The scramble to win new energy customers amid growing complaints about the "big six" power companies intensified on Friday with an independent supplier cutting its prices and one of the large providers promising to pay back annual credit balances.
Ovo Energy became the cheapest supplier on the market by cutting the price of its lowest cost deal – Cheaper Energy Fixed – by £27 to just a little over £1,000 a year.
This happened 24 hours after consumer group Which? revealed there had been 5.5 million complaints against the "big six" – EDF, Centrica, E.ON, npower, Scottish Power and SSE – last year and one of the other independents, First Utility, announced a 3.5% or £39 a year increase from 1 April.
More than 800,000 customers are believed to have switched away from "big six" suppliers in just over a year. Stephen Fitzpatrick, the managing director of Ovo Energy, said his firm's average 2.5% cut reflected the relatively warm winter in Europe, which had brought down wholesale energy prices.
"We are fully committed to making sure that the elements that we can control, like the prices we charge for commodity, operating costs and profit margins will always remain cost reflexive. If the overall cost of supply drops we will always pass that saving on."
Tom Lyon, energy expert at price comparison service, uSwitch.com, said Ovo was sending out a clear signal that it intends to woo consumers from the arms of the big suppliers.
"By dominating the best buy tables smaller suppliers are making sure that consumers will give them more than a passing glance," he said. Independent suppliers gained more than 700,000 new customers in 2013, according to the latest statistics, compiled by Electralink and Energy UK.
Ed Davey, the energy and climate change secretary, said on Thursday that last month just under 100,000 households switched to independent suppliers.
"With Ofgem's action to simplify bills and diversify the market, with industry action to reduce switching times, and with the growing popularity of collective switching schemes, I am confident we can maintain switching momentum in the long-term," he told the Institute of Public Policy Research.
But EDF fought back, becoming the first of the "big six" to bend to pressure and give direct debit customers a full annual refund of any credit built up on their energy account.
This followed a whistleblower telling the Observer that £20m of credit balances went into the annual accounts of British Gas in one recent financial year.
Other power companies also faced criticism from holding on to credit built up on accounts paid by direct debit. Lyon at uSwitch.com said it was a welcome move.
"Energy suppliers benefiting from credits on customer accounts and failing to respond to requests to refund them was turning into a bone of contention.
This step will reassure customers about making the move to paying by direct debit, safe in the knowledge that they will get a 'no quibbles' refund if their account goes into the black. We would urge other suppliers to follow suit."
theguardian.com
Ovo Energy became the cheapest supplier on the market by cutting the price of its lowest cost deal – Cheaper Energy Fixed – by £27 to just a little over £1,000 a year.
This happened 24 hours after consumer group Which? revealed there had been 5.5 million complaints against the "big six" – EDF, Centrica, E.ON, npower, Scottish Power and SSE – last year and one of the other independents, First Utility, announced a 3.5% or £39 a year increase from 1 April.
More than 800,000 customers are believed to have switched away from "big six" suppliers in just over a year. Stephen Fitzpatrick, the managing director of Ovo Energy, said his firm's average 2.5% cut reflected the relatively warm winter in Europe, which had brought down wholesale energy prices.
"We are fully committed to making sure that the elements that we can control, like the prices we charge for commodity, operating costs and profit margins will always remain cost reflexive. If the overall cost of supply drops we will always pass that saving on."
Tom Lyon, energy expert at price comparison service, uSwitch.com, said Ovo was sending out a clear signal that it intends to woo consumers from the arms of the big suppliers.
"By dominating the best buy tables smaller suppliers are making sure that consumers will give them more than a passing glance," he said. Independent suppliers gained more than 700,000 new customers in 2013, according to the latest statistics, compiled by Electralink and Energy UK.
Ed Davey, the energy and climate change secretary, said on Thursday that last month just under 100,000 households switched to independent suppliers.
"With Ofgem's action to simplify bills and diversify the market, with industry action to reduce switching times, and with the growing popularity of collective switching schemes, I am confident we can maintain switching momentum in the long-term," he told the Institute of Public Policy Research.
But EDF fought back, becoming the first of the "big six" to bend to pressure and give direct debit customers a full annual refund of any credit built up on their energy account.
This followed a whistleblower telling the Observer that £20m of credit balances went into the annual accounts of British Gas in one recent financial year.
Other power companies also faced criticism from holding on to credit built up on accounts paid by direct debit. Lyon at uSwitch.com said it was a welcome move.
"Energy suppliers benefiting from credits on customer accounts and failing to respond to requests to refund them was turning into a bone of contention.
This step will reassure customers about making the move to paying by direct debit, safe in the knowledge that they will get a 'no quibbles' refund if their account goes into the black. We would urge other suppliers to follow suit."
theguardian.com
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