Call for reform of energy market

The Government needs to undertake a "fundamental rethink" of its fuel poverty policy, with rising gas and electricity prices inevitably leaving more households struggling to pay their bills, a report from the business and enterprise select committee concluded.

The committee said it had found no evidence of collusion between the "big six" energy companies - British Gas, E.On, Scottish Power, Scottish & Southern, EDF, and npower.

But it said there were "very real problems" with the market.

Committee chairman Peter Luff said: "Just because we have found no evidence of collusion does not mean we have given the big six energy companies a clean bill of health - far from it.

"It is clear that there are very real problems in the energy markets at all levels, and going beyond these six companies, which need to be addressed.

"Some of these are strategic issues such as the functioning of wholesale markets, while others are more specific concerns, for example, how suppliers conduct their doorstep sales to encourage switching."

The report predicts that domestic gas and electricity bills "will rise significantly in the near future, over and above the increases already announced this year".

But the committee raised concerns that fuel poverty programmes had failed to help most of those who were struggling.

It said: "Energy suppliers' existing social assistance initiatives (which go well beyond specific tariffs) do not reach the vast majority of the fuel-poor. They also vary widely, confusing consumers and providing inconsistent coverage. Irrespective of its broader conclusions on the role of such tariffs, we believe the Government should define the criteria for both the prices charged by suppliers under the banner of social tariffs, and for identifying those customers that qualify for them."