Why Are We Paying Too Much for Our Energy Bills

This week on the Kiran Trivedi blog I ask what the recent news that the energy market is over regulated means for your personal finances.

Energy Bills Just Keep on Going Up!

I regularly talk about the impact of energy bills on your personal finances. If you are looking to live on a budget, you’ll have zero chance of success if you don’t think about how much you need to pay for electricity, gas etc. every month.

But as of late, that hasn’t been easy. It seems that energy bills in the UK have been constantly rising over the last few years. This means that not only are energy expenses putting more pressure on your personal finances than ever, but they are harder to predict.

Consequently, this makes it harder to budget for energy expenses, further effecting your personal finances. That’s why I thought you Kiran Trivedi readers would be interested to know that the reason you are paying high energy bills could be because there is too much red tape in the energy market.

Energy Regulation since 2008 Too Aggressive?

According to the BBC, five former regulators went on record last week suggesting that too much regulation could have stopped competition among energy suppliers, in turn keeping energy prices high for households across the UK.

Specifically, they suggested that regulation since 2008 has been too aggressive. This conclusion comes in light of recent Ofgem findings, which suggest that energy suppliers have been able to continue to raise their prices, free from any competitive pressure, even whilst wholesale prices were falling.

Ofgem Responds to Regulator Criticism

Ofgem responded to the criticism, saying it would pay “close attention.” However the regulator went on to deny that things were fine before 2008, but took a turn for the worse when after the date they adopted a more interventionist approach.

A spokesman for Ofgem said: "Many of the current problems with retail competition in the energy market were showing before 2008 and the regulatory and policy environment has changed significantly since then."

Switch to a Low Cost Energy Supplier

So is more regulation the reason your energy bills are so high? Maybe, I’m not sure yet. What I am sure of Kiran Trivedi readers, is that the Big Six energy companies provide poor value formoney. That is why I would suggest that if you’re looking to protect your personal finances, you switch to a low cost energy provider today! 

If you wish to talk to Kiran Trivedi about my articles or just chat about finance, you can contact me here.

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Why Should You Desert the ‘Big Six?’

If you get your energy from one of the ‘big six’ energy companies, and most people in Britain do, then you’ll know that they charge heaven and earth for their services. Saying that, Kiran Trivedi readers, why should you desert the ‘big six?’

Did you know that the annual household energy bill now runs up £1,264, and that only covers gas and electric? Why do you think that is? Is it because it simply costs that much to bring energy to your house? Whilst energy costs are rising all over Europe, they’ve risen much more steeply over here.

The thing is that they shouldn’t. In Britain we’re a lot more energy independent than Europe, as we don’t depend on Russia for our gas and oil and we have a growing renewable energy sector, which means that costs really shouldn’t be that bad. Furthermore, the fact that American shale oil and gas is flooding the market at the moment should make things even cheaper.

The thing is that the ‘big six’ don’t seem to be taking any of this into account. We see this best through the energy prices row last year. Labour leader Ed Miliband suggested that if he got into power then he would impose a 20 month energy price freeze.

The big six went mad. They immediately denounced any such strategy, saying that it costs too much to supply the country with energy as it is and that it why they are raising prices. They also rose prices again to circumvent such measures.

The actions of the big six from there show that they haven’t really got consumers best interests at heart, and that is why you need to desert them. In the end, the energy prices row stopped and not only did most of the big six not lower their prices, they also convinced the government to cutback the ECO Funding scheme; which provided energy efficiency measures designed to cut household energy bills.

This is why you should switch to a smaller energy company if you want to more effectively manage your personal finances. It’s logical really. Because they’re a small company they can’t afford to alienate their customers, which means that they have policies that mean that you get cheaper energy.

We have seen this recently with small energy company Ovo. Based on the usage of dual fuel by a medium user, the energy company has pledged to get energy bills to under £1,000 a year. This has prompted large energy firm SSE to say that they are freezing prices until 2016, showing that they really don’t need to raise prices to keep themselves afloat.

That’s why you need to desert the big six energy companies, Kiran Trivedi readers. They clearly don’t have your best interests at heart because they’re so big that they don’t need to. Switch to a smaller energy company if you want to more effectively handle your personal finances.

LINK TO INFO: http://www.bbc.co.uk/news/business-26947756

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