Robin Pagnamenta
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Ofgem, the energy watchdog, is examining claims of cartel-like behaviour by Britain's top six gas and electricity suppliers.
The regulator has written to Britain's Energy Retail Association (ERA) demanding assurances that meetings of the industry lobby group are not being used to discuss illicit pricing, The Times has learnt.
Ofgem issued a statement last week insisting that it believes that the British gas and power market is competitive and is functioning properly.
However, a spokesman acknowledged that the group was still seeking “categoric assurances” that the ERA is not being used to discuss pricing issues, after allegations that its members, including British Gas, npower, EDF, ScottishPower, E.ON and Scottish and Southern Energy, were colluding to exploit consumers.
A spokesman for Ofgem said: “We have no evidence of anti-competitive behaviour, but it is our duty as an industry regulator to look at these allegations carefully.
"If anybody has any proof of such behaviour, they should approach us immediately.”
He said that Ofgem had the power to launch a formal investigation, including dawn raids on companies, and to impose fines of up to 10 per cent of global turnover on any group found guilty of market abuse.
The ERA faces pressure to minute its regular meetings, which are held every two months, ostensibly to discuss policy and other matters of common concern, and to make those minutes public.
“Why don't they just publish them?” one industry official asked. “If the market is, indeed, functioning properly and the organisation has nothing to hide, why can't they just make them public?”
Last week Sir John Mogg, the chairman of Ofgem, was called to a meeting with Alistair Darling, the Chancellor, to discuss rising UK energy prices.
The meeting was arranged after npower, one of Britain's biggest suppliers, announced price rises on January 5.
EDF and British Gas have since announced rises of their own.
All three cited more than 60 per cent increases in wholesale power and gas prices over the past year, as well as increased distribution and transmission costs.
Wholesale gas supply contracts are frequently linked to the global price of crude oil, which touched a record of more than $100 this month.
Two other companies, E.ON and ScottishPower, are expected to follow suit with increases within the coming weeks.
Scottish and Southern Energy has promised to keep its prices on hold until spring.
Malcolm Wicks, the Energy Minister, said yesterday: “Ofgem would take strong action if there was evidence of anti-competitive behaviour.
The fact of the matter is that global demand for energy is soaring and prices would have to increase by more than the levels seen recently to compensate energy suppliers for the increases in wholesale costs.
The ERA said that it “fundamentally refuted” any suggestion that the UK market was anti-competitive and pointed to the high number of customers who switched suppliers as evidence of this.
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Britain's wind energy industry is being hobbled by delays of up to nine years
in obtaining connections to the National Grid. Maria McCaffrey, the chief
executive of the British Wind Energy Association, said yesterday that
developers of wind farms were being advised by Ofgem and National Grid that
they would have to wait until 2016 or 2017 for connections to big new
offshore and onshore windfarms. She said it was essential that the process
was speeded up if Britain was to meet its target of generating 20 per cent
of electricity from renewable sources by 2020.
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My recent attempt to get better rates from the switching websites produced one showing 30% saving who was using totally inaccurate figures for my current supplier. There were a few saving £10/15 pa and many would have cost more so, where's the competition?
What is also of great concern is the amount by which the utilities are abusing their direct debit mandates, increasing monthly charges by 25% or more against bill increases of 10/15% and this is something that must be looked at as a matter of urgency because, as winter comes to an end, they are going to end up with a lot of our money sitting in their accounts.
AWilliams, Cradley Heath,
The fact that customers are free to switch supplier does not mean that the market is competitive - as ERA try to suggest. What matters is how many actually switch. Since the suppliers are colluding to fix prices, they ensure that there is little point in switching, since customers have very little to gain. Therefore, the market is not at all competitive, irrespective of the 'ease of switching'!!!
Bob, London, UK
About time! The only question to ask of each supplier is, "What was your 'forward supply' contract arrangement in December 2007? Any collusion, collaboration, cartel operation would become evident in the light of PROOF of these arrangements!
S. Barraclough, Huddersfield, W. Yorkshire