Blog Post

6 Big Energy Firms Accused of Price Fix

Paul Fox • Jan 28, 2019

Energy supplier, Bulb, has hit out at the big six accusing them of fixing their prices too close to the cap. Research from the mid-sized company has shown that the default energy tariff being offered by all the big six falls within £4 of the cap level.

Bulb’s Chief Executive Hayden Wood, condemned the pricing, claiming they were using the price cap as a target rather than a limit. He said:

“The price cap, which Bulb supports, was meant to be a maximum and not a target. It’s disappointing to see larger suppliers setting their standard tariffs as close to the cap as possible – squeezing every last penny they can out of families.”

Out of the big six, their SVT levels have been set at:

● British Gas- £1,332 per year

● Eon, npower, Scottish Power and SSE - £1,333

● EDF -£1,335

In contrast, Bulb have priced their SVT at £120 below the price cap, and some suppliers are more than £200 cheaper than the limit.

Backlash from SSE

In a blog post somewhat tongue-in-cheek titled ‘ Time to Ditch the Big Six… label ' ,SSE responded to accusations from Bulb by claiming that is was not only big suppliers who are pricing close to the cap.

They say that, in total, 27 energy suppliers of ‘all shapes and sizes’ have also set their prices within a narrow range. They accuse Ofgem of setting the cap at such a level which doesn’t accurately reflect the cost of supplying energy to customers.

Bulb, themselves, have priced their SVT at below the cap. However, SSE point out that the company also recently posted a loss of £24m due to costs of acquiring new members and investment in growth. They say that it’s a conscious choice not to pass these costs on to the customer, and that it’s an irresponsible practice to set tariffs low if it’s not sustainable long term.

They argue that customers are willing to pay more for their energy due to the higher levels of service provided by some large suppliers. Citing a Citizen’s Advice report ranking supplier performance for customer service, they note that SSE came second in the tables and that other big six suppliers were ranked highly too.

However, the more recent Which? annual supplier performance report paints a different picture, putting SSE 22nd out of 30 suppliers, and with all the big six in the bottom third.

Is the energy price cap fair?

It’s not only SSE who consider the cap to be set at a level which is not reflective of the costs of supplying energy. Centrica, owners of British Gas, have mounted a legal challenge against Ofgem as they say the threshold has been set far too low.

They say that the level they are being forced to price at will harm their profits by as much as £70m in just the first quarter of 2019. Commenting on their decision to seek a judicial review, Centrica said:

"As we have previously said, we do not believe that a price cap will benefit customers, but we want to ensure that there is a transparent and rigorous regulatory process to deliver a price cap that allows suppliers, as a minimum, to continue to operate to meet the requirements of all customers."

Ofgem have responded by saying their extensive consultation process allowed them to set the price cap at a level which everyone was happy with. They have said they will ‘robustly defend’ their position, and that they still believe the price cap is set at such a level that it ‘offers consumers on poor value tariffs a fairer deal’.

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