Alan speaks out for a fairer, greener energy deal
20th October 2011
In a Commons debate last night, Alan Whitehead called for fundamental and far-reaching reform of the energy market to get a fairer deal for households struggling to heat their homes.
Labour secured a debate in Parliament yesterday on the scandal of rocketing energy prices while the Big Six energy companies’ profits rose from £15 per customer to £125 per customer since June.
In the debate, Dr Whitehead slammed the ineffectual “bells and whistles” of the Government’s current proposals on reforming the energy market, and instead set out a comprehensive plan to make our energy market fairer, greener and more competitive.
In his speech, Dr Whitehead called for:
- A mandatory simple tariff used by all energy suppliers, consisting of a simple standing charge and a tariff per unit used.
- Ending the Tory Government’s financial penalty on new competitors to the Big Six growing beyond 125,000 customers.
- A new “pool system” for companies buying and selling energy, ending the cartel-like system of the Big Six where energy companies can sell energy to themselves at grossly inflated prices and pass that increase on to the consumer
Speaking in the Commons, Dr Whitehead said:
“What the public want to know is why energy prices keep going up, and why we have the so-called rocket and feathers effect, whereby prices go up when wholesale energy prices go up, but they do not appear to come down when wholesale prices come down. The truth is that it is difficult to find out why—for the reason, among others, that the market is now so un-transparent and so concentrated in so few hands.”
Speaking after the debate, Dr Whitehead added:
“Even if energy prices had not rocketed up by 20% in the last year, pensioners across Southampton would still be between £50 and £100 worse of this year because of the Government’s cuts to Winter Fuel Payments. This just underlines the urgency of the need for the Government to stop lecturing consumers and get a grip on the fundamental problems in the energy market.
“Households need real help with their bills now, and they need us to fix this market which has become fundamentally biased against both ordinary consumers and against new, greener energy providers.”
What Alan said on...
...the current cartel-like system in the energy market:
“More and more, the big six also hedge their arrangements on price variables, so they all mirror each other, and the result of a price increase by one is that, inevitably, other companies put up their prices, too. Increasingly, therefore, there is effectively—even if not deliberately—a cartel-type price arrangement.”
... the need for fundamental energy market reform:
“The market that was created 10 years ago simply no longer works. The long-term deals that the companies set up account for almost all energy company trading, they are mostly bilateral and totally un-transparent, and energy companies trade with themselves, so it is difficult to see where the pricing goes and whether it is fair to the consumer.
“As for new entrants, they are almost all retail-only, and they have to buy their power from the big six. It is a bit like encouraging corner shops to set up, knowing that they will have to get their stock by shopping at Tesco and then somehow compete with Tesco on price.”
... on the Government lecturing consumers to switch to find a better tariff:
“We were exhorted to switch, which is a good idea, but in those circumstances, and for the reasons that I have outlined, it is of only marginal utility. Logically, one cannot keep switching and saving what is claimed—and anyway, some 80% of customers simply do not switch, leaving the big six energy companies with a huge pool of resources to draw upon in order to outcompete those small entrants on retail tariffs.”
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