Energy Minister Fergus Ewing has welcomed news that regulator Ofgem will investigate whether the ‘big six’ UK energy suppliers prevent effective competition in the UK energy market.
Ewing said: “I welcome this planned investigation into the ‘big six’ UK energy suppliers. This is the first coherent plan that has been put forward to challenge the issue of rising energy bills.“However any investigation must look at the implication of the plans for a new nuclear power station at Hinkley Point for energy bills.
“The planned nuclear subsidy is double the wholesale price and as SSE rightly said yesterday this will impact on energy bills for consumers over the next 35 years.”
Energy Action Scotland also had something to say at the news and Norman Kerr, Director at EAS said: “The move comes as a result of a fall in customer confidence and concern about competition in the energy market and so such an investigation is seen by the charity as positive.
“We believe it is encouraging that this action will investigate if there are excess profits being made, if there are barriers to companies wanting to come into the market and whether having generation, distribution and retail within the one company is detrimental to the customer.”
“This investigation is welcome as it will give the opportunity to find out if there is a broken energy market.
“If the review leads to lower bills and this can be sustained over time, then that will be to the benefit of consumers.
“Any move to make the energy market more transparent can only serve to increase customer confidence and that is certainly a step in the right direction.”
The Big Six UK power companies – SSE, Scottish Power, Centrica, RWE Npower, E.On and EDF Energy – account for about 95% of the UK’s energy supply market.
Ofgem is now referring the market to the CMA – the new competition body – “to consider once and for all whether there are further barriers to effective competition”.
All the major energy companies have welcomed the referral. But Sam Laidlaw, Centrica chief executive, said he hoped “a lengthy review process will not damage confidence in the market, when over £100bn of investment in new infrastructure is needed”.
When questioned on the BBC Radio 4’s Today programme over whether it would mean power outages he said: “There is an increasing risk. A lot can be done in terms of demand management, but actually building a new gas power station does take four years.
“So that’s the kind of time pressure we are up against, by adding another two years that makes it six years.”
However, UK Energy Secretary, Ed Davey, said: “He is absolutely, totally wrong and I can prove it. We have 14 contracts for power generation [in the pipeline] over the next 15 years.
“It is true that companies like Centrica are not investing as much as we might like them to but we are seeing independent energy generation firms like Siemens coming in in their place.”
Centrica also confirmed it would not proceed with plans for a new gas-fired plant, due in large part to today’s investigation being triggered.