Coalition turns down heat under energy suppliers

The Coalition Government has shelved plans for an independent inquiry into the £25bn-a-year energy industry amid accusations of profiteering on electricity and gas.

Before the general election, the Conservatives and the Liberal Democrats repeatedly criticised Labour for failing to tackle prices charged by the Big Six suppliers. Both the opposition parties demanded an inquiry by the Competition Commission.

An inquiry would have the power to reform the industry, encourage new entrants to break the hold of players such as British Gas and EDF on 99 per cent of the market and, potentially, impose price caps.

However four months into the Coalition Government, no inquiry has been called and the Department of Energy and Climate Change confirmed last night that it has no plans to refer the industry to the Competition Commission.

The news comes amid the possibility that the Coalition will reduce the Winter Fuel Payment for older people, worth £250 per household, or £400 where at least one partner is 80 years old.

With annual bills over £1,000, social problems caused by high energy prices have escalated.

Homes in fuel poverty – defined as spending 10 per cent or more of their income on fuel – have trebled in five years to around 6.6 million. Figures released in December showed that during the cold winter of 2008/09, “excess winter mortality” jumped by 49 per cent to 36,700, sending an extra 10,000 pensioners to early graves.

Meanwhile, profits have surged at the Big Six – British Gas, EDF, Eon, Npower, Scottish & Southern and Scottish Power – and the firms are accused of failing to pass on significant falls in wholesale prices.

Of the two British-owned companies, Scottish & Southern revealed in July that full-year operating profits at its supply and generation arm, of which its UK residential business is a small part, rose by £64m to £896m, up 8 per cent.

In July, British Gas, whose residential supply forms the main part of its business, reported operating profits in the first half of 2010 of £585m, up 98 per cent.

Prior to the election, the Conservatives’ shadow Energy and Climate Change Secretary, Greg Clark, repeatedly called for a Competition Commission investigation into claims of profiteering.

In October, he said: “Even the Government’s own watchdog, Consumer Focus, has said that every household is paying £96 a year too much. The Government should cut through the confusion and end it once and for all by a swift, forensic reference to the Competition Commission.”

The Department of Energy and Climate Change (DECC) , run by the Liberal Democrats’ Chris Huhne, is reviewing the electricity market and the role of the regulator Ofgem, which has been criticised for responding too slowly to previous confirmed overcharging.

DECC confirmed there would be “no referral to the CC at present”.

It said:“Ofgem monitor[s] the market closely, reporting regularly on gas and electricity supply margins, and are also separately investigating liquidity and competition in wholesale markets.”

Consumer groups condemned the failure to act, saying customers needed a thorough investigation of the industry, whose numbers of major suppliers has shrunk through takeovers and mergers from 20 at privatisation in the early 1990s to 6 now.

The Independent’s Campaign against the Great Energy Rip-off has warned that suppliers are overcharging and called for action to ensure that cuts in wholesale prices result in lower bills.

Then, Consumer Focus estimated bills were £96 a year too high, while an independent energy expert put the figure at £120.

Since October the firms have cut average monthly direct debit bills by £55 to £1,095 a year.

Energy UK, which represents the Big Six, denied the industry was uncompetitive. Peter Jenkins, its head of communications, said.“The energy regulator, Ofgem, has confirmed on a number of occasions that Britain has one of the most competitive energy markets in the world where around five million customers switch supplier each year.

“Since the launch of the Independent’s campaign customers have seen further reductions in their energy bills. Customers have the cheapest gas and amongst the cheapest electricity in the EU15."

EU statistics show that before tax UK energy prices are average for Europe. Britain has large gas reserves and the industry is fully privatised, compared with state-owned suppliers in many European countries.

Consumer Focus’ energy expert Audrey Gallacher, said: “There are long-standing concerns that the energy market is not working properly and that customers are getting a raw deal as a result.

“The fundamental problems have not changed since Competition Commission calls were backed by Conservative and Liberal Democrat MPs before the election.

“We firmly believe that this market needs to be subject to independent scrutiny.”

Mr Grogan, now retired, said: “As the winter approaches and there is a debate over energy companies and their profits - as there has been for the past five years - I think the pressure will grow for the Coalition to make their position clear.

“Before the election everyone would have been under the impression that they would be making a referral to the Competition Commission. It looks like officials in the department or Ofgem have got to them.”

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Money
Welcome to tinsel town: retailers such as Selfridges will be Santa's little helpers this Christmas, working hard to persuade shoppers to stock up on gifts
news
News
i100
News
people
Arts and Entertainment
Architect Frank Gehry is regarded by many as the most important architect of the modern era
arts + entsGehry has declared that 98 per cent of modern architecture is "s**t"
Arts and Entertainment
Soul singer Sam Smith cleared up at the Mobo awards this week
arts + entsSam Smith’s Mobo triumph is just the latest example of a trend
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Maths Teacher

£110 - £200 per day: Randstad Education Leeds: Secondary Maths Teacher for spe...

Business Analyst - Surrey - Permanent - Up to £50k DOE

£40000 - £50000 Per Annum Excellent benefits: Clearwater People Solutions Ltd:...

***ASP.NET Developer - Cheshire - £35k - Permanent***

£30000 - £35000 Per Annum Excellent benefits: Clearwater People Solutions Ltd:...

***Solutions Architect*** - Brighton - £40k - Permanent

£35000 - £40000 Per Annum Excellent benefits: Clearwater People Solutions Ltd:...

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker