Tuesday, 18 October 2011


Yesterday David (“Call me Prime Minister”) Cameron called for a "trusted, simple and transparent" market – simples everything is fine now. Now quite – anybody who thought for a moment that at the end of the energy summit that their energy bill was going to drop, seriously needs to have their head read. That's not what this was about this was literally David Cameron's Tony Blair moment – the energy summit was about looking good, sounding good, sounding concerned and saying the right things without actually doing anything.

Chris Huhne (the energy secretary) blamed the consumers (us) by saying that at the end of the day it's up to us (as consumers) to shop around and we should not expect the government to somehow resolve the issue of high energy prices. The caring Conservative (and that is definitely an oxymoron) went on to say that the energy companies are not charities ("They're not the Salvation Army”) they are private companies and that there is only so much that a government can do.

What was unsaid was that there is only so much a government can do short of any form of regulation. Part of the problem is that the privatised energy market is an almost sacred ideological inheritance from the Thatcher years. Expecting a Conservative Government (which despite Lib Dem bleating is what we effectively have) to tamper with the ‘free energy market’ would be a little like expecting Labour to remove clause 4 or curb the power and influence of the Trade Unions.

So after that stern talking too from David Cameron the Energy Cartel members are effectively free from pressure to cut domestic prices despite previous Ofgen (the energy regulator) reports that hinted at profiteering. Despite the energy summit and previous calls for firms to cut their gas prices, little will happen partially because Ofgen is toothless and partially because the UK Government has no appetite for regulating the allegedly ‘free’ energy market, even when it no longer works.

While, wholesale energy costs fell in 2009 – 2010; there was no corresponding fall in the energy costs for hard pressed energy consumers. We can no longer afford the luxury of an effectively unregulated energy market or its consequences. Ofgen has failed, it has failed to protect consumers, failed to regulate the energy companies or the so called ‘free’ energy market.

Plaid has rightly repeated calls for a windfall tax on energy companies profits after September's inflation figures were published, and show a 13% increase in gas bills and 7.5% in electricity. The money raised from a windfall tax could be returned to users to cap costs and introduce better insulation and other elements which will not just be cheaper, but also more environmentally friendly.

In October 2009 the then Tory Energy Spokesman, Greg Clark (currently a Minister of State in the Department for Communities and Local Government) said that the "cartel" of the big 6 energy firms would be referred to the Competition Commission by an incoming Conservative Government. The (then) Tory Energy Spokesperson also condemned the unacceptable lag between the cost of wholesale gas prices and household energy bills - noting that customers were on average being charged some £74 pound too much for their energy per year.

Strangely enough that pre-election pledge for an independent inquiry into the £25 billion-a-year energy industry which has been subject to lengthy and repeated criticisms surrounding accusations of profiteering on electricity and gas, was quietly kicked in to the long grass by the Com Dem Coalition Government. Heaven forbid that we let simple ideological principle get in the way of profit.

Few people this winter will have as snug a relationship with the gas companies as that exists between the political parties (within the Westminster village) and the energy supply companies. Before the last Westminster general election, the Conservatives and the Liberal Democrats made repeated criticisms (and much political capital) from New Labour for its failure to tackle prices charged by the Big Six suppliers. Both the opposition parties publicly and repeatedly demanded an inquiry by the Competition Commission.

Any faint hope that the nefarious activities of the energy supply cartel might have prompted the reform of the industry did not happen. All the talk of encouraging new entrants to break the hold of the cartel which controls 99 per cent of the market and any thoughts of imposing price caps or windfall taxes to curb excessive profiteering have come to naught Only four months into the new Coalition Government, it was revealed that there was to be no inquiry and the Department of Energy and Climate Change quietly confirmed (17th August 2010) that it had no plans to refer the industry to the Competition Commission.

Perhaps there ought to be an inquiry into the dubious (and financial rewarding (in cash and kind) relationship between our political parties and the representatives of the energy supply companies who are pretty keen to shower enough goodies around during Party conference season (and beyond) – perhaps not? I mean it might upset the dinner guests...

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