Even with all that we have heard about the business practices of the Big Six energy suppliers, the revelation that they hold more than £400m of our money – and are happy to hang on to it – is somewhat startling.
For years, it appears, they have simply hung on to credit balances left over when customers move house or switch supplier – making a mockery of official advice to “shop around” for the best deals. The energy regulator Ofgem, always the master of understatement, says the sums are “unacceptably large”.
Too right, and the solutions pretty much suggest themselves. In the first place, the companies should return all the monies forthwith, preferably with some interest added.
Second, all the official inquiries and investigations into the energy market, promised and real, need to be speeded up and published at the earliest opportunity. Tariffs are going to be simplified, but there is a case for further streamlining. As the Prime Minister once suggested, there should be a statutory duty for energy suppliers to provide gas and electricity at the lowest possible rate for any given customer’s pattern of use. If the Coalition parties want to trump Labour’s plan to freeze energy prices – only a superficially appealing policy – they would be well advised to get on with cutting the energy firms down to size.
Third, Ofgem, which has been proved completely ineffective, needs to be replaced with a new, savvier regulator. It is remarkable how flaccid it has been in the face of such outrageous abuse of market power.
All that said, the energy companies are not to blame for everything. Global factors have played a role in pushing up energy costs, a fundamental fact that is often overlooked. Higher energy prices – and green taxes – are necessary to reduce usage, improve energy efficiency and help to slow climate change. And the companies do need to make substantial profits to reinvest in expensive capital equipment. They cannot be blamed for our failure to plan for the next generation of nuclear power.
Even so, they have failed to serve the national interest, and radical reform of them is long overdue.