Cory Hazlehurst and Steve Haynes from the Not Enough Champagne podcast allowed me to return to discuss our dysfunctional energy market. There are problems within the energy market that are not widely being talked about. I’ve summarised the discussion below.
To listen to the podcast episode in its entirety go here. https://notenoughchampagne.libsyn.com/losing-energy-222
The Problem
Fuel Poverty is a massive problem. According to 2019 stats based on 2017 data. 2.53 million people in England alone are in fuel poverty.
There are several costs that the bigger energy companies have to absorb including ECO costs and Smart meter installations. These costs would be absorbed into customers bills.
There has been a lot of pressure on Government to reduce household bills because of the high levels of fuel poverty that we have in this country.
Most people didn’t switch their energy provider and so they were paying, on average, more than those that switched regularly. A lot of people were on standard variable tariffs that were higher than fixed term deals.
The potential solution
In response to this pressure the government introduced a Price Cap in January 2019. Those that were on standard variable tariffs were moved to the Price Cap tariff. The price cap was to reduce customers bills and possibly help move people out of fuel poverty.
The consequences
This wiped out the profit margins of the big energy companies. Most of them went from being profitable to loss making in a short amount of time. . A whole array of smaller companies have gone bust, including the likes of Breeze Energy and GB Energy Supply. Another example of the volatility of the energy market is that SSE decided to leave the residential market and their residential energy business has been taken over by Ovo.
Now the energy companies are scrambling, trying to find new ways to make a profit. A focus on becoming an energy solutions provider, by offering other products like solar panels and boilers to existing customers, is a key strategy to some of the big players.
Solutions?
Finally, we spoke about some possible solutions to our energy market problems. A Green New Deal could help, it would take billions of pounds worth of investment, but it could help insulate our homes, so we need to use less energy and invest in a smarter grid, amongst other things.
