BRITAIN’S biggest energy companies have stifled competition to raise prices and make record profits of more than £4.5 billion, a Sunday Times investigation has found.
The six companies that control Britain’s gas and electricity are now facing demands that they be referred to the Competition Commission.
Executives in charge of the six major companies were last week confirmed to be holding confidential meetings at least every two months to discuss market strategy. Smaller rivals are excluded.
The new disclosures come as a YouGov poll for The Sunday Times reveals that more than eight out of 10 customers believe they are being “ripped off” by the energy firms. Alistair Darling, the chancellor, is to meet Sir John Mogg, the head of regulator Ofgem, tomorrow for an explanation of the latest round of price rises.
Industry insiders said they are ready to give evidence about how the “big six” have driven up prices and boosted profits by:
– Keeping each other’s prices in step by raising and lowering tariffs within a few weeks of each other.
– Denying smaller rivals fair access to energy from their own power plants at affordable prices.
– Charging loyal customers significantly more than those who switch, so keeping up profits.
– Stifling competition by supporting laborious and expensive accreditation for new companies.
Allan Asher, chief executive of Energywatch, the consumer watchdog, said: “The problem with the energy market is that it’s lazy, complacent and uncompetitive. It has been able to drive out the possibility of any vigorous challenge to the prominence of the big six energy suppliers.”
The companies enjoyed a “bumper year” in 2007, profiting from a dramatic fall in the wholesale price of gas amid allegations they failed to pass on savings to householders. Analysts believe the companies are now poised to report record annual profits of more than £4.5 billion.
The companies last week confirmed that they were meeting regularly under the auspices of the Energy Retail Association. The association says market-sensitive issues are never talked about and pricing policies are discussed only in the context of a public debate about best practice. Rival energy companies say the association is a “closed shop” for the dominant companies and the minutes of meetings should be published.
The Sunday Times YouGov poll found that 85% of customers felt they were being ripped off by the energy firms. This compares to 76% of people who felt they were being ripped off by the railways; 74% by the petrol companies; and 59% by the banks and financial service industry.