70% of energy customers remain on tariffs that haven’t changed in almost two years. During that time, however, the wholesale price of energy has fallen to around two thirds of the original cost. OFGEM officials say energy bills have not been reduced accordingly.
The Pressure is on
Wholesale energy costs have fallen by roughly a third in the last year and a half, considering that wholesale costs make up almost half of your energy bill it would be logical to expect a fall in price for the consumer as well as the supplier, but this hasn’t happened.
In fact, OFGEM have been putting pressure on energy suppliers to price energy in accordance with the changes ever since resent analysis highlighted how wholesale energy prices, both gas and electricity, have hit a five-year low.
Fixed Rate and Variable tariffs
Customers on fixed rate tariffs are comparatively better off than those on variable tariffs. Customers who are on variable tariffs in particular are not seeing any benefit from a large reduction in wholesale price.
Experts say to switch
Whilst some see the issue as being that larger energy suppliers don’t face enough competition, others say that it is the culture of staying with providers which causes more of a problem for customers. If you have ever read anything from our energy blog you’ll know that we’re all about switching and saving.
Some would say that we unfortunately have an energy market that favours new customers but here at Business Save we see that as an opportunity rather than a disadvantage. Everyone has the ability to be a new customer, and it shouldn’t be frowned upon that being savvy and involved in your energy affairs will save you money. It takes much longer and therefore is much harder to save money in an industry that favours loyal, longstanding customers. With our help the industry can be used to the customer’s benefit.
Experts have implored customers to utilise the amount of competition in the market. It is very much a case that the competition is out there, customers just have to be prepared to use it. We know its a hassle and that’s why we do what we do.
The Competition and Markets Authority (CMA) has also advised customers to switch provider to save money. The CMA report has already encouraged many customers to switch who are already feeling the benefit and saving money. The final advice from the CMA’s report will be published at the end of the month. OFGEM chief executive Dermot Nolan has said the government funded energy watchdog will be using the report to try and improve the situation, but for now customers should switch to save. A possibility could be a safety net tariff for those who are particularly vulnerable. We will have to wait for some time to see how OFGEM put the report into practise.