ENERGY companies should start putting customers before profits say Co-operative Energy which this week became the first energy company to buck the trend and reduce tariffs for customers.
The news is a challenge to the Big Six companies which have introduced price rises – and has been welcomed by consumer groups.
Some analysts believe the move by the Co-op will help it steal customers away in a challenge to the way the bigger companies currently dominate the energy market.
More than 60,000 customers have switched to Co-operative in its first 18 months and this price decrease, which will take effect from 21 December 2012, will make its electricity prices for winter 2012-13 lower than for winter 2011-12.
Tom Lyon, energy expert at uSwitch.com, says: “This move suggests that the Co-op is serious about putting ethics back into the energy market – by cutting its prices, even by as little as 2 per cent, it is sending out a clear message that not all suppliers are the same.
“By differentiating itself from the traditional suppliers, the Co-op should be able to attract consumers that are fed up with the big six and want to try something new. A more ethical approach and good customer service go a long way to winning people over, but attractive prices will see the trickle of new customers turn into a flood.”
The announcement of the price cut was made on the same day British Gas introduced a 6 per cent rise in its prices. SSE has raised price by 9 per cent, Scottish Power is about to raise prices by 7 per cent and Npower will shortly raise the price of gas by 8.8 per cent and electricity by 9.1 per cent. E-on has promised not to raise prices but has been reported to be considering an 11 per cent increase in January.
Which? executive director Richard Lloyd, said: “Rising energy prices are one of consumers’ top concerns, so this is welcome news from Co-operative Energy at a time when millions of household budgets are squeezed. Customers being hit hard by big suppliers’ price rises should now ask why it is that The Co-operative Energy can buck the trend.”
The Co-op’s price cut will shave £9 off its average bill, taking it down from £1,166 to £1,157 a year and is the same regardless of whether you pay by cash and cheque, direct debit or are on a prepayment meter. This means that the Co-op is cheaper than the big six suppliers for prepayment meter customers and for standard tariff customers who pay by cash and cheque.
Co-operative Energy’s Nigel Mason said: “Our customers’ interests come first. Unlike our competitors, we are not driven by a need to make profits for external stakeholders and we pledge to offer a fair and transparent price for all our customers.
“Wholesale electricity costs have come down and we were keen to ensure this was reflected in customers’ bills as soon as possible.
“Trust is at the heart of the co-operative. At a time when the image of the energy market is being further tarnished with allegations of manipulation of wholesale gas prices, Big 6 price increases and reports from Ofgem that suppliers’ profit margins are increasing, we need to show that we’re doing all we can to put customers first, build trust and restore faith, which is why we’ve passed on savings and are distributing £105,000 to our customers this month as a half yearly share of profit.”