Energywatch UK energy bills rising faster than rest of Europe

Energywatch UK energy bills rising faster than rest of Europe 

21/05/2008

The Telegraph

Allan Asher, the chief executive of Energywatch, told a parliamentary select committee that competition in the energy market is a 'myth', with the six major suppliers operating a 'comfortable oligopoly'. As a result, prices in Britain are rising faster than in the rest of Europe.

Mr Asher pointed out that the difference between the cheapest and most expensive provider was just a 'few pence a week', on the most popular deals. 'Sadly we have seen the 20 suppliers of 10 years ago shrink into just six in a comfortable oligopoly who really don't feel a need to innovate or compete, and sadly consumers are the losers,' he told the House of Commons business and enterprise committee.

The cheapest deal from the big six if you pay by direct debit is 952 a year at Scottish and Southern Energy.

The most expensive is from Npower, which charges 972 a year, according to the price comparison website uSwitch.

The committee is investigating the energy market amid accusations that companies are fast to pass on price increases in the wholesale market, but slow to cut bills when wholesale prices fall.

There are also suspicions that the energy companies move their prices in tandem. All six leading providers increased prices earlier this year, to take the average dual fuel bill for electricity and gas up by 15 per cent to 1,048, if not paid by direct debit.

The lack of competition means prices are rising faster than in the rest of Europe, where Britain is ranked fourth for electricity costs and 10th for gas, Mr Asher said. Although there was no evidence of direct collusion, Mr Asher said he believed suppliers followed the lead of the dominant player, British Gas, in raising or lowering prices.

He warned that the situation would get worse if the French giant EDF buys the nuclear power generator British Energy.

The six suppliers own 55 per cent of the generating market, and this would rise to 75 per cent if the EDF deal went through something Mr Asher said could result only in 'worse service and higher prices'. A spokesman for British Gas strongly denied that it was leading power pricing levels.

He claimed that at the start of the year Npower was the first company to increase its prices. In 2006, when prices rose on two occasions, British Gas did not take the lead, he added. 'Mr Asher's facts just don't stack up,' he said.