The energy market is yet again failing to deliver the promised stability. British households are now facing a fresh wave of price surges, and the government’s latest response is a plea for meter readings. It is a desperate attempt to avoid the same sort of chaos that saw energy suppliers collapse by the dozen last winter.
Ofgem, the regulator, has asked customers to submit regular meter readings to ensure accurate billing. But this is a symptom of a deeper malaise. The market is broken. A system that relies on consumers to police their own bills is a system that has lost its way.
Consider the cost. The average household energy bill is now running at over £2,500 a year, and that is after the government’s price cap intervention. The cap itself is a misnomer. It is a price floor as much as a ceiling, guaranteeing suppliers a margin while customers shoulder the risk of volatile wholesale prices.
The root cause is the failure to secure long-term contracts and predictable supply. The UK’s energy independence is a myth. We remain exposed to global gas markets, and the pound’s weakness against the dollar is making imported energy even more expensive. Capital is fleeing the pound, and with it any hope of stability.
The Bank of England is in a bind. Raise rates to curb inflation and you crush consumer spending. Cut rates and you let inflation run rampant. The result is stagnation. The energy price surge is a direct consequence of this policy paralysis.
Meanwhile, the Treasury talks about fiscal responsibility. But where is the responsibility in allowing energy bills to eat up a larger and larger share of household income? This is a tax on the poor, and it is regressive. The cold winter months will see families choose between heating and eating. That is not a market outcome. That is a policy failure.
The plea for meter readings is a distraction. The real issue is that the market is incapable of delivering affordable energy without massive state intervention. The sooner we admit that, the sooner we can design a system that actually works. Until then, expect more volatility, more supplier failures, and more pleas for meter readings. The bottom line is that the consumer is paying the price for a system that was never designed to absorb such shocks. And that is the story.
This is Alastair Thorne, Chief Financial Editor, reporting from London.
