Fuel bills

Published on Mon 4th Aug 2008

Many people's domestic fuel bills, for heating and cooking, will rise to over £1000 a year following the big price increases just announced by British Gas and EDF, the electricity company. This may not seem a big problem in August but when the winter cold starts to bite a lot of elderly people, especially, will worry about how to keep warm. The cost is especially worrying for metered customers who are also generally less well off but pay more than direct debit customers.

There are demands for a 'windfall tax' on the energy companies to raise money to help poorer customers. Such taxes are not as easy as they seem since they would probably be passed on to consumers and reduce investment. Also, there is already a windfall tax on North Sea oil and gas profits.

Yet the electricity companies, in particular, are taking advantage of weak competition to overcharge customers. Switching suppliers doesn't work well. A third of all switchers lose money and half of customers never switch. These companies benefit from a free hand out of valuable permits to produce carbon under an EU scheme.

So I would like the government to insist that the companies provide a proper social tariff. This could include a small free allowance with higher charges for big users, thereby encouraging economical use. And linked to that, an ambitious programme to help households conserve energy. The idea of energy companies encouraging us to use less energy may seem novel; but with dwindling supplies of UK gas, and higher prices, it is the right approach.