Profit estimate makes inadequacy of price cuts clear

Profit estimate makes inadequacy of price cuts clear

Citizens Advice has said today that recent price cuts are clearly inadequate and major suppliers must deliver further and deeper reductions. Ofgem’s Supply Market Indicator, an estimate of energy firm profit margins for the next 12 months, has anticipated an increase on average to £114, up £9 from November 2014 and £37 year on year.

Gillian Guy, chief executive of Citizens Advice, said:

“The inadequacy of recent energy price cuts is now clear. Low wholesale costs are allowing energy companies to increase profits whilst barely cutting energy prices. The ball is now back in the energy firms’ court to actually compete with each other on further and deeper price cuts.

“Consumers need a better offer than the price cuts announced so far to show that energy firms are really passing on a year of falling wholesale costs. Households that are struggling to pay their bills will rightly be angered if falling wholesale costs are being passed on more quickly to shareholders than customers.

“Bigger savings can be made from switching than from the price cuts on offer but households that stay on standard tariffs must not be left out in the cold. Many of the consumers who do not switch are older or stuck with a second-class service on prepayment meters. For everyone to be confident they are getting a good deal the market must be truly competitive. The price cuts that have been offered should be carefully looked at by the Competition and Markets Authority investigation.”

Notes to editors:

1. The Citizens Advice service comprises a network of local bureaux, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
2. The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
3. To find your local bureau in England and Wales, visit citizensadvice.org.uk. You can also get advice online at adviceguide.org.uk
4. You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers
5. Citizens Advice Bureaux in England and Wales advised 2.3 million clients on 5.4 million problems from October 2013 to September 2014. For full 2013/2014  service statistics see our quarterly publication Advice trends
6. Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 3,000 service outlets across England and Wales.