‘Thorough competition enquiry needed’ warns energy boss
30/10/2013
The chief executive of one of the largest energy suppliers in the UK, E.On, has called for a competition enquiry into firms, to try and clear energy companies of their bad reputations.
Just last week there was public outrage, as British Gas added 9.1pc on to the price of the average bill, and they were quickly followed by three other large energy suppliers. This leaves only two of the ‘big six’ suppliers yet to raise prices this autumn, and this has led to questions into how healthy competition between energy companies is.
One theory is that, due to the quite limited number of potential suppliers, companies ignore the chance to undercut each other on prices, and simply follow each-other in raising prices at the same time to increase profit. This leaves consumers with nowhere to turn and no little choice but to accept industry wide hikes.
However, Tony Cocker, chief executive at E.On, has written to the Prime Minister to suggest a full enquiry into the energy sector is conducted, to clear energy firms of any wrongdoing. He said: “We need to have a very thorough competition enquiry”. Earlier in the month EDF also suggested a full investigation would be helpful.
However, Centrica, the company who owns British Gas, has rejected claims an enquiry should be held. A statement from them read: “We believe it is unnecessary as the market is competitive. There have been numerous enquiries into the energy market and none have found any evidence of anti-competitive behaviour”.
So far, energy companies have blamed a recent rise in wholesale market prices on the fact that consumer prices have once again gone up, but market data suggests that the price of wholesale energy has risen by just 1.7pc over the last year, a figure that doesn’t even come close to the rate of inflation.
This has led Stephen Fitzpatrick, managing director at Ovo Energy, to question where large energy suppliers are getting justification for price hikes from. He said: “I can’t explain any of these price rises. I have been somewhat confused looking at the explanations for the price rises we have seen in the last three or four weeks”.
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