12 November 2013

EDF limit increase to 3.9% by deferring green costs

EDF announced a price increase of 3.9% on their gas and electricity prices today but said they'd factored in reductions in costs from ECO schemes.

EDF Energy announced their price increase today and surprised the market by limiting their increase to less than half that of their competitors.

However EDF said they would have to reconsider if the government failed to reduce costs attributable to green levies by as much as they expected.

Asked whether this was a cynical ploy to "grab for market share before you ultimately raise prices, with quite a good excuse that perhaps the government didn't reduce the levies as much as you hoped?”, CEO Vincent de Rivaz responded "It is not at all our state of mind.”

EDF are targeting the Energy Company Obligation (ECO) scheme in particular estimating that it would cost the average dual fuel customer £98 a year in 2014. Within the ECO scheme there is a target to reduce carbon emissions (CERO) by insulating hard to treat homes. It is this target that EDF want halved as it would reduce costs considerably.

EDF's price increase will take effect on variable rate customers from 3rd Jan 2014, existing fixed rates will of course not be affected.

EDF's action is interesting and will hopefully result in an adult conversation about increasing energy costs and how we should be paying for environmental measures. It doesn't make it easy to predict whether you should aim for a long term fix, short term fix or go with a standard tariff. However, if you are paying a standard tariff or haven't switched supplier for years you could almost certainly save money by switching. If you are concerned that prices may come down, then aim for the cheapest available now rather than fixing for a long time. If you do fix, look for tariffs with low or no exit fees.