WHEN she privatised the utilities, Margaret Thatcher called it "popular capitalism".
It certainly does not look like that now. Two weeks ago SSE (formerly Scottish and Southern Energy) was fined a record £10.5m for mis-selling. Yesterday, the company revealed it expected to pay out £1.5m in compensation for what regulator Ofgem described as a "woeful catalogue of errors". Having made an average £45 a year from each of the 23,000 or so customers affected by mis-selling, it proposes paying out around £70 each. Yet thousands of customers were persuaded to switch to SSE on the back of a false prospectus and many promised a cheaper tariff were switched to a dearer one.
Over the past five years, while the numbers living in fuel poverty have risen dramatically, The Herald has argued consistently that the UK energy market is not run in the interests of its customers. Here is the proof. Rather than free market competition driving down prices, the energy supply market has fallen into the hands of six, largely foreign-owned, companies that appear to behave like a cosy cartel.
Does SSE's punishment fit its crime? No. Fine and compensation will total around £12m. That is less than 1% of the £1.3bn the company made in profit last year. Meanwhile, not one head has rolled. In fact, chief executive Ian Marchant, who retires this summer on a £400,000 pension, collected a pay pot of more than £1m last year, including a £158,000 "cash incentive". That now should be repaid.
There are currently some 900 different gas and electricity tariffs. Mis-selling is almost inevitable in such an opaque market, given high-pressure sales techniques. SSE is not alone. Currently Scottish Power, Npower and E.On are also under investigation. Yesterday E.On chief executive Tony Crocker admitted to the Government's Energy and Climate Change Committee that "tt's too early to say", in reply to the question "are you squeaky clean?". That does not bode well.
As with the banks, the superannuated senior management escapes largely Scot-free, while their customers pay over the odds. The Energy Bill holds out the promise of simpler tariff structures, but companies will continue to sow confusion with standing charges, rather than being obliged to use a simple price per kilowatt hour.
Besides, until decisive action is taken to allow more genuine competition into the energy supply market, it will never be popular capitalism.
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