EDF Energy’s decision to hold back full impact of rising costs validated by confirmation of Government action on energy charges
- EDF Energy led the way by anticipating action on costs
- Confirmation of savings means 3.9% price rise not expected to change
- All customers due to benefit from move on Warm Home Discount funding
- Welcome first steps but action on rising costs must continue
- EDF Energy invested £3.7bn in UK over last three years, making it the nation’s largest investor in electricity supply and generation
EDF Energy’s decision to hold back the full impact of rising costs earlier this month has been validated by tonight’s confirmation that the Government will take action on energy charges. EDF Energy was the only major energy company to lessen the impact of higher charges in advance because it was confident that action could be taken to reduce costs.
Following this news, EDF Energy expects to be able to maintain its lower price rise of 3.9%[i], as anticipated. That decision left customers with bills £80-96 lower than major competitors who had announced price increases. The company looks forward to hearing more detail from the Government, but does not anticipate that EDF Energy’s prices will rise again in 2014. Customers should expect other energy suppliers to follow EDF Energy’s lead by significantly lowering their prices.
All of EDF Energy’s customers are likely to benefit from the decision to move the Warm Home Discount onto general taxation.
The comments from the Prime Minister and Deputy Prime Minister show that customers benefit when policy-makers and energy companies work together. EDF Energy believes that both groups must continue to bear down on costs in the future.
EDF Energy CEO Vincent de Rivaz first made proposals for joint action with the Government to bear down on costs on October 8.
These latest comments on reducing costs represent an important first step in that process, but there is more that can be done beyond 2014. EDF Energy believes that further experience in delivering the ECO programme[ii] will lead to opportunities for greater efficiency in its delivery. It is also possible to roll out the smart meter programme at a lower cost. Work is needed to limit the impact of network investment on bills in the future.
EDF Energy CEO Vincent de Rivaz said: “We led the way in limiting price rises for customers because we were confident that action could be taken to bear down on costs. This announcement shows it was the right approach and that customers benefit when policy-makers and energy companies work together.
“These benefits have not come at the expense of vulnerable customers or by scaling back long-term environmental and social ambitions. This announcement is a positive start to the work to examine all costs which must continue. It is important that energy firms, politicians and consumer groups carry on working together for the sake of customers.”
This action to lessen the impact of rising costs will also be achieved without affecting EDF Energy’s investment in British jobs and infrastructure.
EDF Energy is the largest investor in electricity supply and generation in the UK, spending £3.7bn in the last three years alone. This investment supports thousands of jobs here in Britain. EDF Energy has been able to extend the lives of existing power stations, build vital new power generation and prepare to restart the UK’s nuclear programme.
EDF Energy had the cheapest standard dual fuel direct debit prices of the major suppliers for all but three weeks in 2013[iii] and its Blue fixed priced deals come without exit fees – meaning customers can leave for free at any time.
The company remains committed to helping vulnerable customers and has been on track in delivering its ECO target. Less than a third of the way through the delivery timetable, EDF Energy had completed 34% of its overall ECO target.[iv]
Eligible low income customers can also benefit from the company's Trust Fund which has paid grants to 26,000 people to help clear household debts and a free money advice service run by the Citizens Advice Bureau.
In addition the Warm Home Discount currently worth £135 is expected to benefit 246,000 EDF Energy customers in 2014/5, an annual increase of 34%.
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[i] EDF Energy announced on November 12, 2013, that it would increase its standard variable prices by an average of 3.9%, with an effective date of January 3, 2014.
[ii]ECO, the Energy Company Obligation is a government scheme to insulate homes to make them more energy efficient. The cost of the scheme is recovered through domestic customers’ gas and electricity bills.
[iii] This figure is based on a national average of regional prices for customers with typical consumption and paying by monthly direct debit. Typical consumption as currently defined by Ofgem is 3,300 kWh standard electricity and16,500 kWh gas consumption and 5,000 kWh of electricity for Economy 7 meters. Ofgem have recently reviewed the typical domestic consumption value and from the 1 January 2014 a new reduced value will be used; 13,500kWh gas and 3,200kWh standard electricity. Major suppliers are: British Gas, SSE, Scottish Power, Npower and E.ON.
[iv] As detailed within Ofgem’s Quarterly Annex: Energy Company Progress published on the November 8, EDF Energy is well placed to deliver its ECO targets. Based on weighted assumptions between programmes, as at the end of August 2013, EDF Energy was 34% complete against the ECO at a point whereby 30% of allowable time had elapsed.