Is Labour’s promise of a price freeze keeping your bills high?

Reports suggest big six energy suppliers are afraid to drop bills in line with wholesale prices in case Labour wins election and orders price freeze

price freeze

Is the potential price freeze keeping prices up?

According to an article in the Daily Mail, Labour Leader Ed Miliband’s pledge to freeze energy prices for 20 months should he win the next general election has contributed to keeping bills high.

Critics of Labour’s price freeze promise have suggested that it is stopping the big six energy companies from putting energy bills down, despite lower wholesale energy costs.

This is because energy companies are worried that they may be forced to keep prices low for 20 months after the general election, a situation which could prove costly should wholesale prices increase during this time.

Wholesale prices significantly down

At present the wholesale price of gas is down 20%, compared to last winter, however, energy companies have chosen not to pass on the reduction (worth an average of £50) on to households.

Speaking to the Daily Mail, a senior employee at one of the big six suppliers said it was unlikely that there would be a price reduction before the general election.

The source added that the prospect of a 20 month freeze meant energy companies were worried about being forced to lock-in cheaper energy rates, regardless of fluctuations in wholesale prices.

In this context, energy regulator Ofgem has launched an investigation into the energy market to investigate allegations of profiteering.

Small suppliers filling the void

Despite the big six not lowering energy prices, consumers do not have to look far to find a better deal. At present the energy best buy table is entirely dominated by plans from small energy suppliers, which are taking advantage of lower wholesale costs to offer cheaper tariffs.

The cheapest on offer is Co-operative Energy’s Fair & Square tariff, which will set the average household back £989 per year. The plan, however, requires consumers to send out quarterly meter readings to avoid the possibility of being moved to an expensive standard deal.

The most popular plan on offer at the moment is First Utility’s iSave Fixed September 2015, which costs just £3 per year more than Co-operative Energy’s offer, but does not carry the threat of being moved to another plan if a meter reading is not submitted.

Best buy energy table

Top 5 best buy plans paying by monthly Direct Debit

Supplier

Plan Name (POR)

Average Bill Size

Tariff type

Cancellation fee

End date

Co-operative Energy

Fair & Square

£989

Fixed

£25 per fuel

30.09.2015

First Utility

iSave Fixed September 2015 (v27)

£992

Fixed

£30 per fuel

31.08.2015

Extra Energy

Fixed Price September 2015 v11

£993

Fixed

£25 per fuel

30.09.2015

Green Star Energy

No Worries 12 Months Fixed 1406

£1,009

Fixed

£30 per fuel

12 months

Flow Energy

Thames Online Fixed September 2015

£1,010

Fixed

No cancellation fee

31.08.2015

* Based on a medium usage customer using 3,200 kWh of electricity and 13,500 kWh of gas paying by direct debit with bill sizes averaged across all regions.

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