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Big six energy companies accused of £4 billion rip-off

Toothless regulator Ofgem 'can't investigate' claims energy giants skimmed £50 from every household in pricing scam

Labour squared up to toothless energy watchdog Ofgem yesterday after it said it was not capable of investigating the party's claims that energy companies are ripping off the nation by inflating every household bill by £50 a year.

The so-called big six - British Gas, SSE, Eon, EDF, npower and Scottish Power - paid £4 billion more for power than the market rate by buying energy produced in their own power stations, according to shadow energy secretary Caroline Flint.

Labour said this had cost each household £150 over the last three years.

Shockingly a senior partner for Ofgem Ian Marlee admitted there was no way Labour's analysis could be investigated because "there is not enough transparency to be able to actually look at that."

However the regulator announced it was introducing a number of reforms to energy tariffs to help create a simpler and clearer market and help rebuild consumer trust - though it will not give the Ofgem greater powers of investigation.

Labour shadow energy minister Tom Greatrex MP said: "It is just not good enough for Ofgem to say it doesn't know whether consumers are being overcharged - it's the regulator's job to know.

"There is now clear evidence which suggests that all the big energy companies have been buying electricity at above the market price.

Campaigning Labour MP Kelvin Hopkins renewed his call for the energy industry to be renationalised in the wake of the news.

He said: "It's very obvious that the energy sector has been a cartel for a long time.

"Today's news makes the case all the stronger for public ownership.

"As for Ofgem being unable to investigate - it's the same answer.

"The only way to create complete transparency is bring it into public ownership and make it accountable to Parliament."

Labour's analysis compared the price paid for electricity by the energy giants, the weighted average cost of fuel, with the average market price a year ahead provided to them by small supplier First Utility.

Energy UK, which represents the big six suppliers, denied the accusations and said the figures also covered "losses, the energy element of reconciliation-by-difference costs and balancing and shaping costs incurred by the supply."

The industry representative also said wholesale prices fluctuated depending on the supplier and time of purchase and that "different business practices mean that each energy company will be paying a different amount for its wholesale energy."


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