The chief executive of E.On, Tony Cocker, declares himself “devastated” by the mis-selling scandal that has hit his company. E.On has been given a £12m penalty by Ofgem for the offence; Mr Cocker is to have his bonus cut by 25 per cent. While those penalties will hurt, a bit, they are not proportionate to the betrayal of vulnerable customers E.On has admitted to. If such things are designed to be a deterrent, one wonders how many of the energy giants will be quaking in their shoes. They have made far too much money from conning customers on the doorstep and over the phone to be too concerned about a few million here or there.
Of course, many of the customers E.On has abused will change supplier. But the problem in the energy market is structural, and successive governments have failed to tackle it.
The market needs radical reform, and soon. Too many companies have become “vertically integrated”, in the jargon – buying and selling gas and electricity between different arms of the same company, stifling competition. The structure of charges, though simpler than it was, is not comprehensible enough to those who can least afford to be ripped off.
Energy costs are high because the world demand for energy is high, but they may not have to be as high as they are in Britain. Companies refused to pass on the savings to customers when David Cameron cut green levies last year, for one. And with the Big Six moving prices in unison, and usually up, it looks, feels and sounds like a rigged market; if it is not in effect an oligopoly, then no government agency has yet demonstrated that that is the case.
Rightly, energy bills should be a political issue in the approach to the general election. Ed Miliband’s idea of a freeze on energy prices is economically senseless, but the party that does propose a reform to make the energy markets more transparent will find itself in receipt of many grateful votes, and not only from E.On customers.