06 February 2008 11:55:17
|Effectiveness of market under question|
Yesterday, an all-party committee of MPs announced that it would be opening an enquiry into the current structure of the UK energy market.
The recent price rises from the majority of Britain’s energy companies has caused increasing concern about how the market operates and therefore prompted the move.
Chairman of the business, enterprise and regulatory reform (BERR) select committee, Peter Luff said: “The continuing controversy over energy prices is an issue that demands to be addressed. It is a complex but vital question and one that affects everyone in the country – individual consumers and households, small businesses and major energy users alike.”
Four of the biggest six energy suppliers - npower, EDF Energy, British Gas and Scottish Power - have increased their gas and electricity prices over the course of the past month.
As for the other two main suppliers, Scottish and Southern Energy has said it will freeze prices until at least the end of March and E.ON has yet to announce its plans.
Energy companies have blamed the increases on rising wholesale oil, coal and gas prices.
In its announcement, the BERR committee said that it would be looking at a number of areas including, “whether the current market structure encourages effective competition in the retail markets for gas and electricity”.
It is also going to enquire into:
• How effective competition is in the wholesale market
• The interaction of the UK and continental European energy markets
• The implications that arise from energy companies fusing together
• Market regulation
• Progress in reducing fuel poverty
The MPs’ move has been welcomed by the industry watchdog, energywatch who hoped that this move would just be the tip of the iceberg and that the competition authorities would also get involved.
Campaigns director, Adam Scorer, said: “Energywatch has long voiced concerns that there are serious problems in the way the energy markets works, or rather doesn’t work.”
“Consumers need this inquiry to provide some clear thinking about how this market lets consumers down and what needs to be done to fix it,” he added.
He concluded by saying: “This is a sensible step and we hope that it will convince government to make a referral to the Competition Commission.”
Ofgem, the industry regulator, said that it would “welcome talking to the select committee and sharing with it our analysis of the market”.
It argues that the competitiveness of the market is illustrated by the number of people switching their energy suppliers and recognised that other European countries were also seeing their bills rise sharply.