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.”

Start your day with The Independent, sign up for daily news emails
Voices
Barn owls are among species that could be affected
charity appeal
News
Sarah Silverman (middle) with sister Reform Rabbi Susan Silverman (right) and sister actress Laura Silverman (left) at Jerusalem's Western Wall for feminist Hanuka candle-lighting ceremony
peopleControversial comedian stages pro-equality Hanukkah lighting during a protest at Jerusalem's Wailing Wall
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
Sport
After another poor series in Sri Lanka, Alastair Cook claimed all players go through a lean period
cricketEoin Morgan reportedly to take over ODI captaincy
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
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

Recruitment Genius: Finance Director

£65000 - £80000 per annum: Recruitment Genius: Finance Director required to jo...

Recruitment Genius: Medico-Legal Assistant

£15000 - £25000 per annum: Recruitment Genius: This is a unique opportunity fo...

Ashdown Group: (PHP / Python) - Global Media firm

£50000 per annum + 26 days holiday,pension: Ashdown Group: A highly successful...

The Jenrick Group: Quality Inspector

£27000 per annum + pension + holidays: The Jenrick Group: A Quality Technician...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas