You're paying too much for energy: big six profit from policy changes

Will the energy companies do the decent thing and cut charges?

Updated: 

man installing fiberglass...

The government's decision to slash green levies should be saving us more money than it is. The energy companies agreed to knock £50 off the average bill - to pass along savings they were making from the levies being cut. However, new figures show that the companies themselves are actually saving up to £23 a year per household more than this, and the government is urging them to pass on these savings too.

So what will happen next?

All this dates back to December, when the big six energy suppliers said they would knock £50 a year off each household's energy bill if the government agreed to drop certain green levies.

Some £30-£35 of this was made up from a change in their commitment to insulate homes, known as the Energy Company Obligation (ECO). Energy companies had to insulate a certain number of homes, and paid for it by adding a levy onto every bill. The change meant they had to insulate fewer homes, and therefore could charge households a lower levy. This saving was estimated at around £30-£35 per household per year.

However, the government has now said that this saving was an under-estimate. In a response to a consultation on the ECO - buried down on page 50 - it says that: "ECO companies are likely now to be in a position to make greater saving than they had originally projected in December."

It hasn't said now much more ought to be returned to customers, but the Daily Telegraph quotes the Insulated Render and Cladding Association, which put the additional saving at up to £23, and the Association for the Conservation of Energy which put it at £10.

The consultation document added: "Government has very much welcomed the consumer bill reductions that companies committed to in December ... and would expect companies to continue to pass through to consumers no more than the actual costs of delivering ECO. Government would therefore expect the energy suppliers to ensure that consumers benefit from this further reduction in delivery costs in a concrete way, and invite them to set out publicly how they propose to do this."

It remains to be seen whether the companies will respond at all to this polite invitation. It's hardly a strident demand, and by burying it so low down the document there was a chance that it could get overlooked altogether.

The question is whether the energy companies will take advantage of the summer break and hope everyone has forgotten about it in September, or whether they will do the decent thing as quickly as possible.

What do you think?

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