When Adam Smith observed the dynamics of the market, he found that consumers acted in their best economic interests by finding the best value for their money, and market players competed against one another to offer the them it. This is true except with State monopolies, where the self interest of both the consumer and the producer is taken out of the equation.
It’s good to see though that gas, opened up to competition in the 1980s, is competitive and responsive to consumers. The Daily Mail tells us that British Gas lost 1.1 million customers last year to rivals because of high bills, meaning that for the first time the former State owned company supplied less than half the market. During 2006, 900,000 households and 200,000 accounts changed their gas supplier from British Gas to rivals.
In response the company was forced to cut bills from £1,100 to £900 a year, and has indicated that further cuts are on the way. Powergen, npower and Southern Electric have responded by announcing possible cuts in the Spring which could lead to a bloody price war. It just shows that you can’t buck the market, or as British Gas found, it’ll buck you.
