Daily Mail

Energy giants guilty of rip-off bills – but won’t be broken up

- By Sean Poulter Consumer Affairs Editor

WATCHDOGS are expected to criticise energy firms today for hitting millions of loyal customers on standard variable tariffs with rip-off bills. The Competitio­n and Markets Authority will publish the result of an investigat­ion that suggests homes on these tariffs – which make up 60 per cent of the market – are being penalised for their loyalty.

However, consumer groups fear the CMA will not take radical action to break the grip that the ‘ big six’ energy firms have on household energy bills.

Industry critics have been calling for the break-up of the power firms, splitting the energy supply side of the business from the retail side, which sells to homes and business.

It is argued that this would create more competitio­n and drive down bills.

In recent days there have been rumours that the CMA will stop short of this in favour of more modest efforts to try to encourage families to shop around for a cheaper deal.

The CMA investigat­ion was started before the General Election amid complaints of profiteeri­ng by the big six – British Gas, SSE, Npower, EDF, Eon and Scottish Power.

Consumer groups and charities were furious that wholesale energy prices had fallen by more than 20 per cent in a year yet the firms made only tiny cuts in tariffs on standard variable rates.

Anger intensifie­d when Britain’s second biggest energy firm, SSE, recently revealed that its profits from energy supply rose by almost 50 per cent, up from £122.5million to £368.7million over the past year.

The industry regulator Ofgem estimates that the average profit margin energy firms are making per household has risen to an alltime high of £120, which is up by 32 per cent in a year.

Before the General Election power company bosses said that they had been reluctant to cut bills because they feared a Labour victory. They argued that Labour’s promise of an 18-month price freeze meant that if they reduced tariffs too much they would be forced to keep them at the new low level.

However, this allowed them to keep prices artificial­ly high, so boosting profits.

Labour’s drubbing in the polls has removed any excuse the firms have for keeping tariffs at the current high levels, yet they have made no further cuts.

Energy Secretary Amber Rudd has since written to the energy firms demanding they reduce prices. However, the industry continues to refuse to help struggling customers.

Campaigner­s Fuel Poverty Action fear the CMA will not take any meaningful action to curb bills and profits. Laura Hill, from the group, said: ‘When the big six pocket billions of pounds in profit every year while one in four families decide whether to eat or heat their homes, I find it hard to understand how the CMA can say that profiteeri­ng energy companies have nothing to do with the current energy bill crisis.

‘We are all sick and tired of the Government’s inaction and excuses on fuel poverty. It’s time they take stock and listen to the needs of the people and not profit-hungry companies. We need an energy system that is affordable, clean, public and democratic.’

The GMB union claimed the CMA inquiry would be a damp squib. Its national officer Gary Smith, said: ‘The inquiry was political cover in an attempt to divert attention from Labour’s price freeze promise. If anyone believes the inquiry will deliver lower prices for energy users they will be very disappoint­ed.

‘While the heat on energy prices is off at the moment, the longterm trend, as the demand for energy continues to increase, is upwards.’

‘Listen to needs of the people’

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