‘Competition means failures’

by Janet Wood

The lack of both new entrants and large company failures was evidence of a lack of competition in the energy market, Ovo Energy managing director Stephen Fitzpatrick told members of the Energy and Climate Change Committee on Tuesday. He said: “In a competitive market you don’t see that level of stability.”

However, Alistair Phillips-Davies, generation and supply director at SSE, pointed to several failed companies, including Atlantic, which he said reached 340,000 customers before going bust. He said that was why the market had six large companies, because in hedging risks, “you need companies who can take the hit”.

Phil Bentley, managing director of British Gas, agreed that “you need deep pockets”. He said Ovo was “buying energy for St Albans”, while British Gas was “buying it for Britain”.

Firms’ claims that they were becoming more transparent and responsive to customers was challenged. Barry Gardiner MP said they were just “playing catch-up”. He also accused them of failing to explain that prices would rise until 2020, and use that message to promote energy efficiency.

Companies and MPs also clashed on customer switching. Bentley said switching levels in energy were beaten only by levels in motor insurance. But MPs suggested the figures reflected a small number of people switching repeatedly, rather than broad customer engagement.

Suggestions from Ovo of a simple comparison measure for tariffs, such as a pence per kWh, was supported by SSE, Eon and British Gas.

This article first appeared in Utility Week’s print edition of 7th September 2012.

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