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Energy firms told to lower prices or face cartel probe
Jonathan Prynn, Consumer Affairs Editor16 Dec 2008
ENERGY companies were today threatened with a full-scale cartel investigation unless they slash bills in the New Year.
Alistair Buchanan, head of the energy watchdog Ofgem, told MPs that gas and electricity prices "should be coming off in the early part of 2009".
He added: "If the companies are stupid enough to abuse this situation they will be sent to the Competition Commission."
The regulator's warning came as the cost of living fell last month amid the most frenzied pre-Christmas high street price war on record.
Prices dipped by 0.1 percentage points in November, the second consecutive monthly fall, according to figures published today.
Power firm customers are angry that none of the big six - British Gas, EdF Energy, EON, npower, Scottish Power and Scottish & Southern Energy - have cut their tariffs despite collapsing wholesale energy prices.
Since the summer the wholesale gas price has plummeted by a third and electricity by about 40 per cent. The wholesale cost of gas is still 10 per cent above its level at the start of the year but retail prices are 50 per cent higher.
A spokesman for the Energy Retailers Association said: "We take Ofgem's statement today very seriously. All the companies will be considering the concerns Ofgem has raised."
However, today's statement also recognises that energy companies have already invested £300 million in response to the regulator's report."
Meanwhile, prices in general have not dropped for two months on the trot since October and November 2001 when the world economy was reeling from the impact of the 9/11 attacks. It is extremely rare for prices to fall month on month outside the traditional sale periods of January and July. The latest month-on-month drop pushed the annual rate of inflation down from 4.5 per cent to 4.1 per cent last month.
Most commentators now expect the Bank of England to order fresh interest rate cuts next month in a bid to boost the bombed-out economy.
Reader views (14)
Wholesale gas prices have not crashed. I work part time in the gas industry and prices are consistently higher now (because of the weather) than the rest of this year . Most gas in the UK is sold on long term contracts which are based on alternative fuel sources. The prices for the 2008/9 gas year, which began in October, are sky high as they are linked to the previous quarters oil based products. I do not work for an energy retailer and am also a consumer so I have no vested financial interest in defending them, but think the media and maybe the Government, are misleading the public on this one.
- Samantha Reed, Wilmington,England, 16/12/2008 21:50
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I have a feeling (and it's not a warm one) that the prices will fall in the Spring. Therefore the higher prices can maximise profits during the winter time when comsumption peaks.
- Mark, London, 16/12/2008 21:02
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Hello London,
Our own former P.M. Mrs Thatcher has a lot to do with whats happening today.The Deregulation of utilitities and letting working people buy shares through a man called "SID" opened the floodgates for Europe such as France and Germany to invest BIGTIME and they did. The cost of electic and gas is a rip off and our so called regulators are not doing a thing about it nor will they?.
I have fitted all lights with energy saving bulbs, I switch off all stand-bys, and use eco 7 overnight heaters, have double glazing, and home insulation and still my bill for electric is rising now £96 per month thats £1152 per year for a small 3 bed home, a rip off?.
If these watch dogs cannot do anything why have them, they are just a waste of money?.
- John.L., Scarborough N.Yks U.K., 16/12/2008 20:09
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This country does not have the bottle to do anything about it, when they sold of our utilities they would have had a clause saying don’t hassle us because we are bailing you out for being a pathetic government.
Oh yes and the rest of Europe are paying less than we are, and the companies still make a killing. Privatising the utilities is the only way this can go. Britain being sold off bit by bit by the ScotLabMafia... when it’s gone they will all go back to Scotland to a cushy easy life paid for by the English.....Hail Brown the destroyer
Treason still is punishable by death though ain't it Blair
- Chris, Wirral,England, 16/12/2008 19:54
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Publish names and addresses of CEO'snd their telephone nos on the Internet.It would soon stop.
- John Harris, High Wycombe UK, 16/12/2008 18:11
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Eon, my energy provider, wrote to me this week and said they were putting up my monthly direct debit by 44% - even though my account was in surplus, and had been for at least last 2 quarters. I called them last night and said "no way, it's not justified, think again" and so they are not now going to do it! Easy. So what was it all about? Simply a try on...use customer money to fill their bank account and bonusses. Fight back folks, roll over and they win. Crash Gordon and his mates are too busy saving the rest of the world to care, so help yourselves.
- Eon Bill Payer, Home Counties, 16/12/2008 17:14
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Well done Gordon. Squeeze them till they burst, I say
- Keith Price, Luton, England, 16/12/2008 16:42
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Privatization has failed. Nationalize.
- Mick, London, England, 16/12/2008 16:22
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The energy companies will do their level best to delay any price decreases until the summer, by which time Ofgem may have got out of their chair.
- Paul, London, 16/12/2008 16:12
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A cartel probe should have already been carried out and the findings published in the public domain. These regulaters seem to have very blunt teeth - but still I suppose it creates a few hundred "jobs" for these jobsworths.
- Raymond, London, 16/12/2008 16:04
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I wrote to Scottish Power recently asking when they would be cutting their charges. They took ages to respond, and then I just got a stock answer that they constantly review their prices to provide excellent value, blah, blah, blah. I hope Ofgem and / or the Competition Commission give them a kick up the backside.
- Adam, London, UK, 16/12/2008 15:14
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So the Power utils are going to roll-over and lower prices because the big fluffy-wuffy puddy-cat Ofgem has said so. Ofgem has shown how toothless it is so far and hasn't made a jot of difference to pricing. Ofgem has been muting price cuts for several months, no change then!
Maybe if Ofgem stamps its feet a little harder and really screws its face up then the Power utils may pay attention!
- Gavin Hall, Kent, 16/12/2008 15:11
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Not possible, the energy companies get their interest on advance payments. If they did recognise the injustice it would mean putting the costs up for the rich espectially as they have been rumbled with their direct debit swindles!
- Tony Islander, Herts, 16/12/2008 12:53
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It's not just poor households that are being ripped off: I pay a fixed month by direct debit, and even though I am £300 in credit, my supplier wants to increase the monthly amount by 25% (which I have advised them that they can sing for).
The bigger question that Ofgem should be asking is: when will energy prices reflect the true cost of supplying the resources, rather than the inflated prices that are imposed to satisfy shareholders and pay executive bonuses.
- Nobby Clark, Perth, Scotland, 16/12/2008 12:24
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