Huhne to beef up Ofgem to fight energy price rises

A standing ovation followed energy secretary, Chris Huhne's, announcement of energy price reforms at the Liberal Democrat conference in Birmingham.

Speaking today (September 20) Mr Huhne underlined his commitment to take Britain from ‘fossil fuel smoke stack to low carbon payback’.

In a move clearly aimed at trying to break up the dominance of the ‘Big Six’ energy firms Mr Huhne proposed new powers for industry regulator Ofgem and plans to cut red tape to allow smaller renewable producers into the market more easily.

Under the plans the government is considering giving Ofgem new powers to force energy companies to provide consumer with compensation when they’ve lost out as a result of a company breaching a licence condition.

This would be on top of Ofgem’s current powers to fine companies up to 10% of their annual turnover, and would be unlimited.

The minister will also get Ofgem to assess whether competition is being ‘hindered by some energy companies’ who have high energy prices for millions of their consumers – while also offering cheaper online deals that make it difficult for small suppliers to compete.

Mr Huhne, who backed Carbon Capture and Storage (CCS) in his speech, also denied reports he called energy customers ‘too lazy’ to switch suppliers.

He said: “Ofgem calculates the average household could save £200 by switching to the lowest cost supplier – but fewer than one in seven households do so.

“Britain privatised the energy companies, but most consumers never noticed, contrary to the Times’ report, I neither said nor meant that this was laziness.

“It is just that consumers still think that they face the same bill whoever they go to, so I want to help households save money with simpler charging, clearer bills and quicker switching.

“I also want more consumer-friendly firms – co-ops, partnerships, consumer charities – dedicated to doing the shopping around for consumers to make sure that you are always on the best deal, even if you do not have time to check yourself.

“We want to encourage new small companies to come into the market cutting red tape so they can grow bigger.

“We’re also making it easier for them to buy and sell electricity in the wholesale market.

“And with Ofgem, we are cracking down on any bad practice that could smack of being anti-competitive.

“It’s not fair that big energy companies can push their prices up for the vast majority of their consumers – who do not switch – while introducing cut-throat offers for new customers that stop small firms entering the market.

“That looks to me like predatory pricing it must and will stop.”

Responding to attacks on him by what he called the ‘tory papers’ Mr Huhne said they were full of ‘whinges’ about energy.

He said: “We must be doing something right … or left.

CBI director-general, John Cridland, sounded a note of caution after hearing Mr Huhne’s remarks.

He said: “At a time when world energy prices are rising, energy companies are promoting energy efficiency, and introducing smart meters and low-cost insulation to help consumers reduce bills.

“We must remember that prices also reflect the critical need for energy investment for a low-carbon future, where there are opportunities for new entrants to the market. But we do need ministers to be crystal clear on energy policy if vital business investment is to be secured.”

Mr Huhne’s speech can be read in full here on the Lib Dem’s website.

Luke Walsh

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