Energy Prices: Why are they so high?
The power companies have again faced criticism this week as a report has announced the wholesale price of power has seen significant drops while this has not been passed on to the end consumer. Ofgem who regulates the gas and electricity markets in the UK has said the big six energy suppliers are quick to raise bills for the end consumer when the wholesale price of energy rises, yet are very slow to pass on savings when the wholesale price drops. They have said they need an explanation as to why this is the case.
Recently all six companies have faced significant complaints and have been ordered to improve their customer service. Areas they have been asked to improve on is transparency on the tariffs, making it clearer to customers before they sign up what they are paying for and making sure they are on the best tariff for their needs. They have also been fined for miss-selling policies to get people on a higher tariff than they need.
It should now be easier to switch energy companies allowing consumers to get the best deal. This doesn’t seem to be adding a great deal of confidence to the consumer though as many believe the big six operate in a “cartel” keeping prices fixed so they all make the most money. If you think about it if just one company slashed prices everyone would move to them and would therefore put the others out of business. This has never happened which makes people speculate that there is some sort of agreement between them.
It is more important than ever that people get the best value out of their services as the cost of living is escalating at an unprecedented rate forcing more people to cut back on essentials such as heating and food. There has been a big increase in the amount of people using food banks, even people with full time jobs who have seen little or no pay rises over the last few years are struggling to keep up with the rising cost of living. At Redwallet.com we have noticed more and more people needing a payday loan, to bridge the gap until they next get paid. With wages being stretched so thin and it being very hard to amass any savings it’s easy to see why. Usually in a recession the issue is people are losing jobs, the unique effect of this recession though is that people by enlarge seem to have kept their jobs but due to stagnant wages and the rise in the price of living on the whole people are feeling worse off.
So while the energy companies may come up with all kind of excuses as to why the consumer prices don’t fall in alignment with the wholesale prices. All this really does is lead consumers into thinking the big six are only looking after their own interests and filling their own coffers.
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