The energy market is one of Britain’s biggest scandals. A report out yesterday finds the Big Six energy companies are ‘greedy’ and ‘bad’, according to the industry regulator Ofgem which says they profiteer and ruthlessly exploit the vulnerable. As a result a fifth of all households are now in fuel poverty – having to spend more than a fifth of their income on fuel. Tomorrow’s Budget will miss a perfect opportunity to ease fuel poverty, will leave a failed market structure intact, and will make an empty gesture towards a ‘fair fuel stabiliser’. Second only to the selfishness of the banks, British Gas, Npower, E.ON, EDF, Scottish and Southern Electricity, and Scottish Power are holding the country to ransom. What should be done to end their rapaciousness?
The charge sheet against the Big Six reads as follows:
- There is likely to be an energy gap and serious fuel shortages during 2017-20 because the power companies have pocketed their huge profits rather than directing them into the £200bn investment needed to build new power stations, wind farms and other ‘green’ energy options over the next 10 years to keep the lights on,
- When wholesale prices rise, they crank up charges fast, but when wholesale prices fall, fuel prices remain ‘sticky’ and the companies are deliberately slow to pass on the benefits,
- In order to limit the impact s of competition the companies have erected no less than 300 complex ariffs on offer which Ofgem says are designed to ‘bamboozle’ customers into confusion and complexity when trying to discover the best deal,
- Ofgem is convinced that the energy are not providing honest figures on what they are paying for power, and has concluded that only sending in a team of independent accountants will elicit the truth. Ofgem has evidence that in 2010 fuel prices went up faster than costs.
Again second only to the banks, this is a shocking example of private market breakdown where competition has been suppressed and out-of-control market power has been used nakedly to exploit the public. So what should be done? This cosy cartel should be broken up and fined for extortion for what this quasi organised crime syndicate has done. One or more of the Big Six should be taken into public ownership to monitor the energy market from the inside and to inculcate public interest values. And the Government should require that each of the Big Six lay aside 20% of their profits each year to lead the investment fund now so desperately needed to rewire and rebuild Britain.