Friday, 18 October 2013

Freezing prices, freezing homes

Yesterday's announcement of a 9.2% hike in energy bills will have come as a crushing blow to many who are already struggling. It is easy to see why the car crash PR disaster was so bad when on the same day British Gas and they bumped the prices they put out on twitter to #askBG - 16,000 comment later...

While the Lib Dems and Tories advise wearing jumpers at home (actually reasonable advice for once, even if it has been very poorly delivered), Labour were advocating a price freeze just a few weeks back - a highly populist move but one that failed to receive much scrutiny.

So what impact would freezing bills have?
  1. Given that this would start in May 2015, we don't yet know at what level the bills would be frozen at. Prices could go up further before then and energy companies may decide to hedge their bets by pushing them higher than necessary to see themselves through the 20 month freeze.
  2. Keeping energy prices static won't provide any incentives to reduce our consumption and won't help struggling households.
  3. The current tariff system encourages high use of energy by pricing low use at a higher rate than high use. For example British Gas and EDF have a standing charge of 26p per day before you use any energy. This gives a false comfort to use more energy.
What should we do instead?
  1. Having energy companies renationalised would go a long way to help ensure that prices were reasonable and not driven up to meet shareholder expectations.
  2. Have tariffs that allow a reasonable energy use at a low tariff and then charge significantly more above this level. This would ensure that people have enough affordable energy but were encouraged not to waste it.
  3. A radical programme of insulation of homes and businesses.
  4. Urgent investment in renewables to ensure fuel security and drive out market fluctuations in fossil fuels
  5. Banning non-low energy light bulbs and other wasteful technologies.
  6. Oh, and wearing jumpers is always a good idea in winter!

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