Socialist Worker

Theresa May’s lukewarm plan for energy prices won’t pay the heating bill

by Sarah Bates
Issue No. 2576

The flame under a gas boiler—but not everyone can afford to light it

The flame under a gas boiler—but not everyone can afford to light it (Pic: Wikimedia Commons)


Some 2.3 million people are facing another winter where they don’t have enough money to heat their homes.

Greedy energy companies’ search for profits means that 10 percent of households have to choose between heating or eating.

To much fanfare the Tories announced a limit on some energy prices this week. A new proposed law is to cap the amount a customer can spend on a standard variable tariff (SVTs).

Energy providers often entice people to join them with a cheap fixed-term tariff, then when it expires automatically transfer them onto a far more expensive SVT.

In this way companies are overcharging people by £1.4 billion year. The government’s own research shows that low income households tend to be on the most expensive tariffs.

Theresa May said the energy market “has to offer fairer prices for millions of loyal customers who have been paying hundreds of pounds too much”.

But the new bill does nowhere near enough in challenging the power of the energy companies.

It’s a big step back even from the lukewarm measures promised by May during her election campaign. These were mysteriously absent from the queen’s speech.

Poverty

High energy prices are one of the main factors in causing fuel poverty.

This is defined as a household having a higher than average fuel cost where spending the necessary amount on fuel would put them below the poverty line.

Poor quality housing is also part of the problem. A house that isn’t insulated properly loses twice as much heat as one that is.  This is partly why Britain has some of the highest bills in Europe.

Bosses’ lobbying body Energy UK downplayed their responsibility.

It said, “Fuel poverty should be addressed at its root causes through greater societal action on energy efficiency and poverty reduction.”

But not everyone is struggling with the bills. The rich bosses of the “big six” energy companies are enjoying the highest profits ever recorded.

Wholesale gas prices dropped by a third last year due to oversupply. But the cut isn’t passed onto the customer.

British Gas put its electricity prices up by 12.5 percent this summer. Its owner Centrica reported a profit of £639 million in the first six months this year.

Energy regulator Ofgem appears sceptical about a tariff cap, fearing that energy businesses will take it to court.

A surer way to cut costs would be to take these privatised giants back into public ownership.


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