partly due to Boris Johnson’s inadequate promotion of the proven Huddersfield street by street approach which resulted in a quarter of homes being treated. The Mayor also ignored my warnings and failed to put adequate resources behind the Green Deal in its early uptake.
Instead of showing strong leadership to fix this programme and incentivise Londoners to retrofit their homes, the Mayor is instead following the government’s lead by frittering valuable resources on the ‘fool’s gold’ rush known as fracking. This will not solve our energy crisis. Instead it will pose major risks for contamination of our water aquifers with a harmful cocktail of chemicals used in the extraction of shale gases.
The government and the Mayor should follow the lead of the smaller energy companies that are actually cheaper on average than the big six and are achieving this by investing in new forms of green energy. Ecotricity’s, for example ‘bills into mills’ model has achieved 40 per cent energy generation from solar and wind, helping to insulate us from our dependence on global fossil fuel markets.
Germany already generates over a quarter of its electricity from renewables such as wind and solar and this is set to increase substantially with the coming of a generation of more efficient solar cell. Our energy needs are predicted to rise, they are working hard to bring theirs down. This offers an alternative vision for us.
I hope that the work of the Parliamentary committee will help shift the cross party consensus away from a continued reliance on big energy companies who are happy to charge the maximum price they feel they can get away with, to customers who feel it is pointless switching suppliers from one bit of the cartel to another.
We need more competition and investment in renewables offers the fastest way of bringing more small suppliers into the market. Half of Germany’s renewables market is owned by local communities; and that model of people creating their own energy supply is the best way of escaping the clutches of the energy giants.
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15 Responses to “The German model is the best way of escaping the clutches of the energy giants”
Donald J Williamson
We can learn so much from Germany on this and on their social market economics. Big Business Britain will take a lot of shifting. Wasn’t privatisation supposed to end monopolistic industries? They may be six companies, but they act as one – at our expense.
Tom
The German model has its merits yet the likelihood of it ever being implemented are minimal. The root of the problem lies in the cartel system currently employed by the big six. By breaking up this oligopoly and creating greater competition consumers would receive lower prices and a greater choice of provider.
swatnan
We’ed be better off with just the one company … competition actually raises prices, because all these companies are competing for the same customers, in the same market, and are spending enormoussums of money on promotion and advertising. Cut out the frills and give us the basic product..
A Rebours
You mean Germany that has the highest electricity bills in Europe? And subsidises its renewables to the tune of €21 billion a year? That Germany? The one that’s burning loads more lignite because it shut down its nuclear power stations? That Germany?
The Greens and the Left are going to have to overcome their opposition to nuclear power.
Tom
Basic economics dictates that competition lowers prices as firms must compete to offer the lowest prices to the public. A privatized monopoly is unlikely to work given that they would have price setting ability and could therefore charge ‘enormosussums’ to consumers. Classical economists love to deride nationalised industries for their inefficiency and wastage. This is a valid point given recent economic history yet a nationalised industry run like a competitive business that works in the interests of society seems an ideal model.