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Save on your energy bills with The Spectator – and help fix the broken market

13 June 2014

3:10 PM

13 June 2014

3:10 PM

In a healthy, competitive market, prices go down when costs go down. Not in the energy market. As Ofgem announced this week, the wholesale cost of gas and electricity has dropped by more than a third since this time last year, but our bills have increased. Wholesale power is the cheapest it’s been since 2010, so why haven’t the savings been passed onto consumers?

The energy industry usually blames price rises on increasing wholesale costs, so the announcement those costs are going down is tricky for them. This week Energy UK, the Big Six trade body, said: ‘Wholesale energy is just one of a number of costs outside of an energy company’s control, which make up a household bill’.

This would be easier to swallow if we hadn’t seen the profits that the Big Six energy companies make from supplying energy to you and me double in a year. The margins for supplying gas have rocketed from 5 per cent last year to 10 per cent this year, and the profits made from supplying dual fuel households more than doubled from 3 per cent to 7 per cent. So the question is, why has the drop in wholesale costs turned into big profits for big business, rather than savings for consumers?


The answer, in part, is a lack of competition. Six companies control over 90 per cent of household gas and electricity supply and over 60 per cent of people have never switched their energy supplier.

To answer this objection once and for all, Ofgem has proposed that the energy industry be referred to the Competition and Markets Authority for investigation. But such an investigation will take years to report and even longer for anything to actually happen. After years of prices rises, people need lower bills now.

Our Spectator Energy proposal, in association with campaigning organisation The Big Deal, is simple: we get the market to work for you. We bring together thousands of people – over 10,000 so far – to negotiate a better deal on their behalf. There’s power in numbers, and by harnessing the collective buying power of thousands of consumers, we can inject competition into a market dominated by big players.

The aim is to deliver a better tariff than you could find anywhere else on the market saving you hundreds of pounds – but legally, we’ll only be able to offer it to our members. So do sign up before the end of the day to get in on the first offer. This is a chance not only for you to save some money, but to help fix a broken market.

Join our 10,000 members by signing up at or calling 0333 222 5872. It’s free to sign up, takes 60 seconds and is completely obligation free. This commits you to nothing – if our partners, The Big Deal, fail to negotiate a good enough price you can stick with your original supplier. But if you’d like a quote, do sign up.

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Show comments
  • itdoesntaddup

    Why haven’t the savings been passed on to consumers?

    Because there are no savings since OFGEM tells the Big 6 they should fix their commodity price risk 12-18 months forward (and Ed Miliband hinted he wanted it fixed for the next 3 years), but there are some very nice profits at the banks and traders who sold the forward hedges.

  • Neitherangryorscared

    Great idea, you nicked it off Ed Miliband from 2012 didn’t you?

  • DaveTheRave

    No thanks, nice of you to offer though, I appreciate it.

    Now, as I remember, the utilities were privatised to create more competition and thereby provide lower prices for customers…
    In actual fact we have a cartel of price fixers and share holders who are, er… doing rather nicely. Now that’s capitalism folks!
    What would I do?
    I’m not a card carrying socialist but I would RENATIONALISE THE UTILITIES, something not even Labour would do. Oh, does that make me a commie, then?
    A former Tory leader once told a tolerant conference that they should not sell the family silver. Way too late.
    We’ve sold the family silver, the house, the street.. the whole ruddy country.
    Job done.

    • itdoesntaddup

      We have a de facto nationalised industry at the moment. The Big 6 are just PFI contractors doing the DECC’s bidding. THe DECC decide what investment does or doesn’t take place. It sets wholesale prices on “renewables” and demands that all companies buy the same proportion of renewable energy. OFGEM tells them they’re all supposed to hedge forward for 12-18 months. Doesn’t leave much room for real competition – as we had before the Big 6 (the result of the merger spree of 2002 following Labour’s Utilities Act) – which produced falling real prices and much more investment in effective capacity.

      I’d rather see a return to a properly competitive industry, without price fixes and production quotas that make it look like typical Soviet central planning failure.

  • Alex

    I’m not totally a fan of the big 6 suppliers; but blimey, let’s at least attempt some sort of balance….

    No thought of whether a 3% margin on dual fuel customers was unsustainable, no mention of the rise in the company costs other than wholesale supply (I believe that that alone has absorbed half of the savings due to lower wholesale prices), no mention of the need to hedge against supply uncertainty (you may want to check out the international news), no mention of the regulatory burden and uncertainty. No mention that if you expect your prices to be frozen by Red Ed in a year’s time you need to keep them up now or you will go bankrupt if your costs rise in 2 years. Thanks Ed; you muppet.
    And of course having the majority of customers with a few suppliers doesn’t mean there is a lack of competition (do you think there is no competition in the grocery sector?). It is easy to switch, but I’m sure a lot of people don’t want the hassle of endlessly switching to a new supplier to save a quid a week, only to see the new supplier raise prices a month later. It’s the same reason why people don’t buy milk in one supermarket, breakfast cereal in another and teabags in a third, to save 40p. Is that a ‘broken market’ as well? Or just people acting rationally?