KIRSTEEN Paterson reported that one in five consumers now hold accounts with small and medium-sized energy suppliers (UK consumers turning away from Big Six, The National, March 1). The big six share of the electricity and gas markets has fallen below 80 per cent and it seems to be heading fast in a downward direction.

Dermot Nolan, Ofgem’s chief executive, says the largest suppliers are under pressure and they need to look at what they are offering their customers or risk losing them. He needs to do more too. This is not a devolved issue and the Westminster government says it is working on how to protect the most vulnerable customers. I am not holding my breath, as the PM’s promises here lack commitment. It seems to be a smokescreen to avoid the bigger issues of a failed marketplace.

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Dermot states there are still too many consumers paying too much for their energy and he commits to reforming the market to make competition work for all consumers. Time will tell.

Like many, I have no access to gas and live in the north of Scotland, where the climate means energy usage is higher per capita than for most of the UK. It is also where, along with the south-west of England, the cost per kWh for electricity is higher than elsewhere in the UK regardless of supplier. Readers will not be surprised that energy costs are lowest of all for London, but I wonder if many understand why. I believe the problem is based on a charging system laid down by Westminster before energy privatisation.

If Ofgem is serious about reforming the market then abolishing the fundamental unfairness of its postcode lottery will make a good starting point. Where could it start? Well, here is a simple concept I believe is worthy of consideration for electricity. It starts with a decision that the current system is untenable and recognition that favoured status for cosseted London must end. In effect all suppliers of electricity should end the regional differentiation in electricity prices over an agreed period.

The dual supply arrangement which discriminates against consumers who cannot get gas should also end.

For electricity Ofgem should rank the 14 existing postcode regions from lowest to highest per kWh charge and with immediate effect reduce the number of regions by simply merging the postcodes for those where the kWh price difference is marginal. Suppliers should be instructed to do this without an overall increase in costs. Simultaneously, the cost to the two highest-cost regions (south-west England and the north of Scotland) should be reduced to that of north-west England, the third-highest region. To compensate, suppliers would spread the cost across the two lowest-cost regions of London and East Anglia. This process could be carried out annually until the postcode element in pricing has been eliminated. There may be better, more sophisticated ways to do this, but there is every reason for this to be done. Politicians must accept there will be winners and losers in order to achieve fairness.

The economics of the current arrangements need to be questioned. I first switched some years ago. Thereafter it was essential to switch every year to avoid reverting to the expensive standard variable charge. We wonder about poor productivity in the UK. How does it make sense to create a market where you have to change supplier annually and get pestered by companies wanting you to switch through them? Who pays the cost of all this? This has to be addressed by Ofgem.

I switched to a smaller supplier a year ago and was pleased to find I can stay with them without a significant price increase.

Andy Kaye
Ullapool