Malcolm Kyle

Excellent article in the The Telegraph

By Rosie Murray-West 6:00AM GMT 21 Nov 2010

Customers who face energy price rises next month could enjoy their current lower prices for most of the winter, simply by using a little-known regulatory rule.

Scottish Power was the latest company to announce a price rise late on Friday. Customers will see gas prices go up by 2pc and electricity prices by 8.9pc from November 25. British Gas is increasing prices by 7pc on December 10, while Scottish & Southern Energy will raise gas prices by 9pc on December 1.

Other providers are expected to follow suit, except for EDF Energy, which has announced a price freeze on all standard tariffs until March. It confirmed late last week that this included its online tariff, which is now the cheapest on the market.

Under Ofgem rules, energy companies cannot enforce their price rises if a customer tells them that they reject the rise within 20 working days of receiving a letter about it. At present, energy companies can send letters about price increases up to 65 working days after the increase has been applied.

Once customers have informed the supplier that they reject the price rise, they must make arrangements to switch suppliers within 15 working days. The switch will then take around six weeks, during which time the customer will continue to enjoy the lower price.

Depending on how long it takes suppliers to inform customers about prices changes, this entire process could last as long as 20 weeks, during which time customers could continue to enjoy their current energy prices, including British Gas’s cheapest Websaver tariffs.

British Gas said it had already begun to send letters to its customers warning them about the changes. However, it added that it had so many customers that the letters would take a while to be sent out. Scottish & Southern also said it had sent letters to customers.

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British Gas today announced it is putting its prices up by 7% for both gas and electricity from 10 December, making it the second major energy supplier to raise its prices in recent weeks. The increase will affect around 8 million customers, adding £53 to annual gas bills and £29 to electricity bills

British Gas customers on a standard dual fuel plan will see the extra £82 push their total bill from £1,157 to £1,239, according to uSwitch.com. The company said rising wholesale prices had forced it to increase its prices, but fixed-price customers and 300,000 vulnerable customers on the firm’s Essentials tariff would not be affected until the end of the winter.

Late last month I reported that Britain’s second-largest energy supplier, Scottish and Southern Energy (SSE), said it was increasing its gas prices by 9.4% or £67 from 1 December. Now following British Gas’s announcement, consumer watchdogs fear a full-scale increase in energy prices could be on the cards, although EDF Energy said it would freeze its standard tariffs until March 2011.

British Gas’s managing director, Phil Bentley, said: “We know that rising energy prices come at a difficult time for many in Britain. That is why we are not raising prices for our vulnerable customers, such as the poorest pensioners, until after this winter. We will continue to give them extra help – including lower rates – saving each an average of £128 a year.”

British Gas and other suppliers respond to forward energy prices, which is of course their argument that price rises are needed. However, wholesale prices are around half of their peak in 2008, and yet customer’s prices were cut by less than 10%. So I wonder why is it that the suppliers didn’t make cuts when the conditions allowed for it?

It seems to me that UK consumers are now facing an extremely bleak winter and I’m urging my clients to let me examine whole market options for them, to see where I can save them money.

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