Surprise, surprise. The media has finally woken up to the fact that the major energy companies are engaged in a major conspiracy to rip off the consumer. The six biggest energy companies meet regularly to fix prices, according to the London Sunday Times. The Observer newspaper also carries a similar report this morning: “the government can’t � or won’t � do a thing about it,” the left-wing paper says.
But it has always been thus, ever since the earliest days of gas and electricity in the UK and the US, the utilities have attempted to defraud the ordinary consumer.
That is why going off-grid represents a sensible economic choice. Especially if coupled with supplying neighbours or the local community with power and/or water.
“Among the small elite who attend these �private and confidential� meetings are Ian Peters, chief operating officer of British Gas, David Threlfall, chief executive of Npower, and Eva Eisen-schimmel, who launched the ice cream H�agen-Dazs in Europe and is now chief operating officer at EDF,” reports the Sunday Times.
“European energy giants tacitly collude in fixing prices and are able to hoard gas in huge European storage depots until the winter months, before selling it at inflated prices to both continental and British consumers. ‘There is tacit price collusion,’ says the Observer.
It was thought that building gas pipelines from Europe to Britain would help to convey energy to British households. But gas is sometimes produced in the UK, exported back to Europe for storage and then pumped back and sold in Britain at prices that are higher than they should be.
“A laminated print-out reminds the six executives not to use language such as �stitch up the market�,” the Sunday Times says of the regular meeting held by the big six energy companies. Although this is a forum to which smaller rivals are never invited. The members of this exclusive club have prospered in recent years while one by one most of their less powerful competitors have gone bust.
The meetings are held under the auspices of the Energy Retail Association, which says the six executives never discuss or agree price rises – that would be illegal. Instead, the members of the association – who pay an annual subscription fee of about �100,000 each – are meant to work for the �common good� without trying to secure competitive advantage.
“But with Npower – owned by the German utility group RWE – announcing hefty price rises this month and others expected to follow suit, the companies face questions over whether they have been engaged in �tacit collusion�. Last week rivals accused the big six of jointly pursuing strategies to crush smaller competitors and bolster an anticompetitive market. The allegations are strongly denied.
Allan Asher, chief executive of Energywatch, which represents the interests of gas and electricity consumers, said: �British householders are a captive market. The energy companies should be fighting for market share, fighting for customers and fighting to offer the best value they can. But what they do is behave and price in almost exactly the same way.�
The most recent profits figures for the six main companies, which also include Eon, Scottish Power, and Scottish and Southern, reveal they made more than �2 billion in six months last year. Average household energy bills are expected to exceed �1,000 this year, compared with �572 in 2003.
According to well-placed industry insiders, the practices used by the big six to rack up profits include keeping domestic bills broadly �in line� with one another, restricting energy supplies to competitors and demanding laborious accreditation and credit requirements for new companies. ”
consumer groups say that the government has known for years that North Sea oil would run out, and has done little to prepare for it. The UK, for instance, has limited facilities to store gas. While Germany and France can store 20 per cent of the gas they consume, Britain can set aside just 5 per cent.
Neither does nuclear look like a panacea, as the government’s nuclear expansion plan envisages simply replacing our ageing nuclear stations over a period of years. No one has been talking about adding capacity.
Nuclear currently provides British homes with 18 per cent of their electricity, but there are worries about the huge costs linked with building and operating new nuclear power stations. Few believe this can be done by the private sector without state subsidies.
Nevertheless, the government is again hoping the free market can deal with the question, although few believe that will be possible. The bill for the current nuclear clean-up operation has risen to �70bn, according to the Nuclear Commissioning Authority, much of that paid by the taxpayer. French power giant EDF says it wants to build nuclear plants in Britain � but in France, its nuclear facilities are bankrolled by the state.
Britain, like the rest of Europe, is between a rock and hard place, because no matter how hard the commission works to liberalise continental energy markets, the suppliers � Opec and Gazprom � are de facto cartels that hold the whip hand over pricing. And no more so than at a time when demand from the emerging nations of Asia and Latin America is at an all-time high.
Britain’s Top Rip-Off’s
As polled in a survey of over 8,000 e-mail and website responses from 1999 to 2005
(presented in random order)
Fraudulent schemes & scams
Shoddy goods & poor service
Unqualified & rogue trades people
Unscrupulous business practices
Bank charges & bad practices
Water & energy companies
Council Tax *
High interest store & credit cards
Mobile phone charges
Capital Gains Tax *
Fuel duty *
House selling/buying practices
Inheritance tax *
Stamp duty *
Speed cameras *
Premium Rate phone numbers
Wages below the minimum
Low Old Age Pensions
High taxation of the poorest *
Endowment policies & mis-selling
The demise of Final Salary pensions
Government wasting our money
Membership of the Euro
Stealth taxation *
TV Licence fee *
Food prices (supermarkets)
Loan protection insurance
Import duty *
Value added tax (VAT) *
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