Energy bosses face prices grilling

Energy billsDirectors from the "Big Six" energy companies face a grilling today over inflation-busting price hikes that are set to leave three in ten households struggling to afford heating this winter.

Centrica-owned British Gas, EDF, RWE npower, SSE, E.ON and Scottish Power have all been summoned to appear before the Energy and Climate Change select committee to account for their pricing polices.
They are expected to be given a rough ride by MPs after O fgem analysis showed that while the increases announced so far this autumn by some of the companies have averaged 9.1%, wholesale prices have risen by 1.7% - adding just £10 to the average household bill of £600.

SSE was the first of the major energy companies to announce it was raising gas and electricity bills. Its increase of up to 10% will add a typical £106 to annual dual-fuel customer charges to reach £1,380.
The company said wholesale energy prices were up 4%, paying to use newly-upgraded networks by 10% and Government-imposed levies up 13%.

British Gas is increasing electricity bills by 10.4% and gas tariffs by 8.4% for around 7.8 million families this winter.

RWE npower will put up electricity and gas prices by 9.3% and 11.1% respectively from December 1, affecting about 3.1 million customers.

ScottishPower w ill raise gas tariffs by 8.5% and electricity prices by 9% on average from December 6 for its 2.2 million customers.

Shadow energy secretary Caroline Flint said: "The energy companies must come clean about why they are imposing yet another round of inflation-bust price rises this winter when they are already making huge profits.

"The latest revelations about rising profits and the growing gap between wholesale costs and household energy bills highlight why answers are needed.

"Britain's energy market isn't working for ordinary families and businesses."

Consumer group Which? has written to George Osborne calling for him to take action to curb costs in the autumn statement, warning that three in ten people do not know how they will afford to heat their homes this winter.

" People need your help - and they need it now," it has told the Chancellor.

It calls for a number of measures to be introduced to claw back cash, including separating energy generation from supply to help make the wholesale market more competitive, s crapping the carbon floor price, freezing the smart meter roll out for two years, removing the Warm Home Discount from consumers' bills and reforming the Energy Companies Obligation, which helps people insulate their homes.

The plans could save consumers up to £1.8 billion per year, Which? estimates.

Executive director Richard Lloyd said: "Consumers have been left reeling by the recent round of inflation busting price hikes. People need help to cope with the rising cost of their energy bills - and they need it now.

"When George Osborne stands up to deliver his autumn statement we want him to stand up for the millions of hard-pressed consumers who are grappling day-to-day with rising energy costs. He must cut the Big Six companies and the cost of Government energy policies down to size."

A Department of Energy and Climate Change spokeswoman said: "We welcome this contribution to the debate, and agree that stronger competition is the key to tackling energy bills.

"The Government is working hard to help people with their rising energy bills by improving competition, making the nation's homes cheaper to heat and providing targeted help for the most vulnerable.

"The Energy Company Obligation helps people to save energy and money on their bills, through prompting energy companies to green-proof their customers' homes.

"Having warmer and more energy efficient homes, as a result of the Energy Company Obligation, will result in lower energy use, and by default lower energy bills."

Think tank IPPR said Ofgem's data on customer bills shows that profits in 2013 are 6% and operating costs make up 9% of bills.

Associate director Will Straw said: "The key question for the Big Six is why profits of 5-6% are acceptable in a competitive market.

"In 1998, as the market was liberalised the regulator believed 1.5% was an adequate margin for energy suppliers. Profits in other sectors like supermarkets are as low as 2%.

"Energy companies need to come clean on why their profits have kept rising when consumers are being squeezed by so many other costs."
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