Energy probe? Bring it on, say bosses of power firms

Share prices rise as experts say review will back the high costs

TORY plans for a probe into energy costs boosted the share prices of power companies last week and triggered warnings that the proposal could backfire by helping to justify price hikes.

British Gas owner Centrica and the other major stock market quoted power firm SSE both saw their shares jump after the Tory manifesto was published.

Despite at first appearing to be a crackdown on energy groups, the Conservatives’ plans for a review of ‘the cost of energy’ were cheered by executives and City analysts who believe an independent review will be a vindication of price rises.

The upbeat response came despite Prime Minister Theresa May’s repeated claims that the energy market is not working properly as prices have risen 158 per cent in 15 years.

One senior energy executive said: ‘A proper review into the cost of energy would be wonderful. It would be the first time in years that anybody had actually asked why energy is so expensive. The answer is “costs, costs, costs”.’

All of the major energy firms, except British Gas, have bumped up prices this year, often citing increases in costs.

About 80 per cent of the price of the average dual fuel energy bill of about £1,100 is made up of wholesale costs, transmission costs, environmental and social levies and taxes at the moment. Energy companies’ operating costs make up 15 per cent and profits 4 per cent.

Leading energy analyst Peter Atherton, of Cornwall Energy, said: ‘In all the reviews of the energy market there has been very little about the universal cash cost resulting from the commitment of successive governments to move us away from fossil fuels towards renewable energy.

‘We have set ourselves these legally-binding targets but they’re quite arbitrary.

‘If this review says it will cost, say, £250 billion to meet our targets, or £150 billion to get 80 per cent of the way there, or £100 billion if we fall short, then that would better inform policy makers and the public.

‘I can see why the energy companies would welcome that because they’ve taken a ham-