Leading article: What price deregulated energy?

Share
Related Topics

As prices of household energy soared, suppliers had a ready explanation. It was all to do with world market prices. So the not unreasonable assumption made by consumers was that, if prices of household gas and electricity followed wholesale energy prices up, then they could follow them down as well.

As emerges clearly from the figures we publish today, this hope was vain. Deep down, we probably always knew that any reductions, if they came at all, would be rather slower to take effect than the increases, and of a rather more modest order. But the advice was to compare prices, switch suppliers if necessary, and trust the regulator, Ofgem, to look after our interests.

But it seems this is not enough. Household energy costs rose by 42 per cent last year, to an average of £1,293, after oil prices reached $140 a barrel. The oil price now stands at $70, after falling as low as $40 a barrel. So far, though, nothing like this reduction is reflected in domestic energy bills. The watchdog, Consumer Focus, says that prices should be falling far more quickly, and concludes that the difference is being pocketed by the energy companies. It says that Ofgem is not doing its job.

The Energy Retail Association contests this – it would, wouldn't it? – arguing that other elements, such as higher transport costs, have been omitted. And the effective devaluation of the pound against the dollar will also have kept prices higher than they might otherwise have been – although the value of the pound has risen in recent months. But the discrepancy will still look enormous to most consumers. Nor does competition seem to have done much to keep down prices. Tariffs remain much of a muchness; energy companies' profits have ballooned.

So far, the brave new world of energy deregulation has not had anything like the beneficial effect for consumers that we, and surely the Government, hoped. The watchdog's verdict is that "the companies are pocketing £1.6bn extra, while millions of households struggle to make ends meet". It is right to insist that the energy companies take immediate action. Without it, the whole concept of utilities deregulation risks being discredited.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Recruitment Genius: PSV/PCV & HGV Mechanics

£29000 - £40000 per annum: Recruitment Genius: PSV/PCV Mechanics & HGV mechani...

Recruitment Genius: Reprographics Operator

£12500 - £13000 per annum: Recruitment Genius: The largest independent Reprogr...

Recruitment Genius: Web Design Apprentice

£6240 per annum: Recruitment Genius: This company is a well established websit...

Tradewind Recruitment: French & German Teacher

£120 - £145 per day: Tradewind Recruitment: French & German Teacher X2 Materni...

Day In a Page

Read Next
 

How to really be a YouTube star: Be white and wealthy

Olly Lennard
 

The Tate’s secrecy about its BP sponsorship figures was shameful

David Lister
Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee