Select Committee investigation into energy market to be held
February 18, 2008 at 2:18 pm
It was announced last week that a House of Commons Select Committee would instigate an enquiry into accusations of collusion and anti-competitive behaviour in the energy industry, which makes it difficult for newcomers to access the market.
The committee will be chaired by Peter Luff and its first job will be to gather written evidence. A hearing will then take place, probably in June, and senior personnel such as Andrew Duff of RWE NPower and Phil Bentley of British Gas will be asked to attend. Representatives of groups such as Energywatch and smaller energy suppliers will give evidence, along with OFGEM’s chief executive and independent experts.
The investigation will examine whether the existing structure of the energy market is conducive to effective competition in both the wholesale and retail markets. They will also consider whether or not price collusion makes it difficult for smaller providers to compete with the major players.
The committee will then decide whether it is appropriate to refer the matter to the Competition Commission, a move which would be welcomed by the energy consumer group, Energywatch. The industry watchdog, OFGEM, is confident that such a move will not be necessary, believing that the energy market in the UK is in fact competitive.
It is, however, these suspicions that make the majority of householders loathe to switch energy providers, despite the promise of savings. Last year only 4.5 million householders (1 in 6) switched providers and almost 1 in 2 households has never switched, since Mrs Thatcher broke up the monopoly twenty years ago. In the over 60′s age group it is worse news still, with only 31% ever having changed, despite the fact that many of this age group have to budget carefully to pay their ever increasing energy bills.
Scott Byrom, the utilities manager at moneysupermarket.com feels, however, that taxpayers’ money should not be “wasted” on the enquiry, with the money being better spent by the government on publicising the savings that could be made.
On the other hand, Tim Wolfenden of uSwitch.com welcomes the announcement of the enquiry and hopes that it will stop the current rumours that prevent consumers shopping around. He feels, however, that the questions being investigated are for the Government and regulators to deal with and that the man in the street should not be distracted from the savings that he could make right now.
With prices rising, the controversy is an issue which affects everyone. Already four out of the six major suppliers (NPower, British Gas, Scottish Power and EDF) have raised their prices, whilst EON is expected to do the same soon. Scottish and Southern Energy have promised to freeze their prices until late March at the earliest. With the potential savings being in the region of £325 a year, it seems that we would be ill advised to ignore the advice of Tim Wolfenden. The switching process is quick and easy and explained in full on the uSwitch website.
