"Big six" defend prices and tell MPs energy market is "fair"

The people in charge of UK energy firms have told MPs that the UK energy market is competitive and fair to consumers and reiterated that prices are likely to rise in the future.

Phil Bentley, managing director of British Gas denied that customers are charged too much and that there is not enough competition in the sector. He was joined by his colleagues from the other leading UK energy suppliers.

They said that they had simplified bills to make them easier to understand and cut the amount of tariffs on offer to help consumers. However, the men in charge said that it was not the amount of tariffs that should be restricted but how they were presented that was important. They should be presented to consumers in a clear and transparent way, they said.

This is despite continued huge profits amongst energy firms and a lack of serious competition from companies outside the “big six” main firms.

British Gas made £2 million a day from its UK residential operations in the first six months of 2012, posting a 23 per cent increase in profits, to £345 million.

British Gas raised the cost of its gas prices by 18 per cent in August 2011 and the cost of its electricity increased by 16 per cent at the same time. The company subsequently cut the cost of electricity by five per cent in January.

The other five members of the “big six”, E.On, EDF, Npower, SSE and Scottish Power also announced double digit price increases for both gas and electricity in August 2011 before dropping electricity prices in early 2012.

Mr Bentley defended British Gas prices, saying that the UK had "the lowest gas prices in Europe".

However, Eurostat data showed that this was true for the first half of 2011, but not the second half after the massive price hikes has been implemented.

This year, SSE is the only firm to have announced price rises so far. The company said it would raise the cost of both gas and electricity by an average of nine per cent from 15th October 2012.

Consumer groups are concerned that other firms will follow suit with their own price rises. E.On is the only one of the “big six” that has said they will not raise prices in 2012.

The committee also heard evidence from smaller companies. MPs were told by Stephen Fitzpatrick from Ovo Energy that competition has been restricted because of a lack of new entrants to the market.

Mr Fitzpatrick told MPs: "It is a £30bn market and nobody wants to enter it: that's the measure of competition."

Free guide to savings and investments

Follow Myfinances.co.uk on Twitter: @news_myfinances

Sign up to the Myfinances.co.uk newsletter to receive the latest financial news direct to your inbox.