MPs call on firms to make energy prices more competitive as rises kick in
THE grilling of energy bosses by MPs has led to calls for an inquiry into the whole market.
The bosses of the six largest firms in the UK appeared before the Energy and Climate Change Committee in Westminster yesterday to justify their recent price increases.
Four of the companies recently announced increases that average 9.1 per cent, with the others expected to follow suit.
E.On boss, Tony Cocker, said: "We need to have a very thorough Competition Commission inquiry."
The firm claim the rises were largely due to increasing wholesale prices in energy.
Ofgem, the industry regulator, has suggested that the increase is excessive and argued that wholesale prices have risen by less than the rate of inflation — currently 2.7 per cent.
Guy Johnson, external affairs director of npower, which has announced average rises of 10.4 per cent, said: "External costs are driving our prices increase.
"We are not raising them in anticipation of a price freeze."
Stephen Fitzpatrick, managing director of Ovo Energy, one of the smaller brands on the market, told MPs he "can't explain" the price rises being imposed because his company was buying gas at a cheaper price than it had in 2009.
"It looks to me like a lot of energy companies, a significant number of the Big Six, are charging the maximum price they feel they can get away with to the customers that they feel will not switch under any circumstances and then maintaining the illusion of competitive pricing with tariffs targeted towards a very small number of relatively well-engaged customers."
Consumer group Which? has written to Chancellor George Osborne calling for him to take action to curb costs in his autumn statement, warning that three in 10 people do not know how they will afford to heat their homes this winter.
"People need your help — and they need it now," it said.
A spokesman for the Prime Minister said: "It is for the energy companies to explain the decisions they have taken with regard to bills."
Geraint Davies, MP for Swansea West, supported calls for an inquiry.
He said: "It's been clear that the big energy suppliers have been quick to massively increase their profits and slow to pass on any reduction in bills."
He went on to suggest "either tax the excess profits or introduce a freeze on bills" in order to help people struggling to heap their homes.
"We need to make sure that the regulation of the market is carried out in a way that makes prices much more competitive," he added.