Clarke Says Government Will Take Action Against Rising Energy Bills

After five of the big six suppliers already announced price rises this year, the energy regulator Ofgem said that some of the rises were hard to justify.

Business and Energy Secretary Greg Clark told a Business Select Committee that the market is “clearly not working” for those on default tariffs. Mr Clark said he did not have the power to affect prices directly, but the government could act to alter a “deficiency” in the market.

The government has said that action would be taken against energy firms’ “damaging” price rises. Clark said it would happen “soon”, but the timing remains unclear and, owing to the imminent election, the date for this “decisive” move was being reviewed.

Energy UK said government intervention would be bad for customers.

British Gas announced a price freeze until August. Other major energy firms revealed increases in standard tariffs recently, blaming investment needs, government demands and the value of the pound falling.

Those organisations include:

Npower Price Increases: 16th March

Electricity
15%

Price

Gas
4.8%

Price

E.On Price Increases: 26th April

Electricity
13.8%

Price

Gas
3.8%

Price

Scottish Power Price Increases: 31st March

Electricity
10.8%

Price

Gas
4.7%

Price

EDF Price Increases: June

EDF, combining previous prices changes with a second announcement of electricity rises in June, but gas prices will stay the same.

Electricity
18.1%

Price

Gas
0%

Price

SSE Price Increases: 28th April

Electricity
14.9%

Price

Gas
0%

Price

An investigation by the Competition and Markets Authority (CMA) found that two-thirds of UK households were paying too much for their energy compared with those who have switched to a different tariff. But the CMA also stated that capping standard tariffs was not in the best interests of customers.

The findings have been widely challenged and there has been speculation that the government could intervene with a cap on these variable deals.

The Business and Energy Secretary believes that customers who could not shop around online or didn’t act were being milked by the energy companies. He said the government’s response would be decisive.

Lawrence Slade, chief executive of Energy UK, which represents the major suppliers, said:

“We must allow the remedies from the recent market investigation to be implemented but the industry is not complacent. Action is being taken now, with companies going further to engage with loyal customers and leading new initiatives like targeted switching campaigns. Intervening further in the energy market risks undermining so many of the positive changes we are seeing in the retail market. That would be bad for competition but more importantly, bad for customers too.”

Energy UK Chief Executive Lawrence Slade

Source: BBC News

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