Ofgem plans competition inquiry ‘to break up the Big Six’
Regulator to take action after SSE announces price freeze till 2016 that will cost £100m
The big six energy suppliers face the prospect of being broken up when the regulator announces a shake-up of the industry today.
A day after Britain’s second biggest gas and electricity supplier, SSE, announced an unconditional two-year price freeze, Ofgem will kick off a process that is likely to involve a full-scale competition investigation into the energy sector.
This will probe whether British Gas, Scottish Power and the other four big-six providers should be broken up into completely separate retail and energy generation businesses. This would address persistent allegations that they are attempting to disguise the profit they make from supplying cash-strapped households by hiding some of it in the accounts of their generation operations. The big six have always strenuously denied any such activity.
The investigation is also expected to cover why the main energy companies typically tend to increase and decrease their prices within a few weeks of one another – which has raised concerns about industry collusion – and to delve into British Gas’ dominating 41 per cent share of the gas market.
The political tension around energy prices reached a new high yesterday after SSE said it would freeze prices until 2016.
During Prime Ministers Questions yesterday, Ed Miliband appeared to take some credit for SSE’s move – which came six months after he promise to freeze prices for two years if elected prime minister. He accused David Cameron of being “not the prime minister at all, but a pr man for the energy companies”. At the time, Mr Cameron dismissed his price freeze pledge as “unworkable”, but yesterday he welcomed SSE’s announcement. Mr Miliband said: “We’ve obviously misunderstood the prime minister. He is the champion of the price freeze. Week after week he denounced Labour’s call for an energy price freeze to help families and businesses, but now apparently he supports a price freeze.”
The other five big six providers were weighing up their options yesterday after SSE announced a unconditional price-freeze until 2016. The group insisted that the timing of its announcement had nothing to do with today’s Ofgem announcement – although many in the industry remained sceptical.
A source at one rival said: “SSE’s announcement is not a happy coincidence, not in a million years.”
An employee from another rival added: “I’m sure all the companies will react in some way over the next few weeks.”
Ofgem is expected to put the issue of whether to launch a full-scale competition inquiry out to consultation first – a process that will take six to eight weeks – with a two-year review of the industry expected to be announced early June.
- 1 Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
- 2 Christians: The world's most persecuted people
- 3 The secret report that helps Israelis to hide facts
- 4 Danish TV reporter is all business up top, all party down below
- 5 Denmark bans kosher and halal slaughter as minister says ‘animal rights come before religion’
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
Israel-Gaza conflict: The children were playing in the street with toy guns. The air strikes were tragically real
Danish TV reporter is all business up top, all party down below
Syria conflict: Syrian and Turkish Kurds unite to battle Isis threat - ‘We shoot them like sheep, but next day double the number return’
Ross Burden dead: MasterChef and Ready Steady Cook star, dies aged 45
The secret report that helps Israelis to hide facts
A day in the life of Vladimir Putin: The dictator in his labyrinth
Were 'Poor Doors' added to mixed developments so wealthy residents don't have to go in alongside social housing tenants?
A new Russian revolution: The cracks are starting to appear in Putin’s Kremlin power bloc
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Opponents of Israel's military operation in Gaza are the real enemies of Middle Eastern peace
iJobs Money & Business
Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)
£350 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...
£500 - £560 per day: Orgtel: Java Developer FX - Banking - London - Up to £560...
£350 - £400 per day + competitive: Orgtel: My client, a leading bank, is curre...
£26000 - £30000 per annum + Benefits: Ashdown Group: Account Manager - (Produc...