Proof by Falsifiability: UK Energy Market is Not Best

At a time when tens of thousands of UK citizens are turning to foodbanks to feed their children, the practical and social obstacles to obtaining cheaper energy mean the best deals are only available to the better off.

I have been trying to change to the cheapest energy tariff in my area since December, from my prepay meter with Scottish Power. Of course, since free markets offer the best and most cost-effective solution for everything, this was as simple as ABC.

As I was on a prepayment meter, I found that none of the cheapest tariffs were available to me. So I had to go online and research which company I could switch to on prepay that would then be prepared to switch me onto a credit meter without (1) charging a fee, (2) doing extensive credit checks, or (3) tying me into a contract on expensive rates for 12 months. Luckily I don’t live in abject poverty, I have a computer and an internet connection, and know my way around the internet, so it was possible for me to do this. It turned out that this was only EDF energy, so I switched to them. Luckily they also have the cheapest prepay energy, so there was also a small saving.

The changeover took over a month. Naturally Scottish Power mucked up everything about it, and sent me a bill. This is impossible as I was on prepay and had credit on my meter when I moved into the flat, and when I switched. Their bill only gave me a charged 0845 phone number to contact them on. Luckily I can afford to call them on this, so I did, and after about 2 weeks of wrangling, they cancelled the bill and refunded the money I had wasted calling them. It turned out that they also have a free 0800 number, they just don’t put that on the false bills they send to their poorest customers. They also eventually corrected the wrong meter readings they had sent to EDF.

There was a moment of humanity in the middle of this when a nice Glasgwegian from Scottish Power that I spoke to on the phone seemed to conclude that I was a really poor person struggling with my bills, and proactively chased up everything on my behalf until every penny was refunded. He was the exception in two weeks of wasted time, money, and energy, but he restored my faith that there really are good people out there doing the right thing in the face of the machine.

My next step was to get EDF to install credit gas and electricity meters. I had to wait over another month for this to happen. Then when it did, of course the £5 credit on my electricity meter, and £10 credit on my gas meter magically vanished from my account. So I had to chase this up to get the money back. At least this time there were free 0800 numbers I could call. After a day or two this was sorted out.

But of course, when I transferred onto a credit meter and bills, I was placed onto the standard variable rate for energy from EDF, with no saving. There was some very small print at the bottom of the bill about changing tariffs. It turned out that there was a fixed price tariff I could move to that saved me about £60 a year. Then EDF failed to informed me that by setting up a direct debit I could save a further £56 a year. Luckily I have a computer and a bank account with enough money in it to pay a direct debit, so I was able to research and access these deals.

Now, finally, I am in a position to switch to the cheapest deal available in my area. If I knew I was going to be here for at least the next year, I could save a further £63, or on a deal without being locked in, a further £41.

This process has taken me nearly 4 months, so I have missed the chance to make big savings on my winter energy bills.  In any case, here are the final results, based on total annual cost quotes from the uSwitch website:

Scottish Power Prepay                 £1 000.11
EDF Prepay                                    £ 971.52
EDF Standard Variable                   £ 971.52
EDF Blue+ June 2015                    £ 912.77
EDF Blue+ June 2015 DD              £ 856.28
First Utility iSave FIxed April 2016   £ 793.14

As you can see, the largest jumps in saving occurred when switching to DD and then between credit meter deals. For someone without a bank account or credit history, these deals are, quite simply, not available. Lack of access to a computer, or lack of internet literacy, would most likely leave you paying in excess of £200 a year over the odds for your power. I’m sure I don’t need to point out that for a family struggling on the poverty line that might be the difference between being able to feed a child or afford winter clothing.

Right-wing economists often repeat the magical thinking that regulation and common ownership are evil, and that markets always deliver the best results for consumers and society. The mathematical models they rely on to “prove” this often rest on twin assumptions of perfect liquidity and total (price) knowledge of the market. I have a PhD, and a burning hatred of being ripped off. My experience proves that these assumptions completely fail in the UK energy market.

Even if they were true, and the government employed computer trading bots to automatically switch our power suppliers on a second by second basis, as better deals became available, that would tell us nothing about the effect that vicious price competition would inevitably have on the pay and working conditions of power company employees, like my pal the nice guy from Glasgow.

In the philosophy of science there is a fundamental principle called falsifiability. This says that if you can frame a statement about the world in such a way that evidence can show it to be false, it is a scientific statement, and its falsification by actual evidence gives you real knowledge about the state of the world. In this case, the proposition that deregulated markets always provide the best result for society and consumers is shown to be false by my experience, therefore it is demonstrably not true that markets are best in all cases.

Q.E.D.

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