Co-operative Energy makes U-turn on energy price increase

Ethical energy supplier Co-operative Energy has announced that it will be reducing the energy price increase that it announced last month, from 4.5% to 2.5%.

The two percentage point decrease comes as a result of the government’s indication that it will remove the mandatory Energy Companies Obligation (ECO) taxes on gas and electricity bills, according to the Co-op. The energy supplier said there was a “clear indication” by the government to transfer environmental taxes into general taxation.

The Co-operative is the second energy supplier in as many days to announce conditional price changes, after EDF announced on Tuesday that they are increasing their prices by 3.9%, warning of further increases if the government’s review into green levies fell short of their expectations.

Ramsay Dunning, group general manager of Co-operative Energy, said, “As we stated in our recent price increase announcement, there were a number of factors that were out of our control including costs associated with buying energy and getting it into people’s homes, that we reluctantly had to pass on to our customers by raising prices. 

He added that the announcement of the removal of ECO schemes was “imminent”, saying that the Co-op had taken the “leap of faith” in removing this element from customers’ bills prior to this announcement.

“If ultimately we have misread the signals and social taxes remain in place for next year we will have no alternative but to review this decision but at least our customers will have benefited over the difficult winter months”, Dunning said.

Speaking about EDF’s announcement on Tuesday, Reg Platt, senior research fellow at the thinktank IPPR, said it was “a threat to government saying ‘cut back your policies or we’ll raise our prices further’”.

A spokesperson for Co-operative Energy denied its own decision should be seen as a threat, saying, “All energy companies can do is influence [prices] through pricing strategies. With around 150,000 energy customers Co-operative energy is just doing whatever it can to help its customers through the winter months.”

Further reading:

Co-op follows SSE and British Gas in announcing energy price rise

EDF hikes prices by 3.9% and vows to go higher if green levies review falls short

Utility bill increases here to stay, says National Audit Office

Ofgem data shows wholesale energy prices have remained broadly flat

Green levy review having a ‘devastating’ impact on energy efficiency industry