Energy companies are not ripping you off

Telegraph

20 hours ago

A week ago, the Government announced with great fanfare that 'millions more families' would get £150 off energy bills this winter. This sounds great. Unfortunately, what the Government failed to mention is who would pay for this. The answer is everyone else.
The Warm Homes Discount (WHD) is one of several non-energy obligations placed on suppliers. Suppliers get a bad name, but they are forced to do a lot of things that have little to do with energy supply, and are given little money to do it. Meaning fewer resources to do the things people expect them to do well.
Of course, some suppliers could and should do better, but it's worth thinking about the various spurious obligations they face and why they make little sense.
Take the WHD. This is how it works:
Step 1: the supplier must ask the Department for Work and Pensions which of its customers are eligible to receive the discount;
Step 2: the supplier calculates the total cost of the discount;
Step 3: the supplier adds the cost of the discount to the bills of all its customers that are not eligible to receive it, plus an admin fee.
This is wealth redistribution, pure and simple.
Suppliers take money from one group of customers in order to give it to another group. It is quite simply not the job of corporations to do this – if governments want to redistribute wealth, there already exists a tax-and-benefits process for this.
Make no mistake, the WHD is a benefit for a small group of consumers and a tax on the rest, and with over 6 million homes expected to be eligible, the overall cost will be close to £1bn.
Another non-energy obligation imposed on suppliers is the Energy Company Obligation (ECO) that requires suppliers to help their customers cut energy usage through home improvements such as better insulation.
What, you may ask, do energy suppliers know about building and construction? The answer is that they have had to learn, hiring builders and other contractors to carry out home retrofits. The scheme costs over £1bn per year. And how is this paid for? Through bills. Suppliers impose a charge on their customers to pay for the scheme.
Again, this is inefficient. There are already people who know about insulation and building standards. They are called local authorities and they supervise the planning and building control processes. If the government wants to reduce heat losses in homes, it should provide funding to local governments to supervise such schemes, rather than asking energy suppliers, whose job is to supply gas and electricity, to do it.
Smart-meter installation is another unnecessary supplier burden.
No other country in Europe expects suppliers to install network equipment. Network operators do it instead.
But in the UK, suppliers are required to meet strict smart-meter installation targets, despite it being entirely voluntary for consumers to accept one or not. On top of this, successive governments have repeatedly told consumers that suppliers are greedy profiteers who cannot be trusted.
And then they wonder why consumers are reluctant to allow them to install devices that could, were market rules to change, allow suppliers to restrict their energy usage, or charge them punitive amounts to use energy at various times of the day.
Again, the costs – also estimated at around £1bn per year – are recovered through bills.