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Making Energy Work for You
Green Technology Featured Articles
February 18, 2014

Making Energy Work for You

By Drew Hendricks

In economics, monopsony refers to a market in which only one buyer converses with many sellers. A ‘monopsonist’ can in theory dictate terms to its suppliers, just as a monopolist supposedly dictates terms to its buyers. The latter situation is one in which most consumers (as well as gas & electricity suppliers themselves) would agree that the UK currently finds itself in regards to the energy market. Idealists would argue that the former ought to be the only logical status quo for a set of commodities essential for everyday life; however as new figures show there is a tidy sum to be made from the business of energy supply.


A Steepening Curve

According to OFGEM, Profits made by suppliers on the average household’s energy bills have doubled in the past year, with the ‘Big Six’ energy companies pocketing on average an extra £23 profit per household in 2012. This represents a 75 percent rise on 2011’s value, the average profit rising from £53 to £105. The below graphic provided by the industry regulator illustrates just how rapidly profits are increasing.

A Turning Tide?

Whilst it would certainly appear as if consumers are at the mercy of spiralling costs, the tide does seem to be showing signs of turning, albeit very slowly. Consumer group Which? has demanded an inquiry into the energy market to try and work out why it is supposedly “not working for consumers,” with 5.5 million complaints registered in 2013 related to bills & metering, customer service and switching.

 Subverting the Status Quo

The call from Which? focuses on the so-called ‘Big Six’, comprising Npower, EDF, British Gas, E.ON (News - Alert), SSE and Scottish Power and whether the fact that they currently make up 97 percent of the entire energy market is having a negative effect on consumers. What this suggests is that a new approach is required. If a bid to move towards a more buyer-controlled market is to be successful, shouldn’t consumers be looking beyond the monopoly towards some of the smaller, lesser known players?

Whilst the first step is to evaluate current suppliers (comparison site Compare The Market recently launched a new iPhone app that allows you to take a photo of your energy bill and find out if you could save money), sometimes it makes sense to ditch the old and explore the possibility of the new.

Suppliers such as Ecotricity are beginning to gain traction in the green energy market, that particular company boasting of the lowest number of complaints for the past four years running, a figure backed up by the aforementioned OFGEM. Their boldest claim is that they are cheaper than the Big Six, one that’s likely to turn heads of consumers.

And then there’s the idea of LPG (liquid petroleum gas) as an alternative to the mains variant. Lesser known gas suppliers such as Scottish company Macgas are already popular in rural areas; however a certain lack of information precedes any conversation surrounding LPG as a viable alternative way of supplying gas to the mass market.

The Grass Isn’t Always Greener

Consumers should always feel empowered to make inspired decisions that will benefit them and their families in regards to home-related costs but it’s worth remembering that the grass isn’t always greener on the other side. For example, it’s worth checking to see who actually owns the company that you’re considering switching your energy supply to.

A Big Six provider may well be behind that utopian-sounding co-operative green energy scheme, as is the case with the British Gas-owned Sainsbury’s Energy. As mentioned previously, the first step is to evaluate current providers and compare prices to see if you could be getting a better deal.

A Tough Nut to Crack

Whilst consumers are beginning to see the merits in comparing energy prices across the board, many are rightly reluctant to switch to smaller providers from a purely cost perspective. Smaller players may not be able to provide the weight of support or contact options that an established name might, whilst there’s also the danger that a small company may fail to deal with a sudden large influx of customers.

The monopoly could be a difficult nut to crack, and it’s not necessarily a bad nut by any stretch of the imagination with plenty of satisfied customers on the more widely known tariffs.

The Tools of the Trade

Keeping abreast of the market and fluctuations in price, reputation and quality of service is undoubtedly the most valuable weapon in the consumer’s arsenal. To this end, UK comparison site Compare the Market’s aforementioned Snapt app is a useful thing to have to hand. It’s been reported that up to 84 percent of UK households are able to save money simply by switching energy provider and the app allows consumers to do so without actually having to contact them themselves. The keener amongst you are also able to stay up to date on UK energy use and generation data with UK Energy Watch, a new portal that shows information relevant to individual households, particularly in the case of those generating their own power via wind or solar energy.

Sticking With What You Know

If you aren’t actually keen on the idea of switching energy suppliers or aren’t able to because you’re a tenant rather than homeowner but still want to save money, there are ways to do so. Small steps taken on a regular basis can go a long way towards slashing energy bills. Chances are that if you’re a tenant your building won’t be brand new, meaning that you’re likely to be losing heat by way of draughts around doors, windows and other little holes scattered about the place. A little research can save you a lot of money. Installing simple draught protectors and sealing skirting boards with silicone can go a long way towards saving you money on heating bills, roughly to the tune of £20-30 a year.

 Turn off lights and plugs when they’re not in use and you could save yourself between £45 and £80 a year. By ensuring taps aren’t left running when not in use, not over-filling kettles and washing at 30 rather than 40 degrees that’s another potential £40 saved.

Some water companies are giving away efficient shower heads for free so it might be worth getting in touch with them to see if you can receive one.  They can reduce your hot water usage (saving on the gas bill) as well as prevent costly leaks. Families of four could witness savings of around £65 a year in this fashion.

Speculating to Accumulate

Whilst the above techniques are good for shaving a couple of pounds a month off your energy bills, by investing in more hi-tech equipment you can expect to see much more tangible savings. Installing cavity wall insulation, for example, costs around £500 but should save up to £150 a year, meaning it would have paid for itself in four years and lasts practically forever.

Renewable heating technologies such as heat pumps are now allowing households to benefit both from energy savings but also additional income from the government for energy produced. And then there’s the biggest investment of them all: the conversion to solar power. Installations can cost upwards of £8000 but savings of nearly £800 can be experienced. This is obviously recommended only if you own your own home and plan to stay there for a long time.

Like most things in life then, getting a good deal on energy is all down to common sense. There are advantages to be had from comparing and perhaps switching suppliers. Whilst there are viable alternatives to the ‘Big Six’ energy suppliers or indeed your current supplier, sometimes savings do literally start at home.




Edited by Cassandra Tucker


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