We can’t believe 2018 is over! From fines and freezing weather to price rises and called-off mergers, it’s been a big 12 months as far as energy is concerned. We thought we’d use our last article of the year to take a look back at the key events that had tongues wagging.
So without further ado, uSwitch presents a review of 2018 in energy - see you in 2019!
The year started slowly as the country went back to work after the festive break, with little happening in terms of the energy market and wider energy industry. Notably, a report by Bloomberg New Energy Finance showed that the UK’s investment in green energy had more than halved during 2017. The 56% decrease in funding (the steepest fall of any country) was blamed on ‘stop-start’ support from the government amid various policy changes the previous year.
The end of February and beginning of March were dominated by the arrival of the year’s only extreme weather to affect the entire country, as opposed to select areas. The Beast from the East brought heavy snowfall and freezing temperatures to the UK, with Storm Emma following a week later. Customers understandably saw costs rise as they increased their energy usage to stay warm, although many saw their power and water supplies cut off as a result of the weather.
At the beginning of the month, the government’s Minimum Energy Efficiency Standards came into force. These measures were designed to ensure that rental properties achieved a minimum level of energy efficiency and were fit for tenants to live safely in. Properties now have to achieve a minimum rating of ‘E’ (i.e. not ‘F’ or ‘G’), otherwise they won’t be permitted to be rented. This should have a positive impact on the amount that consumers pay for their energy bills, as a more energy-efficient home will be more successful at retaining heat.
The big six energy suppliers also commenced their round of annual price rises. Four of them announced increased charges for customers: British Gas, EDF, Scottish Power and E.ON.
Do what the price cap won't - fix your energy costs today
While a fairly high portion of the country eagerly anticipated the wedding of Prince Harry and Meghan Markle, May was a fairly quiet month as far as energy was concerned. npower and SSE, which hadn’t already announced price rises, did so, ensuring that all big six energy suppliers raised their prices at least once in 2018.
As World Cup fever gripped the nation and Gareth Southgate’s boys took England to their first World Cup semi-final in nearly 30 years, June was also an eventful month for the energy industry.
The Government announced the Warm Homes Discount Scheme, which requires suppliers which manage more than 250,000 customer accounts to offer £140 off the bills of customers who would benefit from a discount (either because they’re on a low income or they get the Guarantee Credit element of Pension Credit).
E.ON announced a second price rise, leading to an average annual increase of 4.8% for customers.
June also saw the first significant fine of the year for one of the big six. EDF Energy was ordered to pay £350,000 into Ofgem’s Customer Redress Fund after the supplier missed its target to install smart meters for its customers in 2017.
July was notable for breaking heating records throughout the country. This was good news for solar energy, which briefly became the UK’s top power source for the first time ever. While this was a one-off (gas and nuclear energy generated a lot more power overall during the same period), it is an important milestone for the perception of renewable energy in the UK.
The second round of price rises from the big six also continued, with EDF choosing July to announce its increase.
August began as July finished: with another price rise. This time it was British Gas, which announced its second increase of 2018.
The month also saw another hefty fine by Ofgem. The energy regulatory body fined npower £2.4 million after it found that the supplier had failed to install advanced meters for some electricity business customers by the given deadline of April 2014.
With the country coming down from a hectic summer, September was a quiet month in energy as well.
The big story was the banning of halogen lightbulbs throughout the EU which, for now, still includes the UK. This is good news for consumers because halogen bulbs will largely be replaced by LEDs, which only use one-fifth of the energy of halogens. This should help minimise costs.
Do what the price cap won't - fix your energy costs today
October saw the controversial resuming of fracking in the UK, following a 2011 moratorium after small earthquakes were felt during fracking operations in Lancashire. Fracking is designed to release vast reserves of natural gas trapped beneath rock such as shale, which can then be used for energy.
On the flipside, Scottish Power announced its maiden foray into solar energy as part of its move away from fossil fuels to renewables.
In energy business news, the Competition and Markets Authority approved a potential merger between npower and SSE. There had been concern that the merger would have a negative impact on standard variable tariffs. However, an inquiry group found that the two companies do not compete closely on those tariffs, and cleared the merger to go ahead.
November was dominated by the news that Ofgem had set the long-awaited tariff price cap at £1,137, which sounded like good news but there’s more to it than meets the eye as far as consumers are concerned, and anyone who was already thinking about switching shouldn’t rule it out.
The National Audit Office also announced that the Government’s 2020 target of rolling out smart meters to every home and small business in the UK will not be met. This means that a lot of customers will be left with an inadequate smart meter which could have the potential to ‘go dumb’ if they decide to switch (though this should not put off customers from doing so).
As the year wound down, the big news in December was that the proposed merger between npower and SSE was off, despite only having been approved two months previously. The two businesses said that the deal was affected by several factors, the price cap being one of them, and they had decided that it was no longer in their mutual interests to merge.
The price cap controversy took a new turn when Centrica, the owner of British Gas, announced a legal challenge to Ofgem in the form of a judicial review. It argued that the threshold had been set too low, and aimed to ensure that there would be a rigorous and transparent regulatory process when setting the price cap in the future.
What will 2019 bring for energy? Will this be the year you switch to a cheaper energy deal? Whether it is or it isn't, make sure you stay tuned to uSwitch’s energy channels for all the latest industry developments and what they could mean for you.