CEO of renewable energy supplier Outfox the Market, Keith Bastian, has given his take on how customers can beat impending Ofgem price hikes.
Last year, Outfox the Market, the No.1 rated supplier for customer satisfaction (Which? 2020) was earmarked as having the best fixed term deals ahead of similar regulated price increases.
Action must be taken to ease the worries of the nation. With looming costs around boiler replacement on the horizon, combined with impending regulated Ofgem price hikes, attention is turning to both energy supplier and the government, to see how consumers can keep both costs under control as well as meet renewable wishes.
The consumer price index, including owner occupiers housing costs, rose by 1.6% in the two months leading to April 2021.
These statistics reflect a continuing rise in the costs of living, placing further pressure on low-income households to achieve a more sustainable life amidst tightening purse strings.
How does the government plan to action their zero carbon targets whilst renewable heating and energy solutions remain inaccessible to struggling low-income families? And how can utility providers, like us, help to ease the burden of many?
Energy Providers and Levies
One area of energy that I would encourage people to look into in terms of savings is through the mentality of switching. Here, I would ask homeowners to continually assess the marketplace. They mustn’t be fooled by price comparison sites and instead should go direct to suppliers to find the best deals. In addition to this, they must check their contracts thoroughly as there might not be any exit fees for switching to a new supplier.
It is important to note that comparison sites have been notoriously bias to firms that pay more to be in the top positions. It pays to be proactive; you may not always be getting the best price or service for your needs. As we look towards the future, affordable, low-carbon, and eco-friendly heating solutions should be standardised. This will make them more widely accessible to those in need, and easier for us to reach a net-zero carbon future.
But what more could the government do in the meantime, to help energy suppliers, and in turn consumers? As a firm believer in the future of energy provision in this country to be electric, I propose a switch.
Electricity is approximately 3x the price of gas currently. This is not on account of electricity being an expensive commodity to produce but is due to the higher levies imposed on electricity. 23% of the total cost of electricity is composed of levies, compared to the significantly less 3% for gas. Economically, these vastly unbalanced levy statistics make sense as all the households in the UK have electricity, therefore the government can ensure a higher tax revenue. However, these increased levies have massive consequences for the bill-payer.
The government’s push for a net-zero carbon future is a brilliant initiative, but with such high levy percentages on electricity, how do they expect low-income households to make the switch?
According to Ofgem, nearly 23 per cent of the cost of household electricity is made up of green taxes. This includes part-funding the cost of investment in the renewable generation and paying energy companies to subsidise energy efficiency improvements in poorer households. Last year these charges added £162 to the average annual electricity bill of £707. In contrast, the energy regulator says that environmental and social charges make up 1.86 per cent of a gas bill — or £10.23 on a £550 annual bill.
Proposals being discussed by senior government advisers would compensate lower-income households for planned increases in gas bills as part of the drive to cut carbon emissions. The energy industry has stated that the levies imposed on electricity are to be revised. But what I would say is that the government needs to act immediately if they are to succeed in reaching their target of net-zero carbon by 2050.
Reducing the levies on electricity will significantly lower the price of electricity. With lower prices, consumers can make the switch to clean energy without having to make the choice between heating their homes or putting food on their table.
What can the Government do?
There is no doubt more can be done to support working class families. From pushes on TV and marketing campaigns to specialised packages for families on income thresholds, the UK Government has already pledged a £2.8 billion package of measures to support the vehicle industry and consumers. It is time for more focus to be put on our home heating, particularly when you consider the fact that the average household in the UK emits 2.7 tonnes of CO2 every year from heating their home.
The government should act now, rather than just laying focus on new build homes. In regard to business, I would encourage the cutting of levies on electricity and increase the levies on gas. This will increase the uptake in cleaner fuels and, in turn, the consumer behaviour will change. By taking such actions today, we can reduce the future environmental costs and put more money into the pockets of the poorer sections of our community.
Britain did not have a choice about entering the “global green energy race”, but now our future economic prosperity depends on being a leader in the technologies of the future.