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| MPs warn of energy price impact | |
| (1 day later) | |
| Rises in gas and electricity bills in the near future will have serious consequences for millions of households, an MPs' committee has said. | Rises in gas and electricity bills in the near future will have serious consequences for millions of households, an MPs' committee has said. |
| It also warned that thousands of jobs in manufacturing would be at risk if UK prices stayed higher than those faced by industry in the rest of Europe. | |
| The Business and Enterprise Select Committee report said problems in the sector needed to be addressed urgently. | The Business and Enterprise Select Committee report said problems in the sector needed to be addressed urgently. |
| But it found no evidence that key firms colluded to keep energy prices high. | But it found no evidence that key firms colluded to keep energy prices high. |
| The committee's report, published on Monday, comes just a few days after EDF Energy became the first big supplier to announce widely-predicted summer price rises. | The committee's report, published on Monday, comes just a few days after EDF Energy became the first big supplier to announce widely-predicted summer price rises. |
| Competitors | Competitors |
| The committee decided on an inquiry after the "big six" energy companies announced double-digit price rises at the start of 2008. | The committee decided on an inquiry after the "big six" energy companies announced double-digit price rises at the start of 2008. |
| FROM THE TODAY PROGRAMME href="http://news.bbc.co.uk/today/hi/default.stm">More from Today programme class="" href="/1/hi/business/7528532.stm">Reaction to committee report class="" href="/1/hi/business/7528595.stm">Q&A: Energy prices The big six firms are: Npower, EDF Energy, British Gas, E.On, Scottish Power, and Scottish and Southern Energy. | |
| The report voiced concerns that "the UK's energy markets are not functioning as efficiently as they should". | The report voiced concerns that "the UK's energy markets are not functioning as efficiently as they should". |
| "Industrial consumers now face prices above European levels," the report added. | "Industrial consumers now face prices above European levels," the report added. |
| "If these price differentials are sustained, they will affect the competitiveness of the UK economy." | "If these price differentials are sustained, they will affect the competitiveness of the UK economy." |
| 'No collusion' | 'No collusion' |
| The inquiry addressed the issue of why there was only a very small difference in prices charged by the major suppliers. | The inquiry addressed the issue of why there was only a very small difference in prices charged by the major suppliers. |
| We believe that the time is right for a root and branch review of government policy on fuel poverty Select committee report class="" href="/1/hi/business/7426123.stm">Fuel poverty action plan unveiled class="" href="/1/hi/business/7523527.stm">Fuel poor tariffs 'must be cheap' class="" href="http://newsforums.bbc.co.uk/nol/thread.jspa?forumID=5162&edition=1">Send us your comments | |
| It said that nobody brought any evidence of price collusion among the big six, simply that it was easy for each to predict what the other five were going to do. | It said that nobody brought any evidence of price collusion among the big six, simply that it was easy for each to predict what the other five were going to do. |
| "Just because we have found no evidence of collusion does not mean we have given the big six energy companies a clean bill of health - far from it," said committee chairman Peter Luff. | "Just because we have found no evidence of collusion does not mean we have given the big six energy companies a clean bill of health - far from it," said committee chairman Peter Luff. |
| "It is clear that there are very real problems in the energy markets at all levels ... which need to be addressed." | "It is clear that there are very real problems in the energy markets at all levels ... which need to be addressed." |
| The committee was concerned about how the wholesale markets functioned, including why gas producers appeared unwilling to trade in the forward gas market. | The committee was concerned about how the wholesale markets functioned, including why gas producers appeared unwilling to trade in the forward gas market. |
| The report was critical of the government for failing to act quickly enough to encourage investment in gas storage, as the UK becomes more dependent on importing gas. | The report was critical of the government for failing to act quickly enough to encourage investment in gas storage, as the UK becomes more dependent on importing gas. |
| It also warned that the potential takeover of British Energy could undermine the diverse market in electricity generation in Britain. | It also warned that the potential takeover of British Energy could undermine the diverse market in electricity generation in Britain. |
| Fuel poverty | Fuel poverty |
| Energy regulator Ofgem, which is conducting its own inquiry into the market, was also criticised, with the committee demanding a "greater sense of urgency" in some areas. | Energy regulator Ofgem, which is conducting its own inquiry into the market, was also criticised, with the committee demanding a "greater sense of urgency" in some areas. |
| Prices rises by EDF are expected to be replicated by other suppliers | |
| On Friday, EDF raised gas prices by 22% and electricity prices by 17% for domestic and small business customers. | On Friday, EDF raised gas prices by 22% and electricity prices by 17% for domestic and small business customers. |
| With all the major suppliers expected to follow suit in the coming weeks, the committee said there would be an inevitable increase in fuel poverty. | With all the major suppliers expected to follow suit in the coming weeks, the committee said there would be an inevitable increase in fuel poverty. |
| The government estimates that 2.5 million households are in fuel poverty - defined as when more than 10% of household income is spent on fuel bills - but watchdog Energywatch says the figure is more than four million. | The government estimates that 2.5 million households are in fuel poverty - defined as when more than 10% of household income is spent on fuel bills - but watchdog Energywatch says the figure is more than four million. |
| "We believe that the time is right for a root and branch review of government policy on fuel poverty," the committee said. | "We believe that the time is right for a root and branch review of government policy on fuel poverty," the committee said. |
| It said social tariffs failed to reach the vast majority of fuel poor customers, were inconsistent and confusing. | It said social tariffs failed to reach the vast majority of fuel poor customers, were inconsistent and confusing. |
| The committee wants the government to define the criteria for these tariffs and identify the customers who should qualify for the discounts. | The committee wants the government to define the criteria for these tariffs and identify the customers who should qualify for the discounts. |
| It also wants more focus on improving energy efficiency in homes, to help cut bills, and called for an reversal of the funding cuts in Warm Front grants. | It also wants more focus on improving energy efficiency in homes, to help cut bills, and called for an reversal of the funding cuts in Warm Front grants. |