DTI tells energy regulator to crack down on rip-offs

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The Government is putting pressure on the new energy regulator, Sir John Mogg, to prevent electricity companies ripping off customers.

Stephen Timms, the Energy minister, is concerned that bills from the incumbent electricity companies are too high and customers are not switching to cheaper suppliers.

The warning comes in a letter from the Department of Trade and Industry's most senior official involved in drafting energy policy, Joan MacNaughton. It urges Sir John, who is the chairman of Ofgem, to address, "the failure of electricity companies to reduce in-area prices for domestic consumers". In-area prices are charged by incumbent electricity suppliers, and are typically 20 per cent higher than the prices set by new entrants.

But of the 26 million electricity customers in the UK, only 11 million have switched suppliers since 1999. Energywatch, a watchdog, said many customers hadn't changed because either people couldn't be bothered, were too busy or didn't know they could switch.

The DTI also wants Ofgem to address an "apparent slowdown in transfer activity" which it says lessens the "pressure on suppliers to make ... reductions". According to Energywatch figures, 800,000 customers transferred in April 2002, compared to 525,000 in April 2003.

The DTI wants Ofgem to launch the assault on the electricity companies as part of its coming three-year strategy.

While Ofgem supports switching, it warned that it could do little to force electricity companies to reduce their bills. "What companies charge is up to them. But we look to see if there is any collusion between them and will come down on them like a ton of bricks if we find any," an Ofgem spokesman said.