MPs want to know if gas and electricity firms are rigging market to hike prices

MPs want to know if gas and electricity firms are rigging market to hike prices 

05/02/2008

Daily Mail

MPs are to investigate claims that gas and electricity firms are rigging the market to force huge price rises.

The Commons Select Committee for Business yesterday announced an inquiry into 'possible anti-competitive behaviour in the UK energy market'. Consumer groups complain that the 'big six' energy companies and their wholesale suppliers have carved up the market.

The MPs will hear calls for the imposition of a multi-billion pound windfall tax on the industry to help lift families out of 'fuel poverty'. Bills have risen 60 per cent over the past five years, which has left suppliers collecting an extra 8billion a year from customers.

The German-owned Npower recently announced price rises of up to 27 per cent, while British Gas and others have imposed increases of around 15 per cent.

The increases have taken the annual dual fuel bill above 1,000. The firms claim they are victims of a rise in international wholesale prices, which have been driven up by concerns over shortages.

However, critics say there is no good reason for the surge in wholesale prices, other than to deliver huge profits to the power industry.

The MPs want to know whether European power giants have rationed supplies to the UK in the winter in order to boost prices.

The committee will also focus on allegations-that the industry regulator, Ofgem, failed to protect consumer interests.

MPs are particularly alarmed because the number of those in 'fuel poverty' has doubled in the last three years to around 4.5million. High prices mean this group must spend more than 10 per cent of its disposable income on keeping the lights on and staying warm.

The Treasury is collecting a VAT windfall of an extra 400million a year compared to five years ago because of higher bills yet recently announced cuts to a programme designed to help the poor insulate their homes.

Committee chairman Peter Luff said: 'The continuing controversy over energy prices is an issue that demands to be addressed.'