Davey claims competition forces Britain’s Big Six utilities to freeze electricity prices

Ed Davey, MP The ‘energy crisis’ facing the UK in 2010 has been turned around over the past four years, British Energy Minister Ed Davey told Westminster MPs in the government’s annual energy statement – the last before the general election next year.

The ‘energy crisis’ comprised a historic record of underinvestment in energy infrastructure that threatened energy security, following a decade of rises in energy costs, with consumers getting a raw deal from the Big 6 energy suppliers – in a market that had too little competition, Davey said.

The Minister added: “Given how fast bills had risen in the last Parliament and how fuel poverty had increased in the last Parliament, helping consumers has been a top priority. But we also needed to reform the energy markets to promote choice and competition.

“Ofgem’s Retail Market Reforms now mean energy bills are easier to understand and tariffs are simpler, providing consumers with greater ability to shop around.

“Slow switching times were also clearly a barrier to competition and so those times are being slashed in half this year, and Ofgem is consulting on its roadmap for moving to 24 hour switching, with a decision due by the new year.

“Thanks to our deregulation, there are now a dozen new suppliers taking on the Big Six to give consumers more choice and competition.

“In the past, we had switching between the Big Six driven by doorstep selling. Or too often mis-selling. Now we have switching that favours the consumer.

“Over the past 12 months, 3.5 million people switched their electricity supplier – with 1.2 million moving away from the Big Six to smaller suppliers. The independents now boast over two million customers and regularly top the best buy tables.

“And after years of rising bills, there have been no new price rise announcements from the Big Six this year, reflecting that increasing competition and the efforts the Government has made to reduce policy costs.

“And on policy costs, the latest review of prices and bills I am publishing later today shows that this year we estimate that policy costs now account for 7% of an average household energy bill.

This is down from the 2013 levels of 9% – as a result of the package of measures announced in the Autumn Statement last year.

Davey added: “We have delivered all major Electricity Market Reform milestones. The first allocation round for Contracts for Difference is now open for bids and the the first Capacity Market auction will take place in December.

“But these measures alone will not guarantee the UK’s longer term energy security.

“For the next decade, we are building a diverse lower carbon energy mix, predominantly home-grown, that ensures we will not be over-reliant on one source, one fuel or one import market.”

A spokesman for Energy UK – which represents the Big Six utility suppliers, commented: “Efforts to help lower customer bills are a step in the right direction but it is important to remember that these savings are for an average bill. On average, savings may outweigh the costs but not all customers are eligible for the measures.  

“Not everyone qualifies for the Warm Home Discount and not everyone has had Energy Companies Obligation’s energy efficiency measures installed. The government must find the most cost effective way to pay for its initiatives.  

“Moving policy costs into general taxation would be a fairer way of paying for these schemes.”

However – commenting on the news Ed Davey is planning emergency steps to ensure the UK’s energy supply –  SNP Energy spokesperson Mike Weir, MP, said: “If Ed Davey was serious about taking steps to ensure our energy supply, he would ensure the UK government invests appropriately in our energy sector instead of the eye watering level of money being spent on nuclear power.  

“In contrast to the billions being spent on Hinkley C Nuclear Power station, offshore wind is having to compete in the first round of Contract for Difference allocations with other less developed technologies. This probably means that at most only one major project will get funding. 

“Offshore wind could provide a major source of renewable energy with several proposals for developments off the coast of Scotland, but unless the UK government gives the support required then we will not see the production of this energy, or the economic growth which would follow. This runs against the UK government’s own stated aims in its offshore wind industrial strategy.”

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