Big Six Inquiry Sends Ripples Through UK Home and Business Energy Sector
The week started in emphatic style for the energy industry, when SSE decided to freeze their prices for home and business customers until at least 2016.
The firm stated that the move was made in a bid to streamline their operations and up to 500 jobs would be cut in order to make up for the loss in profits. Whether SSE took this action to pre-empt any investigation from Ofgem or simply to reduce costs for themselves or the consumer remains to be seen, but can only be good news for households or companies currently using SSE for their energy.
Probe Into Big Six Energy Suppliers...
With this news hardly digested by the media or indeed the British public, bigger news was yet to come when Ofgem announced a large scale investigation into the Big Six, just yesterday. The official line from the regulator regarding the probe was that it “would enhance confidence in the investment climate”.
Reaction to the investigation into the Big Six energy suppliers and their profits has been predictably mixed, with the firms themselves venting their anger but consumers and energy comparison sites welcoming the added levels of transparency that will inevitably follow. If foul play or malpractice is proven as a result of the two-year investigation, then the Big Six energy suppliers in the United Kingdom could well face being broken up.
Centrica Warn Of UK Blackout...
British Gas have perhaps been the most vocal opposition to the energy probe, saying that it will act as a catalyst for an energy investment freeze and could even result in blackouts. Sam Laidlaw, who is Chief Executive of Centrica (British Gas’ parent group) went to state that the building of new power plants will now be compromised which will add to the threat of the lights going out across the country.
However, these claims have been refuted by Ofgem who have stated that they need to “clear the air” after the ever-soaring profits of the energy companies and diminishing confidence from home energy and business energy customers alike.
Both the Labour Party and Ed Davey have also dismissed these views as “special pleading” and just “absolutely, totally wrong” respectively.
Who Will Conduct the Big Six Investigation?
The inquiry into the UK’s Big Six Energy suppliers will be performed by a brand new body by the name of the Competition and Markets Authority (CMA). If predictions are correct and they are deemed to have acted unacceptably, firms such as E-On and RWE npower could be ripped apart. Their supply arms, which sell gas and electricity to homes and businesses at these supposedly extortionate rates, would be separated as well as the generation units which run the British power stations. The investigation will commence imminently and will finish in 2016.
In the interim period, any energy firms breaking the rules set out by Ofgem or the government can expect to face fines amounting to “tens of millions of pounds”. The regulator will also now have more power to stop energy suppliers from rolling business energy customers’ contracts over automatically as well as prohibiting excessive back-billing which can often cripple SME’s bottom line. After some heavy criticisms regarding inaction, it seems that Ofgem are now reacting with aplomb and looking to improve the marketplace for business and home energy customers across the nation.
Big Six Inquiry Inevitable...
Ulitmately, an investigation into the conduct of the Big Six energy suppliers has been coming for some time. 4.5 million British home and domestic energy customers have been getting a raw deal for several years, which has seen prices soar by 24% since 2009. With record profit margins being recorded by the suppliers but lacklustre customer service, the likelihood of a review into where this cash has been going was surely always going to be inevitable.
Ofgem has found that 43% of customers has no trust in their gas or electricity company as they were far from transparent about their pricing systems. Indeed, their retail profits have risen to a staggering £1.1 billion following the obscene price hikes that have ensued over the last few years. SSE, RWE npowe, Centrica, EDF Energy, E.ON and Scottish Power control 95% of the energy market, so any shake up would surely see the smaller energy firms given a fairer crack of the whip.
Ed Miliband to Fight the Corner of SME's...
As if all if this furore was not enough, Ed Miliband has lent his argument to round off one of the most dramatic weeks in recent times for the energy sector. The Labour leader has called for new curbs on energy bills and brushed aside any notions of the lights going out as a result of Ofgem’s proposals.
He wants to save SME’s in the UK over £5,500 a year on their energy prices through his 20 month price freeze programme, which has understandably gathered some serious support. “The profiteering of the Big Six has been at the expense of hard working business people,” he will say today, when he speaks today in the Commons.
This will come to the delight of business energy customers across the UK, as the politician continues his quest to create an open market economy when small and medium sized businesses can grow and make bigger profits.
This is also the aim of the team here at Love Energy Savings, as we provide your business with a free, real-time online price comparison for your energy and can also switch you over completely free of charge. Why not take advantage of our service today and ensure you are saving as much money as possible on your commercial gas and electricity.