A senior executive at British Gas has denounced a “witch-hunt” which he claims has contributed to a breakdown of trust between consumers and energy suppliers.
Stuart Rolland, the chief operations officer at British Gas, also described as “irresponsible” claims that Government intervention could reduce energy bills, at a time when the rise in energy prices was being driven by international markets.
Labour leader Ed Miliband has pledged to freeze energy bills for 20 months if Labour wins next year’s General Election. Mr Rolland made the comments before visiting British Gas’s operation in Leeds, which employs 2,300 staff, with Energy Minister, Baroness Verma.
They toured the company’s Smart Centre and Training Academy in Leeds and met the staff, who will deliver smart meters which allow British Gas ‘pay as you go’ energy customers to top up their energy supply from a mobile phone or online.
Mr Rolland said the smart meter roll-out “is absolutely central both to the Government’s policy, and to British Gas’s policy, to try and restore trust in the energy market”. He added: “There’s been a bit of a breakdown in trust. It’s not been exactly assisted by the media. I think there has been a bit of a witch-hunt around what’s happening in the energy market.
“I’m incredibly proud of the work that British Gas does, but it’s clear that we have to restore trust and that means being much simpler in terms of communication with customers and also giving customers insight and advice that they can act on, in order to get control of their energy bills, and that’s where smart (meter) comes in.
“The reason this (the breakdown of trust) has occurred is because energy prices have increased very substantially, and people’s bills on the back of that, have increased substantially over the last decade. Bills have doubled during that period of time, at a time of difficulty in terms of people’s ability to meet the costs of living, so it’s inevitable there will be a lot of focus in this area.
“The increase in bills is absolutely driven by the international cost of gas. We are increasingly dependent on overseas supplies of gas as North Sea supplies have dwindled, that’s put up costs. And also the costs of what you might call the green levies which are to fund insulation and renewable sources of energy.
“So, if you strip out the profits that British Gas makes on energy, it’s not changed, it’s five per cent after tax. That’s not a lot of money for the level of re-investment that the company is required to make.”
When asked what he thought about Government intervention to reduce energy bills, Mr Rolland said: “Anybody who is knowledgeable about how the energy sector works knows that it can’t work. In fact, it’s rather irresponsible to engage in that sort of discussion and hold out that promise to customers. You can’t freeze prices, no more than you can freeze the price of petrol at the pumps for consumers.”
Caroline Flint, Labour’s Shadow Energy and Climate Change Secretary, said: “Labour’s energy price freeze is the right thing for hard-working people facing a cost of living crisis under David Cameron. But the decision by SSE to freeze prices shows companies can and should freeze their prices to reset the energy market.”
A spokesman for the Government said it was committed to driving competition in the energy sector and helping people who wanted to switch energy supplier, but it did not believe that price freezing was a solution, because it could reduce investment.
In March, regulator Ofgem referred the energy sector to the Competition and Markets Authority for a competition inquiry.