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Curb the power of the big power companies

June 23, 2011 5:05 AM
By Peter Black in Glamorgan Gazette

It seems that the UK Energy Secretary, Chris Huhne was as shocked as me by the decision of Scottish Power to raise its gas prices by 19% and electricity tariffs by 10%, adding 48p a day, or £175 a year, to the average daily combined gas and electricity bill of its 2.4 million customers.

He has suggested that consumers should hit back by shopping for cheaper alternatives, something that is actually quite easy to do. The problem is that very few people do it. Only about one in six ever switch suppliers. If you want to do that then the place to start is http://www.energyhelpline.com.

There is also quite a high level of ignorance about the social tariffs that are available. If you are on a low income many energy companies have schemes that can help you pay for your gas and electricity and pay off arrears. Go onto the company's website and search for it.

The last time I shopped around I managed to almost halve my energy bills with the same supplier. That was a real shock and underlines how the big energy companies are failing to automatically give their customers the best deal.

I am pleased that Ministers are thinking about seeking powers to force companies to reveal to every customer on their bills whether they are on the cheapest tariff. This seems to me to be the only way to address concerns about lack of transparency.

The really big scandal though, is the near-Oligopoly operated by the big six power companies. That is why I also welcome the fact that further measures to address a lack of competition in the market are expected to be announced by energy regulator Ofgem.

These changes are expected to force the big six, which have their own power stations, to auction up to a fifth of their generated output on the open market so as to make it easier for new players to enter the market.

The new measures are also expected to ensure that the huge array of tariffs, which has grown by 70% since 2008 to nearly 350, are dramatically reduced so that customers can more easily compare prices between suppliers.

Ofgem first announced these proposals in March, following a four-month investigation. The regulator gave the big six - Scottish Power, nPower, EDF, Scottish and Southern, E.ON and British Gas - until 1 June to "engage constructively" with its proposals or face a referral to the Competition Commission.

In my view this is an abuse of economic power which has gone on too long and needs to be curtailed. We may not be able to check the increase in energy prices but at least we can give people some real choices to help them cope.