If only everything was as predictable as the domestic energy market.
For something that is so predictable an awful lot of fuss is made about the inevitable.
The simple rule is, following pressure (or on the odd occasion the desire to be seen as a market leader) one of the Big 6 will move their price (up or down) by a defined amount. Within one week a second member of the Big 6 will have done so. Within the following 10 days 3 more will have announced price changes in the same direction and to the same magnitude with one outlier taking a little linger than the rest.
The only thing as predictable is the populist messaging from price comparison websites and politicians alike.
Last week E.ON cut prices by 3.5%, today British Gas did the same but by 5.0%. By this time next week the full extent of the predictable pattern will have been followed.
However E.ON got away with it lightly. British Gas did not.
Big 6 baiting rent-a-quote leader of the opposition Ed Miliband said the price cut was:
“Too little, too late when we’ve seen wholesale prices fall by 20%”
Ed doesn’t seem to like British Gas.
In contrast Prime Minister David Cameron welcomed the announcement saying:
“This is excellent news and we should be absolutely clear that this price cut would not be happening if we’d listened to Labour and put in place their 20-month price freeze.”
But George Osborne continued his apparently questionable (and much criticised) grasp of hedging strategy saying:
“Good British Gas cutting prices. Real progress. Need to ensure falls in wholesale prices passed on so will continue to monitor very closely.”
Centrica Chief Executive Iain Conn attempted to aid the Chancellor’s understanding by saying:
“We’ve been watching the significant moves in the international energy market extremely closely for some time, with the aim of helping customers with a price cut at the earliest possible opportunity.
“Operating in such a volatile market, no pricing decision is straightforward.
“We bear the responsibility of managing the risks of buying energy ahead on behalf of our customers, who value the predictability this brings.
“Taking this decision now, at a time of continuing uncertainty, shows our absolute commitment to pricing competitively, with customers at the forefront of our minds.”
Whilst Richard Lloyd of price comparison website Which? who clearly has never read the Business Juice Market Movement Index (BJMMI) said:
“[The Competition and Markets Authority investigation] must look at whether falling wholesale energy costs are passed on fairly, or whether a lack of competition leaves us all out of pocket.”
Look no further Richard. And George. And Ed. You might learn something: (BJMMI)