Power company bosses who conspire to inflate prices by rigging the energy market could soon face jail, the Government announced today following accusations of being soft on the “Big Six” firms which supply almost all of Britain’s gas and electricity.
Ed Davey, the Energy and Climate Change Secretary, raised the threat of criminal sanctions similar to those which apply to bankers found guilty of manipulating financial markets for their own gain.
He also promised moves to enable customers to switch suppliers within 24 hours, rather than the typical five-week period, and an initiative to force companies to be more transparent about pricing.
The Energy Secretary set out the plans as the Government seeks to get on the front foot over the soaring energy costs.
Four of the “Big Six” companies have already announced price rises averaging more than nine per cent.
Executives from the firms came under fire after an appearance before MPs this week in which they blamed the rises on wholesale prices, so-called “green levies” and transport costs.
Mr Davey announced plans for a new criminal offence of manipulating gas and electricity prices as he delivered the Government’s annual energy statement.
At the moment it is only a civil offence, with no existing criminal offence specifying price-rigging in the energy market. Officials confirmed the maximum punishment could potentially be a substantial jail sentence.
“Companies need to know that any wrongdoing will be uncovered and dealt with,” Mr Davey told the Commons.
“We are going to consult on increasing the sanctions for manipulation of the energy markets, so they carry criminal penalties for the first time.”
Mr Davey challenged the industry to put its customers in control.
“That means making it easy for people to change supplier to save money, it means regular market assessments to check their behaviour and it means tougher penalties for market manipulation and putting an end to opaque finances,” he said.
Mr Davey said he would meet companies in the coming weeks to tell them they had to encourage competition by making it quicker and easier for customers to change their supplier.
And he announced that the energy regulator, Ofgem, was to carry out an annual review of the behaviour of companies to ensure they were acting in consumers’ interests.
But Caroline Flint, the shadow Energy and Climate Change Secretary, protested: “It’s another day, another policy that will do nothing to help people with their bills this winter.
“Hard-pressed energy customers struggling with the cost of living need action now, not endless reviews and consultations from an out-of-touch Government that refuses to stand up to the energy companies.
“What we need now is a price freeze because this is the only way we can deal with the energy companies overcharging.
Friends of the Earth energy campaigner, Sophie Neuburg, said: “Ed Davey is right. Bills are soaring thanks to rising gas prices, but promoting easier switching is like rearranging the deckchairs on the Titanic.
“The real solutions – massive investment in energy efficiency and a rapid switch to renewables –are conspicuous by their absence from the minister’s plans.”
Energy UK, which represents the major firms, said: “Energy companies welcome scrutiny about how the market is working and our members have nothing to hide.
“Energy companies are also committed to quick switching and have kept government fully informed of the work already underway to cut switching times dramatically while making sure customers’ consumer rights are protected. Already around one quarter of a million customers switch every month, proving it is not only possible but easy.”