Which? calls for urgent action on "broken" energy market

Consumer group Which? is demanding an urgent review of the “broken” energy market.

Which? Executive Director, Richard Lloyd, has written to the Prime Minister, David Cameron exactly one year after an energy summit to discuss ways to help energy customers and to make competition in the sector work better for consumers.

The summit involved consumer groups, energy companies and government ministers and its aim was to find ways to keep the cost of energy down and simplify tariffs and information available to consumers to help them make an informed choice to get the best deal on gas and electricity.

However, in the last week, three of the “big six” energy companies, British Gas, Scottish Power and Npower have announced price rises and a fourth, SSE, has implemented a price increase announced in August.

Which? wants an independent expert review to determine whether the recent price increases are justified.

Which? says that in the last year, the average dual fuel energy bill has increased by an average of 13 per cent and government efforts to tackle the problem have been ineffective with 75 per cent of households still on the most expensive tariffs and the number of people switching suppliers continuing to decline.

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Mr Lloyd says that little has been done in the last year to address the concerns raised at the summit 12 months ago and he has called on the government to take immediate action.

In his letter, he says: “We are calling on you to launch an urgent, expert, independent review into the rising cost of domestic energy bills and whether competition among energy suppliers can be made to work more effectively in the consumer interest.”

However, A spokesman for the Department of Energy and Climate Change said: "Households facing rising energy bills this winter aren't going to be helped by more inquiries or investigations that could take years to complete and implement.

"We know what the problems are, we want to get on with tackling them now. We're focusing on action, not more words.

"The fact is reforms by Government and Ofgem, including electricity market reform through the forthcoming Energy Bill and Ofgem's ongoing Retail Market Review, offer the quickest way to boost consumer confidence in the energy market."

Senior members of the government are to meet today to try and formulate a policy for dealing with future energy needs. The results will help to give shape to a new energy bill which is expected shortly.

Mr Lloyd refers to the reasons energy firms have given for the price rises, in particular the impact of government environmental schemes. Mr Lloyd questions this reason, saying that it is “virtually impossible to get accurate calculations of these costs.”

Mr Lloyd wants the review to explore why prices do not come down when wholesale prices drop and to look at the reporting measures that should be required of energy companies relating to both wholesale and retail markets and the costs of social and environmental policies.

He also wants the review to consider whether the regulator, Ofgem “should now be required to better protect the majority of consumers on expensive 'standard' tariffs by introducing a fair cap on 'standard' prices.”

Shadow energy secretary Caroline Flint said: "Which? are right to say that Britain's energy market is not working in the public interest.

"For too long energy companies have been able to get away with blaming wholesale prices when bills go up, but failing to pass on savings when wholesale prices fall.

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