Prime Minister David Cameron announced a probe into profit and competition among U.K. energy suppliers as both his government and the opposition bid to show they have plans to deal with inflation-busting price increases.
“We will be having a proper competition test carried out over the next year to get to the bottom of whether this market can be made more competitive,” Cameron told lawmakers in Parliament in London today. “I want more companies, I want better regulation, I want better deals for consumers.” He said there’s also a “need to roll back” green levies that suppliers have said have contributed to higher costs.
Cameron’s spokesman, Jean-Christophe Gray, told reporters in London that the energy regulator, Ofgem, will work alongside the Office of Fair Trading and the new Competition and Markets Authority to put in place an annual review of competition in the industry. Further details will be set out in a statement on energy to Parliament next week, with the review focusing on prices, profits and barriers to new entrants in the energy market, Gray said.
Three of the “Big Six” companies that dominate Britain’s energy market have announced gas and electricity price increases of about 10 percent over the past two weeks, almost four times the rate of inflation. One of Cameron’s Conservative predecessors as prime minister, John Major, called on the government yesterday to impose a windfall tax on the profits of the energy companies if it needs to spend more money this winter helping the elderly and needy with higher fuel costs.
Opposition leader Ed Miliband said last month his Labour Party would freeze energy prices if it wins the next general election in 2015. In clashes in the House of Commons, Cameron accused Miliband of being a “con man” over the proposals. Speaker John Bercow rebuked the premier for his use of the words.
A Labour spokesman who asked not to be identified in line with party practice told reporters that Miliband is prepared to work on a cross-party basis to bring energy prices down, while also saying the premier’s announcement smacked of panic.
Cameron’s remarks on reducing green levies threaten to open up a new battle with his coalition partners, the Liberal Democrats, who oppose eliminating such taxes. A spokesman for Cameron who declined to be named in line with official practice told reporters the two parties have been discussing energy policy for several weeks.
Cameron’s Conservatives argue that if there is no policy change by 2020, green levies may rise to 194 pounds ($313) a year from the current 112 pounds -- or 14 percent of the typical household bill. Labour said that of the 112 pounds, 67 pounds of levies had been introduced under the current government.
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