EDF Energy and First Utility freeze prices
Moves to freeze energy prices come despite predictions that some of the big six companies are likely to raise bills.
Just a week after the energy sector protested loudly about the potential impact of Ed Miliband’s promise to ban power price increases for 20 months, two major suppliers have started to freeze their own prices.
EDF Energy has just unveiled a new fixed price tariff of £1,340 per annum that extends out to 2017 while First Utility has promised to keep its variable tariff unchanged at its current level until March of next year.
The moves comes despite predictions from some energy experts that many of the big six companies are likely to raise their bills by between 5% and 10% over the coming weeks.
Earlier this week LoCo2 Energy, a small supplier and power generator, put up its electricity bills by an average of 9% saying this was necessary to counter a 10% rise in costs since last spring.
Ann Robinson, director of consumer policy at uSwitch.com, said that rumours of price rises continued but homeowners could take some small comfort from some of these better deals.
“The fact that suppliers are doing battle royal in this part of the market is good news for competition too. It is forcing suppliers to compete hard on the price of these tariffs and to offer increasingly attractive terms, such as no early exit fees. This is good news for consumers and serves to demonstrate what competition could deliver if the barriers were raised.”
Ian McCaig, chief executive of First Utility, was one of the industry executives who welcomed some aspects of the Miliband plan to restructure the wholesale market but warned that the retail price freeze could endanger small companies such as his.
Last night he denied there was anything contradictory about freezing prices for his 190,000 customers for six months but saying a 20-month government-imposed moratorium could be disastrous.
“Today we have already bought the energy we need across the winter but if there was a cold weather snap like there was in March 2013 then we might have to make up for that by adjusting prices in the spring. But every company will be different and I cannot see what it looks like for the big guys who are worried about the rising cost of government policies or need to invest in new power generation (plants),” he explains.
McCaig argues that it would be much harder to know what the market is going to look like in 2015 and small companies would be much less able to absorb any unexpected cost shocks than larger ones. He added: “I think the result might be price increases before the freeze and ones after which would not really benefit the consumer.”
The new launch of the EDF Energy’s Price Freeze March 2017 brings the French company in line with another of the big six firms, npower which is offering a Price Protector March 2017 tariff which costs £1,341 a year. Both are fixed for the same length of time and neither carries an early exit fee, giving customers the maximum flexibility and freedom to move on again should prices fall or a better deal emerge.
Switching service, energyhelpline, still expects variable tariffs to rise shortly with one leading and the rest rapidly following. Energyhelpline describes the retail market as being “like a volcano about to blow”.