A tangled web


By Jonathan T. Clark, list candidate in South East Wales.

News that Ofgem (the energy regulator) has told energy firms they must offer simpler tariffs to help consumers compare prices is to be welcomed. Ofgem has also said that the "big six" suppliers should also face more competition, saying that it would force these firms to auction off up to a fifth of the electricity they generate, making room for new companies. Not to mention that Energy firms could be referred to the Competition Commission if they do not comply with the new system.

Now, of course, Ofgem launched a review of the energy market after claims were made that suppliers were making excessive profits. Certainly British Gas (earlier in the year) said operating profits had risen by 24% in 2010 to £742m. Back in November, Ofgem said that energy supplier's net profit margin per typical customer rose from £65 in September to £90 in November, which was a 38% rise. Interestingly enough, Ofgem also said that it had found evidence that the "big six" energy firms "have adjusted prices in response to rising costs more quickly than they reduced them when costs fell".

Factor in the possibility that Scottish Power, may face an investigation into its pricing regime and that this investigation is in addition to the ongoing Ofgem investigation into how British Gas, EDF Energy and Npower handle consumers' complaints. Not to mention that Ofgem is also still continuing to investigate allegations of misselling by EDF Energy, Npower, Scottish Power, and Scottish and Southern Energy and you may well draw the conclusion that the so called 'free market' in energy supply is joke that deliverers little save for fat profits for members of a self serving cozy energy cartel.

The problem is that any Ofgem investigation into questionable practices undertaken by the energy companies will not come close to the Conservative pre-election promise of a proper enquiry into the energy industry. Now oddly enough that pre-election pledge for an independent inquiry into the £25 billion-a-year energy industry (which has been repeatedly criticised with accusations of profiteering on electricity and gas) was quietly dropped by the Com Dem Coalition Government in August 2010, when no doubt when they hoped no one would notice.

Back in October 2009, the then Tory Energy Spokesman, Greg Clark has said that the "cartel" of the big 6 energy firms will be referred to the Competition Commission by an incoming Conservative Government. He also said that there was an 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. An 'independent' investigation in the Energy companies' refusal to pass on reductions in wholesale energy prices to customers was also mooted along with an overhaul the energy sector billing structure and charges.

Now don't get me wrong, this all sounded great, but, wasn't it a Conservative Government that was responsible for starting the whole sorry mess in the first place by privatising the energy market in the first place, throwing any rational energy pricing structure upon the whims of the alleged 'free market' by allowing the newly privatised energy companies to price gouge customers in the first place? So you may ask, why did it never happen? Well that was one reason may well be that the current shambles helps to feed the fat wallets of Tory chums in the City and the exchequer.

Its also worth noting the energy companies are busy gouge mining profits from their domestic customers. Back in February is was British Gas who's operating profits rose 24% in 2010 to £742m.This news, welcome to shareholders if no one else, two months after the UK utility announced a 7% rise in domestic energy bills, which it blamed on rising wholesale prices.

British Gas also said it had increased its number of customers by 267,000 during the year to 16 million. This helped parent company Centrica to achieve pre-tax profits of £2.8bn, with operating profits up 29% to £2.4 billion. Factor in continuing unrest in the Middle and near East which is leading to a rise in Oil Prices something which will also hit us at the pumps and elsewhere with increased food and energy costs and you would think that developing cheap sustainable safe secure energy would be pretty important.

This is more than important, it's the potential game changer and is far too important to be left to the profit chasing whims of an energy cartel. We need to seriously and actively pursue the development of sustainable, reliable and secure energy supplies here in Wales and elsewhere in the UK with a serious degree or urgency. What makes this interesting is that some of this energy can and should be community owned and community beneficial, something that could generate green energy and green jobs here in Wales.