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| Energy boss calls for competition inquiry into market | Energy boss calls for competition inquiry into market |
| (35 minutes later) | |
| The boss of one of Britain's largest energy companies has told MPs that there should be an inquiry into the whole energy market. | The boss of one of Britain's largest energy companies has told MPs that there should be an inquiry into the whole energy market. |
| Tony Cocker, the chief executive of E.On, said he had written to Prime Minister David Cameron to suggest a full investigation. | Tony Cocker, the chief executive of E.On, said he had written to Prime Minister David Cameron to suggest a full investigation. |
| "We need to have a very thorough Competition Commission enquiry," he said. | "We need to have a very thorough Competition Commission enquiry," he said. |
| He was speaking in front of MPs on the Energy and Climate Change Committee. | He was speaking in front of MPs on the Energy and Climate Change Committee. |
| Another energy company, EDF, suggested the same thing earlier this month. | |
| Andrew Wright, the acting head of the regulator, Ofgem, told the MPs that competition in the market would be fully examined in a review due out in the Spring of 2014. | |
| "We will look at all aspects that affect competition in the market," he said. | |
| But Centrica, the parent company of British Gas, said a competition enquiry would not be helpful. | |
| "We believe it unnecessary as the market is competitive," said a spokesperson. | |
| "There have been numerous inquiries into the energy market and none have found any evidence of anti-competitive behaviour. | |
| "However, if it'll take another inquiry to improve trust then we are supportive." | |
| Prices | |
| The bosses of the six largest firms in the UK had been summoned in front of the committee to justify their recent price increases. | The bosses of the six largest firms in the UK had been summoned in front of the committee to justify their recent price increases. |
| So far, four of the companies have announced increases that average 9.1%, with the others expected to follow. | So far, four of the companies have announced increases that average 9.1%, with the others expected to follow. |
| The four firms involved have insisted that the rises were largely due to increasing wholesale prices. | The four firms involved have insisted that the rises were largely due to increasing wholesale prices. |
| William Morris, the managing director of SSE, told MPs that his firm had faced a 4% increase in wholesale costs over the last year. | William Morris, the managing director of SSE, told MPs that his firm had faced a 4% increase in wholesale costs over the last year. |
| He said the cost of transporting energy to homes had risen 10%, while the cost of government and environmental schemes had risen 13%. | He said the cost of transporting energy to homes had risen 10%, while the cost of government and environmental schemes had risen 13%. |
| But the regulator, Ofgem, has argued that wholesale prices have risen by less than the rate of inflation. | But the regulator, Ofgem, has argued that wholesale prices have risen by less than the rate of inflation. |
| Its data suggests that wholesale electricity and gas together have risen by just 1.7% over the last year. | Its data suggests that wholesale electricity and gas together have risen by just 1.7% over the last year. |
| It estimates the net effect of wholesale gas prices on a household bill should be just £10 extra on a bill of £600. | It estimates the net effect of wholesale gas prices on a household bill should be just £10 extra on a bill of £600. |
| Stephen Fitzpatrick, the managing director of Ovo Energy, a small independent energy company, told MPs that wholesale prices paid by his company were actually falling. | |
| "I can't explain any of these price rises," he said. | "I can't explain any of these price rises," he said. |
| 'Filibusters' | 'Filibusters' |
| MPs also asked the energy bosses whether they were buying energy from different parts of their own business, thus inflating prices. | MPs also asked the energy bosses whether they were buying energy from different parts of their own business, thus inflating prices. |
| Most of them have a separate generation business as well as a retail business. | Most of them have a separate generation business as well as a retail business. |
| But Tony Cocker, the chief executive of E.On, denied they were transferring money to their generating arms. | But Tony Cocker, the chief executive of E.On, denied they were transferring money to their generating arms. |
| "There is no cross-subsidy between the two businesses. We operate them as stand-alone businesses," he said. | "There is no cross-subsidy between the two businesses. We operate them as stand-alone businesses," he said. |
| Martin Lawrence, a managing director of EDF energy, agreed. | Martin Lawrence, a managing director of EDF energy, agreed. |
| "We operate our businesses entirely separately," he said. | "We operate our businesses entirely separately," he said. |
| The bosses were also asked about the level of profits in their retail arms. | The bosses were also asked about the level of profits in their retail arms. |
| Guy Johnson of Npower said they had invested £2.9bn in the UK in the last five years. | Guy Johnson of Npower said they had invested £2.9bn in the UK in the last five years. |
| "We've invested 100% of what we have earned in the last five years from generation," said Tony Cocker of E.On. | "We've invested 100% of what we have earned in the last five years from generation," said Tony Cocker of E.On. |
| "I speak for a company that is proudly operating power stations and proudly investing in new power stations to ensure the lights stay on." | "I speak for a company that is proudly operating power stations and proudly investing in new power stations to ensure the lights stay on." |
| But Stephen Fitzpatrick, of the Ovo Energy, said the big companies were charging 10% more than they should be. | But Stephen Fitzpatrick, of the Ovo Energy, said the big companies were charging 10% more than they should be. |
| "We're all trying to tack down where this money is going, But you will never find it," he said. | "We're all trying to tack down where this money is going, But you will never find it," he said. |
| "These guys are the best filibusters in the business." | "These guys are the best filibusters in the business." |
| Transparency | Transparency |
| MPs on the Energy Committee also wanted to know how the transparency of the energy companies' finances can be improved. | MPs on the Energy Committee also wanted to know how the transparency of the energy companies' finances can be improved. |
| "Do you understand that the people in this country do not trust you?" asked Ian Lavery MP. | "Do you understand that the people in this country do not trust you?" asked Ian Lavery MP. |
| "I completely agree with you," said Tony Cocker. | "I completely agree with you," said Tony Cocker. |
| "But we have worked very hard to improve our business and simplify our tariffs," he told the MPs. | "But we have worked very hard to improve our business and simplify our tariffs," he told the MPs. |
| In a letter to the committee, Ian Peters, the managing director of energy at British Gas, admitted that there was further work to do on that. | In a letter to the committee, Ian Peters, the managing director of energy at British Gas, admitted that there was further work to do on that. |
| Later this week, the Energy Secretary, Ed Davey, is expected to set out further details of the annual competition test for the energy market. | Later this week, the Energy Secretary, Ed Davey, is expected to set out further details of the annual competition test for the energy market. |
| The review will be carried out by Ofgem in conjunction with the Office of Fair Trading (OFT) and the new Competition and Markets Authority (CMA). | The review will be carried out by Ofgem in conjunction with the Office of Fair Trading (OFT) and the new Competition and Markets Authority (CMA). |
| The government has also said it will look at the contribution made to energy bills by the green levies, although these make up a relatively small part of overall costs. | The government has also said it will look at the contribution made to energy bills by the green levies, although these make up a relatively small part of overall costs. |
| Labour said it would freeze energy bills for a period of 20 months if it won the next election. | Labour said it would freeze energy bills for a period of 20 months if it won the next election. |