Home / Advertisers / Why don’t the UK’s energy companies do what a retailer would do – lower their prices (or price increases)?

Why don’t the UK’s energy companies do what a retailer would do – lower their prices (or price increases)?

Centrica-owned British Gas is, we learn, planning to ‘ramp up‘ its marketing activity to try to counter the unpopularity it’s incurring for raising its gas prices by 18 per cent and electricity prices by 16 per cent despite making £270m profits in the first half of 2011 from domestic consumers. In total Centrica made £1.26bn in the six months to June.

To add to its woes it’s just been fined £2.5m by industry watchdog (hardly a regulator) Ofgem for mis-selling its products.

British Gas is the only UK-owned company among the country’s ‘big six’ energy providers. The others – EDF Energy, E.ON, npower, Scottish and Southern Energy and Scottish Power (faux Scottish names have always been the last refuge of the scoundrel) are foreign-owned.

But any big retailer (which is all this lot are in the energy business) would respond to struggling customers and consequent unpopularity by cutting prices; taking a hit on margins and trying to offset this by putting pressure on their suppliers.

The retailers would realise that spending loads of money on ads and cringe-inducing PR campaigns proclaiming how ‘green’ they are (which is presumably what British Gas has in mind) will only ad to their perception problems.

It’s undoubtedly true that wholesale energy prices have risen recently but far from clear that the energy retailers have tried to do anything about these; by shopping around for cheaper suppliers for instance.

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And the big six make it the foundation of their business to make buying gas and electricity cheaply as difficult as possible by offering literally thousands of possible tariffs.

You would need to be on a price comparison website every other day to have any chance of getting a reasonable energy deal.

In the meantime Centrica’s management and shareholders do very nicely with bigger profits and bonuses from their captive market.

Hardly a free market at all. And someone ought to remind the big six that price is a crucial element in what these dimwits call ‘marketing.’

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.
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