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The ‘big six’ energy companies will be forced to be more transparent about their profits and make it simpler for customers to switch providers, under plans for an annual competition check on the industry.
Energy Secretary Ed Davey will unveil plans for the yearly review later in the House of Commons.
He is expected to say the companies will be subject to rigorous checks in three key areas – competition, profit and customer engagement.
It follows a storm of controversy around energy prices after four of the big six companies raised prices by an average of 9.1%, causing customer bills to exceed £1,400 a year and leading to allegations of cartel behaviour.
The annual check is designed to drive up competition in the market, which is still heavily dominated by the big six.
Despite a number of new entrants to the market, British Gas, SSE, Powergen, EDF, E.ON and Scottish Power still provide gas and electricity to 99% of British homes.
The annual review will aim to crack down on practices seen as preventing new firms from entering the market.
One supposed method revealed earlier this week involved British Gas. The energy giant was said to have a dedicated team that contacted customers who had switched away and offered them lower rates to go back.
Stephen Fitzpatrick, managing director of Ovo Energy, made the claims at a select committee hearing in which companies faced MPs.
via Eagle Radio – The Station that Loves Surrey and Hampshire – News – Big Six To Be Forced To Make Switching Easier.
Npower seem to be first in line for most of the criticism, with Ofgem reporting the commercial energy firm paid on average:
– £59.61 per megawatt-hour in 2010
– £57.32 per megawatt-hour in 2011
– £58.39 per megawatt-hour in 2012
All the while increasing retail prices by 5.1%, 7.2% and 9.1% in those same years, respectively. E.ON and EDF also found to have raised prices in spite of mostly small changes in wholesale electricity costs.
Four of the big six – British Gas, Npower, Scottish Power and SSE – have all announced price increases over the last few weeks, causing MPs to call the bosses of all the major energy players in the UK before a committee to justify such raises in bills for private and business energy consumers, subsequently Ofgem’s findings could scarcely be more timely.
Greedy energy firms have found a fresh way to sneakily boost their profits — by scrapping discounts for people who pay bills on time.
British Gas, EDF, E.ON, Scottish & Southern Energy and Scottish Power all currently give customers money off if they pay their bills promptly by cash or cheque each quarter.
However, firms claim new rules being brought in by the regulator Ofgem mean that from next year they will no longer be allowed to offer these discounts.
This will leave customers up to £40 a year worse off.
SSE customers currently get a £5 discount per fuel every quarter if they pay their bill within ten days.
However, households across Britain have been told that from November 15 this discount will be axed — the same day 7.3 million customers will see their average energy bill soar by 8.2 per cent.
Scottish Power dual-fuel customers currently get a £31.50 discount each year if they pay within 14 days. This is being abolished from December 6 — when energy prices will shoot up by 8.6 per cent.
The government’s agreement to underwrite the Hinkley Point nuclear power station could turn out to be economically insane and hugely costly to consumers, City analysts have warned.
Analysts at Liberum Capital said the government’s deal with France’s EDF will make Hinkley Point the most expensive power station in the world with the longest construction period in the world.
The government gave the go-ahead last week for EDF to build the Hinkley Point C plant in Somerset. Its two reactors will cost £8bn each and will provide power for about 60 years once it starts operating in 2023.
The energy secretary, Ed Davey, has made a huge bet that fossil fuel prices will rocket by the time Hinkley Point starts operating in 2013, Liberum’s Peter Atherton and Mulu Sun said in a report published on Wednesday.
They said: “The UK government is taking a massive bet that fossil fuel prices will be extremely high in the future. If that bet proves to be wrong then this contract will look economically insane when HPC commissions. We are frankly staggered that the UK government thinks it is appropriate to take such a bet and underwrite the economics of any power station that costs £5m per MW and takes nine years to build.”
Davey controversially agreed a minimum price of £92.50 for every megawatt hour (MWh) of energy Hinkley Point generates – almost twice the current wholesale cost of electricity.
Some of Britain’s biggest energy companies have been accused of raising households bills for no reason and systematically overcharging customers by £3.7bn a year as they were grilled by MPs over their soaring prices and profits.
They were taken to task by Stephen Fitzpatrick, the chief executive of small supplier Ovo Energy, who launched a stinging attack on his larger rivals for being “the best filibusters in the business” when it comes to revealing how they make their money.
After British Gas, npower, SSE and Scottish Power announced inflation-busting increases in household bills, Fitzpatrick said he “cannot explain any of these price rises” as his company is buying gas for 7% less than it was two years ago.
The four companies that have raised bills in recent weeks are under increasing pressure to justify their higher prices after figures from the regulator Ofgem showed that network costs have risen by just £15 since last year, wholesale costs by £10 and green costs by £10.
During the hearing MPs criticised the companies’ executives for accepting large bonuses while putting up prices year after year and failing in their duties to protect poor households who have to choose between heating and eating.
John Robertson, a Labour MP, warned that thousands of people were dying of hypothermia because they could not afford to pay their bills. He dismissed the companies’ claims that they do not disconnect customers by pointing out that those who fall into debt are moved on to prepayment meters which in effect force them to “self-disconnect”. “The big reason is they die of hypothermia and they can’t afford to keep the heating on. By the time you have gone to look for them [after 30 days of no energy] it’s too late,” he said.
A Bad Week for Energy Companies
Ofgem’s latest findings have brought more criticism onto some of the UK’s largest energy companies in a week where the ‘Big Six’ are already being held to account by a government committee over pricing. Ofgem claim that energy companies have seen wholesale electricity costs fall over the last three years whilst putting up prices for homes and businesses across the UK.
Top executives from the UK’s six largest energy companies are expected to face serious criticism when they come before a group of MPs.
The bosses have been called in front of the Energy and Climate Change Committee, following recent price rises.
So far, four companies have announced increases that average 9.1%.
The energy firms are expected to insist that the rises were largely due to increasing wholesale prices.
But Andrew Wright, the acting chief executive of regulator Ofgem, is expected to tell the MPs that wholesale prices have risen by less than the rate of inflation.
Ofgem data suggests that wholesale electricity and gas together have risen by just 1.7% over the last year.
It estimates the net effect of wholesale gas prices on a household bill should be just £10 extra on a bill of £600.
Two new gas-fired power plants with a combined capacity of 2.1 gigawatts (GW) could come online by 2018 in Britain, developer InterGen said on Monday.
Britain faces a power capacity crunch within two years’ time due to the closure of polluting and ageing stations and a lack of new capacity.
Plans for new thermal power stations have dried up in recent years due to an overhaul of the energy market but government announcements on the creation of a capacity market have reignited interest.
The two plants, Spalding Energy in Lincolnshire which is majority owned by utility Centrica and Gateway Energy in Essex, together will cost up to 1 billion pounds ($1.62 billion)to build and are equal to around 3 percent of Britain’s current installed capacity.
Two years ago video footage of a wind turbine catching fire and breaking up in Ardrossan, Ayrshire, was widely circulated. So what does happen to wind farms on a very windy day?
Turbines do occasionally have to be shut off in very high winds, but usually at speeds higher than the current storm in the south of the UK.
Failure to do so can lead to an incident like the one at Ardrossan. That was blamed on a fault that stopped the head of the turbine pointing in the correct direction and another fault with the brakes.
During dangerously high wind, the blades on turbines are supposed to be “feathered” – twisted so they no longer catch the wind and rotate.
The current storm has already destroyed one turbine in Devon. Tim Kirby, managing director of Ecogen, admitted there might be some problems for smaller turbines but not for typical commercial farms.