The sum of the big energy companies’ response to the coming inquiry into their practices is to threaten anyone who questions them with blackouts. Today’s Times (£) reports Centrica as saying more or less that, while British Gas holds out the prospect of a freeze on new power stations. But a trade-off from the larger companies by which any good news for Britain’s consumers is financed by less investment for the future is nothing new – as we have seen this week.
After all, the two year SSE price freeze, which David Cameron and Ed Miliband jostled for ownership of in the Commons, is to be paid for by the abandonment of £20 billion of planned investment and the shedding of 500 jobs. And consumers will be no better off at the end of it. The OFGEM referral to the Competition and Markets Authority is welcome. (It could scarcely not be, since it screwed the freeze out of the SSE in the first place.) But it may not in itself to deliver lower prices to consumers.
What would? Ed Miliband’s answer is price freezes enforced by the state. But this would force precisely the lost investment and jobs of which the big companies warn – and all at a time when we are over-reliant on imports from nasty regimes (think Russian gas) and facing possible blackouts in any event. And the Labour leader can take credit for nothing, since it was a regulator’s enquiry, not his pie-in-the-sky plans, that delivered SSE’s panicky concession.
Tough regulation certainly helps, and the inquiry will give the new Competition and Markets Authority, which is holding it, a chance to show what it is made of. This site has lauded John Penrose’s plans to give regulators sharper teeth but, as he himself has stressed, to believe that a better deal for consumers will be delivered from the top down rather than the bottom up is to think the wrong way round. Better regulation must work hand in hand with big consumers (that’s to say, better-informed ones).
It is consumer pressure that will come most close to squaring the energy circle – in other words, delivering lower prices without damaging investment and employment. So it’s time to spread the word about a way in which consumers can band together to get a fairer deal. Later this morning, ConservativeHome will publish a piece by Henry de Zoete, until recently one of Michael Gove’s Special Advisers and now a co-founder of The Big Deal.
The idea behind the initiative is simple – namely, that consumers will have more muscle if they act together, and that the net offers them a means of doing so. The Big Deal is a network which will give people the opportunity, as he puts it, “to form a community whose collective bargaining power brings them maximum savings with minimum hassle…people power can fix the energy market quicker than politicians”. We should all say Amen to that.
Shopping around on one’s own can be bewildering. Doing so with others can be less so. When it comes to consumer power, Henry is deploying a motto also used by Scotland’s No campaign: Better Together.