From the Reading Chronicle:
ENERGY companies are raking in immoral profits from their poorest customers – that was the charge made by Nick Clegg in Reading at the weekend, as he called for tax cuts for low earners and a 2% cut in interest rates.
The Lib Dem leader, speaking at his party’s regional conference at Woodley’s Oakwood Centre before a public meeting at Reading Civic Centre on Saturday, declared: “It is immoral, it is wrong for the big six energy companies to have received, as they in effect have, a £9bn windfall subsidy through the complex mechanism by which carbon trading permits were handed to them for free.”…
He accused energy companies of “dragging their feet” on installing smart meters which stop customers being overcharged for gas and electricity based on faulty estimates.
He added: “It’s downright wrong that people on low incomes pay more for the first units of energy they use, rather than the units they use later.
“It’s the poor, the elderly, the infirm who sit with one heater in a sitting room with the rest of the house stone cold – who use a fraction of what wealthy people do in larger, fully-heated homes – who get penalised more than anyone else.
“The Government should take action now with the energy regulator and just reverse it – let people pay less for the first units instead.”
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3 Comments
“He added: “It’s downright wrong that people on low incomes pay more for the first units of energy they use, rather than the units they use later.”
Only if they don’t pay a standing charge though. Having a no-standing charge tariff benefits the very small users and (having been sad enough to work it out once) doesn’t penalise the higher users.
That said standing charges vary massively – Merseyside is double those in the NW for example.
If Nick wants such micro regulation of then the logical conclusion would be to re-nationalise the power companies.
I’m pretty sure you’re mistake Hywel, unless something has changed very recently, as I’ve had electricity deals in the past where I pay a standing charge and also pay more per unit above a certain volume.
On the micro-regulation issue: the industry regulator already gets into huge levels of detail because of the nature of the industry. So I don’t see any call here for new regulation; rather it’s a matter of doing it differently (if indeed it is needed at all; public pressure can also have an impact).
It’s possible (I’m not infallible 🙂 When I worked it out there were two possible tariffs. One had a standing charge of Xp per day and a flat rate per unit, the other had no standing charge but a higher rate on the first Y units with a lower rate afterwards.
If you multiplied the difference between the higher rate by the number of units that was charged on it came out (to within a few pence) as the equivalent of the standing charge.
In effect the standing charge was spread over the first Y units used so if I used less than Y units I would have paid less. If I used more than Y units then being on a no standing charge tariff was no more or less expensive.
Like I said it’s not a calculation I’ve done since! I need to look at switching in the next few weeks so I might check to see if the same still applies.
The public pressure thing is a good point – the more people are encouraged to switch the greater the pressure on the companies to compete.