Big Six energy firms 'like cartel'
The Big Six energy firms are ripping off customers and acting "like a cartel", the boss of a smaller competitor has claimed.
Ecotricity's Dale Vince said energy companies had been taking advantage of consumers since the utilities were privatised and the market is "dysfunctional".
His comments came after MPs on the Energy and Climate Change Committee were told r ising wholesale costs and environmental "stealth taxes" were behind the average 9.1% hike announced by some major firms.
But Mr Vince, who claimed his firm's investment in renewable energy was "insulating us from the rising cost of fossil fuel", said wholesale costs alone could not justify the increase in bills.
He told BBC Radio 4's Today programme: "They have cited three factors: the rising cost of wholesale fossil fuels, Government levies and the cost of distribution. All three of those are valid, in the case of wholesale price rises right now, if you look back over 12 months, then they are not justified in raising their retail prices because of wholesale movements in this year.
"We had a close look at that and therefore announced our own price freeze."
Asked if the firms were "ripping us off", he said: " I think there's been a degree of that going on ever since privatisation back in the early '90s."
Mr Vince explained how he believed the Big Six operated: "They make it very confusing for customers and they make it very difficult for them to leave. That's how they create this inertia in the market which puts people off switching. That's probably one of the worst things that they do, the most uncompetitive things that they do."
T ony Cocker, chief executive officer of E.ON, told MPs he had w ritten to Prime Minister David Cameron calling for a Competition Commission investigation into the industry to be set up to help reassure customers.
But Mr Vince said: "I don't think you need an inquiry to tell you this market is dysfunctional, you just have to look at it. Six big players have a 95% market share and they seem to operate like a cartel, the prices go up in conjunction."
He added: "Privatisation in the energy sector has simply failed."
E.ON has yet to raise its prices and Mr Cocker told Today that any increase would be kept as low as possible and delayed for as long as the firm could manage.
He said: "Our prices have not yet gone up, we haven't announced anything. We will continue to keep it under review of course but what I can assure you and our customers is we will keep any price rise as low as possible and we'll delay it as long as possible."
Urging the Government to remove green levies, he said the savings would be passed on to customers.
"Social costs, environmental obligations, upgrading our network, all of these things are adding to energy costs going into the future," he said.
"The single thing that we could do today to manage those increases, the simplest thing in my view, is to take some of those things and move them into general taxation. I believe that would be much more progressive for our customers, whether those are households or businesses."
Mr Cocker added: "Pound for pound, we would take off those costs."
Appearing before the MPs yesterday, Ovo Energy's m anaging director Stephen Fitzpatrick said he "can't explain" the price rises being imposed because his company was buying gas at a cheaper price - 5p a therm less - than it had in 2009.
But Mr Cocker said E.ON was "as good at buying" wholesale energy as Mr Fitzpatrick but smaller companies were able to keep bills lower because they did not face the same level of social and environmental obligations.
"Small companies are exempt from a number of the environmental and social obligations, not all, but a number of them."
Mr Cocker added: "If those costs are moved or cut, then we can pass that benefit on to our customers."
Former prime minister Sir John Major warned earlier this month that some people would face the choice between heating and eating this winter, but Mr Cocker said customers with worries about their bills should contact the firm.
He said: "What I would say to anyone worrying about their bills, and we understand that, is get in touch. We have a lot of ways that we can help you so please get in touch."