Householders Struggling With High Energy Bills Should Take Packed Lunch to Work, Says Ofgem

AP Photo/Martin Meissner
AP Photo/Martin Meissner

The energy market regulator Ofgem has been accused of issuing “patronising rubbish” after releasing a list of money saving tips urging people to take packed lunches to work, give up gym membership and buy second hand mobile phones, presumably in order to meet the current extortionate cost of heating their homes this winter.

The timing of the bizarre list couldn’t be worse, as consumer watchdog Which? has just issued a report showing that the big six energy firms are failing to pass on falls in wholesale energy prices on to customers, costing householders an average £145 a year on standard energy tariffs, the Daily Mail has reported.

“The average office worker spends £2.83 a day on buying lunch (based on meal deals of a sandwich, drink and snack). Save your money and instead make and take your own food into work,” Ofgem advises. Total projected annual saving: £735.80, suggesting that Ofgem thinks ingredients for packed lunches are free.

Whilst packing those lunches, Ofgem also suggests that you could “Cut back on a morning coffee each day by investing in a reusable flask. Avoiding a £2.60 medium latte each day could help you save £676 across the year.”

They find a further £78 a year by “picking up a basic second-hand handset and then [trying] out a SIM-only deal for a snip of the price.”

Labour’s shadow energy secretary told the Mirror “This is patronising rubbish. People don’t need lecturing on taking a packed lunch to work, jogging round the block or getting a second-hand mobile phone, they need a regulator that will stop energy companies ripping them off.”

A spokesman for Ofgem has said “We’re only ­interested in helping energy customers save money.”

However, a new report by Which? has revealed that consumer energy bills have not kept pace with wholesale price falls. By comparing the wholesale price of energy with the average consumer price since 2013, the watchdog said that it could find “no justification” for a price hike which occurred in late 2013.

It also said that recent price cuts have not been as large as they ought to have been. The big six energy companies have recently delivered cuts to consumer prices of up to 5 percent, but Which says that the cut should have been more in the region of 8.8 percent to 10.3 percent, saving consumers a total of £2.9 billion over the last year.

Which? executive director Richard Lloyd said: “Our analysis places a massive question mark over how suppliers have been setting prices over the last two years. They now need to explain to their customers why bills don’t fall further in response to dropping wholesale prices.

“Energy bills are consistently the top consumer concern so it’s about time people got a fair deal.

“While the competition inquiry should establish beyond doubt whether the price people are paying today is right, consumers will now look to politicians of every party to set out how they’ll deliver fair and affordable energy prices in the future.”

Ofgem has also found that profits for the big six companies were twice this year what they were last year. According to Ofgem, the average profit per household was £114 in the past 13 months – up from £77.

A spokesman for the regulator said that they had referred the energy companies to the Competition and Markets Authority for a full investigation, adding “We have consistently called for suppliers to explain the growing gap between wholesale prices and retail prices.

“Which?’s report echoes Ofgem’s concerns that bills go up faster in response rising wholesale prices than they fall when wholesale prices come down, which was one of the reasons for our referral of the market to the Competition and Markets Authority.”

However, energy industry insiders have criticised Which’s methodology and questioned the conclusions within the report. Lawrence Slade, chief executive of Energy UK, the trade association for the energy industry, said: “Customer deals are falling in price – over £100 cheaper than this time last year.

“The Which? calculations are based on very many assumptions and do not reflect the cheaper deals we are seeing. Which? points out that each company allocates their costs differently and this makes it difficult to estimate wholesale costs and hedging strategies. Indeed its hedging assumptions for 2013 are different from Ofgem’s report based on the companies’ actual accounts.

“Costs are coming down but, because energy companies buy ahead to fix prices and to plan with certainty, the gas and electricity we are using today has already been paid for.”