Huhne to tackle energy ‘predatory pricing’

[dutchman]

Chris Huhne will on Tuesday tackle the big six energy companies head on, announcing new powers for the energy regulator to clamp down on “predatory pricing”.



The energy secretary will demand energy companies make charging simpler, bills clearer and switching between suppliers easier.

He will tell the Liberal Democrat conference in Birmingham: “We are determined to get tough with the big six energy companies to ensure that the consumer gets the best possible deal.

“We want simpler tariffs, requiring energy companies to tell you whether you could buy more cheaply on another tariff.”

Although Mr Huhne’s words are likely to remain measured, one adviser reflected the anger felt within the energy department, calling the top companies, which include British Gas, EDF and Eon, a “bloated oligopoly”.

Ofgem, the industry regulator, will be given several new powers under Mr Huhne’s plans.

It will be able to take action against companies without them being allowed to force a second opinion from the Competition Commission, a process that can cause delays. It may also be able to funnel dues from the fines it levies on companies for breaching licences back to consumers, either directly or through a fund that benefits them more widely.

One of the biggest problems that Mr Huhne is trying to remedy is a tactic used by some companies of keeping most of their customers on artificially high tariffs and using those extra profits to offer significantly reduced rates for anyone who shops around.

Under his new proposals, companies will be forced to tell customers if they could save money by switching rates. Ofgem will also be encouraged to tighten up on the tactic of offering customers prices below what companies pay on the wholesale market, a tactic that the energy secretary feels they use to lure marginal customers, using excessive profits from the majority.

Mr Huhne is trying to retake the initiative after coming under fire for overseeing a steady rise in energy prices since taking office last year. While he cannot do anything about the soaring oil price that has underpinned much of that rise, he feels more can be done to help energy consumers take full advantage of the privatisation that occurred more than 20 years ago.

The energy secretary appeared to blame customers themselves last week for not doing enough to find out what tariffs are available, telling The Times newspaper: “[Customers] do not bother. They frankly spend less time shopping around for a bill that’s on average more than £1,000 a year than they would shop around for a £25 toaster.”

But he will seek to shift the blame on to the energy industry on Tuesday, telling delegates: “With Ofgem, we are cracking down on any bad practice that could smack of being anticompetitive.”

His speech also serves as an answer to an adviser to David Cameron, who reportedly told the prime minister this month that energy prices would continue to rise because of the coalition’s green policies.

Mr Huhne will restate his commitment to tackling climate change, saying: “In the storm-tossed seas we have to sail, low carbon energy gives us security, assurance, safety.”

[rebbonk]

I personally think that Huhne is nothing more than an oxygen thief.

This is the muppet who at the weekend blamed the customer for high fuel prices!

[dutchman]

Perhaps we'll all be doing this soon?

How water bottles create cheap lighting in Philippines

[dutchman]

Energy giants shrug off Huhne's threats on bills



City analysts rejected claims by the Energy Secretary, Chris Huhne, that his crackdown on the "big six" would lower utility bills, as investors pushed up shares in Britain's main gas and electricity providers yesterday.

Consumer and environmental groups generally welcomed Mr Huhne's proposals, which include measures to promote competition, but analysts and investors doubted whether they would result in lower prices.

Reflecting the belief that the bottom lines of the big six providers would be little affected, shares in Centrica, which owns British Gas, jumped by 7.1p, or 2.4 per cent, to close at 300.2p. Shares increased by 3 per cent, to 1,326p, at Scottish and Southern, and by about 4 per cent at RWE, which owns Npower and E.ON, both listed in Germany.

Lakis Athanasiou, an analyst at Evolution Securities, said: "This is frankly hot air and the markets seem to be saying that as well. People are obviously concerned with rising energy prices and the government wants to be seen to be doing something and to deflect attention from the subject. These announcements might be an easy win with the media. But with energy suppliers' profit margins running at around 5 to 6 per cent, it is unlikely they will choose to sacrifice margin."

The big six generate most of Britain's energy as well as supplying the vast majority of it. This gives them scope to reduce the prices they charge households by cross-subsidising their supply arm with the profits from the energy generation business.

However, analysts said that profits on electricity generation are being squeezed by rising gas, oil and coal prices, as well as by excess capacity and the costs associated with new environmental requirements.

Angelos Anastasiou, an analyst at Investec, said: "It's quite a tough market for energy generation at the moment. There have been times when it's made huge profits, but not now."