• Text size      
  • Send this article to a friend
  • Print this article

Robust action on Big Six is needed

With winter officially over, many households will be reviewing their energy use, even though it remains chilly outside.

The cost of heating has reached new highs this year, following yet more energy price hikes last autumn at considerably above the rate of inflation. Shivering through a few hours without heat each day can seem for some like the only way to keep household debt levels in check.

No wonder 70% of consumers are worried about energy prices, 80% do not feel they trust energy companies and 90% believe the market should be investigated further to make sure it's operating in consumers' interests.

It seems likely that the energy regulator Ofgem will recommend a full competition inquiry into energy companies by the new Competitions and Markets Authority (CMA), the body that goes live in April and will promote competition in the interests of consumers. That is what is required.

Politicians of all stripes have undoubtedly played to the gallery in the last six months by publicly criticising the Big Six energy companies but they are not ultimately to blame for public disaffection. To many consumers, the energy companies appear to be untouchable and have failed adequately to explain the reasons for the escalating price of their lifeline commodities. They have blamed it variously on the rising wholesale price of energy (which has been much lower than the rise in consumer prices), investment in infrastructure (leaving consumers wondering why the replacement of creaking infrastructure has not been planned for and implemented on a rolling basis over many years instead of being landed on them at such cost now) and the government's important "green levies" (though they are a relatively small part of household bills and the Government has now reduced them in any case). In fairness to the energy companies, these issues are more complex than they are often presented as being, but with the Big Six acting in concert each year imposing similar huge price increases, no wonder the British public suspect they are being used as a cash cow.

The Big Six have not given the public good reason to trust them. Like banks, they have been found guilty of a string of misdeeds. Last autumn, Scottish Power was fined £8.5m for misleading people during doorstep and telephone sales approaches, while npower was fined £3.5m in December, coming five years after a £1.8m fine for mis-selling. Last April, SSE was fined £10.5m for mis-selling gas and electricity, and in 2011, British Gas and npower were fined millions over their handling of customer complaints. The fines, alas, are but a minor inconvenience, Scottish Power's representing half a week's worth of 2012's pre-tax profit.

If consumers feel the Big Six are operating as a cartel, it is hardly surprising. With fines and public criticism making no apparent difference, more robust action is called for. There are two sides to the story, but without a full inquiry, bill-payers will continue to suspect the companies of exploiting their privileged position - and getting away with it.

Contextual targeting label: 
Business

Commenting & Moderation

We moderate all comments on HeraldScotland on either a pre-moderated or post-moderated basis.
If you're a relatively new user then your comments will be reviewed before publication and if we know you well and trust you then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules

Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.

221491