Davey warns Big Six energy bosses to avoid the same fate as Banker ‘Fred the Shred’

Ed Davey, Energy Minister
Ed Davey, Energy Minister

In a hard-hitting message at Energy UK’s annual conference, Ed Davey, Energy Minister bluntly told the chiefs of the major utility power companies that the public had lost faith in them.

And the Minister warned the Big Six that he would wield the ‘big competition stick’ to end their ‘closed shop’ in both wholesale and retail energy markets.

He said: “I have come today to deliver a tough message to you: Trust between those who supply energy and those who use it is breaking down.

“Fair or not, consumers look at the big suppliers and they see a reflection of the greed that consumed the banks.”

Drawing comparisons between ‘greedy bankers’ as personifed by former Royal Bank of Scotland chief executive Fred Goodwin – who was stripped of his Knighthood by the Queen – Davey told Energy UK:

“So this is a ‘Fred the Shred’ moment for the industry to avoid the reputational fate of the banks. You deliver an essential public service, so your industry must serve the public – and the public must have trust in what you do.”

To rebuild trust Government and society will not accept a closed shop in energy, the Minister added.

He explained how Government aims to re-establish trust by ‘making sure the market works for consumers – keeping prices and bills as low as possible as we make sure energy supplies are secure.’

Davey said: “The best way to keep bills as low as possible for the long term is to continue to pursue our twin track strategy.

First energy efficiency – to help people use less energy and therefore pay less – through initiatives like the Green Deal, ECO and energy demand reduction.

“The second is through robust and rigorous competition in the markets to bear down on costs and prices – keeping them as low as possible.

“As Sam Laidlaw (Centrica) said, ‘the starting point is about transparency, and the energy industry does not have a good story to tell here.”

“There is nowhere near enough scrutiny of how supplier operating costs and profits are made up and why these costs are justified.”

Ofgem have now set in train an ambitious package of reforms which will do away with the complex web of hundreds of tariffs and confusing information on bills.

By December Ofgem’s cap on the number of tariffs suppliers can offer will be in place and by the end of March consumers will have clearer bills showing the cheapest tariff suppliers offer.

The Minister added; “The proposed Market Maker reforms will provide independent generators and suppliers greater access to the power generated by the Big Six and other large power producers, enabling them to purchase and deliver cheaper energy to consumers.

“This transparency in the way electricity is traded will give independent generators a foothold in the UK energy market and encourage new players to invest.

“And I am prepared to use the powers we are taking in the Energy Bill to improve energy market liquidity should Ofgem’s proposals be delayed or frustrated.

“With our Energy Bill, Ofgem has powers to require energy companies to make compensation payments directly to consumers who have lost out, but we can and should go further.

“So we intend to consult on the introduction of criminal sanctions for anyone found manipulating energy markets and harming the consumer interest.

“Companies that play outside the rules will be penalised and fined.”

A spokesman for Energy-UK, which is the trade association for the major power companies in the UK – said: “Rebuilding public trust in the market and improving customer service is incredibly important and high on each company’s agenda. Energy companies have been working hard on making energy bills clearer, making it simpler to switch between energy suppliers and reducing the number of tariffs, so people find the best deal for them.”

 

 

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