Energy market review detail expected

Posted by Warren Fyfe on October 31, 2013 in Warren Fyfe Site

Pylons near Barking Power Station in east London

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Ben Wright reports: “The big issue lurking in the background is the question of green levies”

Energy Secretary Ed Davey is expected to unveil more details of a proposed review of competition in the energy market in a Commons statement later.

Prime Minister David Cameron told MPs on Wednesday: “We want a competition inquiry that starts straight away.”

The review will be led by the regulator Ofgem, together with the Office of Fair Trading (OFT) and the Competition and Markets Authority (CMA).

Labour accused the PM of “kicking the problem into the long grass”.

‘More transparency’

Mr Davey is due to deliver the annual energy statement to the House of Commons from about 11:15 GMT, unless it is delayed by urgent questions or other statements.

The review is expected to report annually on the state of the energy market, examining the barriers encountered by new suppliers entering the market, scrutinising prices and profitability, and evaluating how easy customers are finding it to switch suppliers.

“I’ll be announcing that we’ll do an annual competition assessment to make sure that these big six [energy companies], they feel the pressure of competition,” Mr Davey told BBC One’s Watchdog programme.

“We’re not going to let them get away with hiding things, from people, from Parliament, from ministers,” he said.

The first review is expected to be complete by spring 2014 and would help to bring “much more transparency” to the sector, he added.

Four of the UK’s six main energy companies have recently announced price rises, with an average increase of 9.1%, and the other two are expected to follow suit soon.

The firms say the rises are largely due to increasing wholesale prices, but Ofgem says these have only risen by 1.7% in the last year.

Wholesale costs – the price at which energy companies buy the gas and electricity they provide to customers – make up just under half of the energy bills paid by most customers.

Energy firms dispute Ofgem’s figures and say wholesale prices have risen by 4-8% in the last 12 months.

‘Stealth poll tax’

Appearing before the Energy and Climate Change Committee of MPs this week, some of the big energy companies blamed the government’s social and green policies for driving up prices.

Tony Cocker, chief executive of E.On, called such costs a “stealth poll tax” and said they should be paid through the main tax system, not as part of energy bills.

Mr Cocker also told MPs there should be “a very thorough Competition Commission inquiry” into the way the UK energy market operates.

Ed Miliband

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PMQs: Cameron and Miliband on energy bills and policies

But Centrica, parent company of British Gas, later said such an inquiry was “unnecessary”, adding: “There have been numerous inquiries into the energy market and none have found any evidence of anti-competitive behaviour.”

At prime minister’s questions in Parliament on Wednesday, Mr Cameron clashed with Labour leader Ed Miliband on the issue of energy bills for the fourth week in a row.

The prime minister said the energy market needed “more competition and lower levies”, but Mr Miliband called him “the unofficial spokesman for the energy companies” and said customers needed to “switch the prime minister”.

Article source: http://www.bbc.co.uk/news/uk-politics-24747183#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa

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