The big energy companies need shaking up

This cosy arrangement on prices makes a mockery of the idea of true competition in the energy market

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British Gas is expected to announce a rise of 8-10 per cent in bills the coming weeks, adding another £120 to the average annual duel fuel bill and a dose of aumnal gloom among the the poor and middle income earners. The other big energy companies are all but certain to follow where British Gas leads. They may claim to decide prices independently but in practice the big six march in step with one another.

This cosy arrangement on prices makes a mockery of the idea of true competition in the energy market, and makes it all too easy for the big six to put up prices year on year. But how to challenge them? One way would be to make it easier to switch suppliers, which is why a smaller  energy company’s call for consumers to be able to change over in a day merits interest.

Right now it takes an extraordinary five to six weeks on average to change supplier, which is why most consumers sit it out with the same big company they have used for years, even when they know that smaller suppliers have better offers. First Uility maintains that if just a third of us changed supplier, we would collectively save ourselves about £1.5bn a year.

The company in question does, of course, stand to benefit from the very change that it proposes. If we all became more promiscuous in terms of choosing our suppliers, smaller energy companies would make faster inroads into the market. But self interest does not mean the point isn’t reasonable. At a time when banks are being forced to allow customers to switch their current accounts more easily, it is fair to ask why energy companies are not obliged to do likewise.

Anything that increases consumer confidence, boosts competition and potentially halts the remorseless rise in fuel bills can only be welcome.

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