Rising wholesale costs and environmental “stealth taxes” were to blame for the controversial hikes announced so far this autumn, the Energy and Climate Change Committee was told.
Bosses of British Gas, EDF, RWE npower, SSE, E.ON and ScottishPower were summoned before the panel to account for their pricing policies after analysis by regulator Ofgem showed wholesale prices have risen by just 1.7 per cent while the increases have so far averaged 9.1 per cent.
William Morris, managing director of SSE, which has announced an 8.2 per cent price rise, said he regretted having to increase bills but transport costs had gone up by 10 per cent, while the Government’s environmental schemes had risen by 13 per cent.
“We would like to see those costs taken off customers’ bills and onto taxation. We welcome the Government’s decision to review that,” he said,
Tony Cocker, CEO of E.ON, which, along with EDF, is one of the only Big Six companies yet to announce a rise, told MPs he would hold prices as long as possible but his company faced the same pressures.
But small-scale competitor Ovo Energy’s managing director Stephen Fitzpatrick told the panel he “can’t explain” the price rises being imposed by the larger firms because his company was buying gas cheaper than it had in 2009.
Loyal bill-payers are charged up to £200 more than those who switch in some cases but the companies responsible go “unchallenged” by Ofgem, he added.
“A lot of energy companies, a significant number of the Big Six, are charging the maximum price they feel they can get away with to the customers they feel will not switch under any circumstances and then maintaining the illusion of competitive pricing with tariffs targeted towards a very small number of relatively well-engaged customers,” he said.