Chris Huhne, the energy secretary for the coalition government, has indicated that he will take action against the major energy suppliers following their increases in utility bills this summer.
Scottish Power and British Gas were the first to announce rises in their energy prices this summer and last week EDF Energy became the last of the major suppliers to announce similar increases. Scottish and Southern Energy, Npower and E.On are the other three major suppliers for the UK and they all have claimed that the rise in energy prices are necessary due to the rise in the wholesale prices of energy.
The announced rises in utility bills amounted to an average increase of 17.4% for gas bills and 10% for electricity bills.
These increases in prices have led to Ofgem starting an investigation into energy pricing by the major suppliers who are concerned that the companies may have understated their annual profits in order to justify these rises.
Mr Huhne has indicated that he wants to make it easier for customers to find cheaper energy deals and to switch companies.
Recent months have seen criticism of the doorstep sales technique often used by the energy suppliers to get people to transfer onto their energy tariffs. However, customers are not always offered the best tariff for them. Mr Huhne has suggested that energy firms should be required to tell customers about the cheapest tariffs available when they take on a new customer.
Mr Huhne has also indicated that the regulator for the industry, Ofgem, could be given more power to help take action against the industry when necessary.
Ofgem is able to to issue fines of up to 10% of any company’s annual turnover. Mr Huhne wants to extend this to allow them to force the companies to compensate customers when they exhibit ‘bad behaviour.’ Companies can also defer Ofgem rulings by appealing to the Competition Commission, which can cause delays. Mr Huhne has suggested stopping this and granting them a quicker appeals process.
Mr Huhne wants to see more small energy firms to enter the UK energy market and also would like an increase in consumer organisations, co-ops, partnerships and charities to help customers get the best deals for them.
Energy UK, who represent the major energy suppliers, have indicated their support for any changes which will help people to get the best deal. However, they argue that Britain already has a highly competitive energy market and has the cheapest gas, and fourth cheapest electricity out of the major European countries.
John Cridland, from the Confederation of British Industry (CBI), has suggested that the high energy prices indicate a need for investment in the low-carbon energy industry and has called for the government to be ‘crystal clear’ over their energy policy to help secure business investment.
Donna Hume, a spokesperson from Friends of the Earth, pointed out that the government has cut the feed-in-tariff which rewards businesses and homes for contributing their own clean energy to the National Grid. She added: “Behind closed doors, the energy companies are attempting to lock us into expensive gas power plants for the next two decades instead of investing in the home-grown clean energy that could keep our bills stable and cheaper in the long run.”
