Energy chief says Big Six wrong to blame wholesale costs
THE head of utilities firm Ovo Energy has insisted that energy wholesale prices are not rising – and claimed the major energy providers were “selling it to themselves” at an inflated cost, which is then passed on to the consumer.
Stephen Fitzpatrick, managing director and founder of Ovo Energy, said he had not noticed an increase in wholesale prices for two years, despite the Big Six energy firms claiming that they need to increase bills in order to meet rising costs.
Consumer groups and politicians have called for the retail arms of energy firms to be separated from the power generation sections of the business in a bid to ensure fair pricing in the industry.
At present, the Big Six providers – which also include ScottishPower, EDF and E.ON – produce 70 per cent of the UK’s electricity.
They are then technically able to sell it back to their retail arms in bilateral trades, which then sell it on to the consumer.
“If they’re buying more expensive gas, more expensive electricity, in a large part we think this is because they’re selling it to themselves,” said Mr Fitzpatrick.
Glasgow West MP John Robertson, who sits on the Energy select committee, said that money was being “shuffled” between different parts of the business and pointed to the firm’s 25 per cent rise in profits last year.
“If Ovo say wholesale prices have not gone up for two years, then Npower are just inflating the price when they sell it back onto themselves,” he said.
“We need to split the generation and retail parts of these businesses and the retail parts need
to be sold off. We simply trust these people.”
Ovo has previously sought to put pressure on the Big Six energy giants. In January 2012, the market minnow slashed its gas and electricity bills by 5 per cent.
At that point, its tariff was the cheapest fixed product available on the market.
When wholesale prices fell during the second half of 2011, none of the Big Six suppliers brought their prices down.
The only supplier to do so, other than Ovo, was market newcomer Co-operative Energy, which announced that it was bringing in a 3 per cent price cut in December 2011.
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