Weekend press round-up: Rees-Mogg accused of grabbing absolute power over energy industry

In our latest review of sector coverage in the national media, concern is raised about new legislation that would hand sweeping control over the energy sector to the secretary of state. There is also speculation the government wants to scrap the energy price cap; reports on job cuts at Scottish Power, and Thames Water topping the list of water company complaints.

Rees-Mogg accused of grabbing absolute power over UK energy industry

The business secretary, Jacob Rees-Mogg, has been accused of launching a “power grab” as new legislation proposes to hand sweeping control over the energy industry to the government

The government last week introduced the energy prices bill to parliament to formalise the energy price guarantee, Liz Truss’s flagship policy to reduce household bills by limiting the cost of electricity and gas for two years.

However, the Guardian understands that energy suppliers have raised concerns with the business department that the legislation contains proposals for the government to be able to effectively overrule Ofgem, the sector’s independent regulator.

The draft legislation proposes to hand “power of the secretary of state to modify energy licences” as well as the “power of the secretary of state to give directions”.

Ofgem is responsible for overseeing every element of a supplier’s licence, from ensuring vulnerable customers are correctly handled to rules governing smart meters.

If approved in its current form, the legislation could override the authority of Ofgem. The regulator has been bruised by the energy crisis after its efforts to increase competition were undermined as more than 30 suppliers went bust when gas prices rapidly escalated.

The Lords are expected to discuss the main principles and purpose of the bill at a second reading of the legislation on Wednesday. Energy companies are also unhappy that they were given little time to examine the legislation.

Dhara Vyas, the director of advocacy at Energy UK, said:“It’s astonishing that the government gave the energy industry just 24 hours to respond to a draft bill which unexpectedly proposes giving ministers broad and seemingly unlimited new powers over the regulation of the industry.

“While we certainly need swift legislation to enable the support for households and businesses this winter, the decision to include longer term measures in the bill with very significant potential consequences for the industry – which must therefore be examined and debated closely – is inexplicable. We are urging the government to reconsider so that they do not risk the measures which this bill should be delivering.”

A senior source at one large energy supplier accused Rees-Mogg of a power grab “worthy of Henry VIII”. He said: “It gives absolute power to the secretary of state over all rules governing all aspects of the UK’s energy industry, in perpetuity.”

“That means bypassing Ofgem and the entire licensing and regulatory regime without any safeguards or time constraints and no consultation or appeal process for anyone – supplier, generator, networks – affected by any decision.”

An executive at another large energy company said: “This power grab means that the government could control the network, governance, pricing, the ability to acquire assets and infrastructure. It’s nationalisation by stealth.”

The Guardian

Energy price cap could be torn up under plans considered in Whitehall

The energy price cap would be scrapped when Liz Truss’s £60bn support package for households comes to an end under plans being considered in Whitehall.

Officials at the industry regulator Ofgem and the Business Department are discussing market reforms that could include scrapping the cap, which is normally changed every three months based on average wholesale power prices and was introduced by then-Prime Minister Theresa May.

The cap – which has been superseded for the next two years by a price guarantee that limits the average household’s bill to £2,500 – has been heavily criticised by energy providers, which claim it compels them to swallow losses if prices rise sharply higher.

Civil servants have now hinted that the cap will not come back when emergency help ends in October 2024. Tearing it up could mean a return to rules before Ms May’s intervention, when customer prices could be changed daily to reflect increases or decreases in the underlying cost of electricity and gas.

In a response to a report by MPs, the Business Department said it would consider how “price protection needs to evolve” in future.

Asked about whether the cap could be scrapped, Ofgem said on Friday that it would work with the Government “to determine what protections will be required” after the guarantee ends.

Under existing legislation, the price cap is due to expire next year and an extension would need to be approved by Parliament.

The bill proposed by ministers to underpin the price guarantee proposes to remove this “sunset clause” and instead give the Business Secretary, currently Jacob Rees-Mogg, power to decide when to end the scheme.

Daily Telegraph

ScottishPower to axe 300 jobs

Energy giant ScottishPower is to axe 300 jobs with many workers being made redundant days before Christmas.

Around 150 jobs will go from the Glasgow office of ScottishPower Energy Retail, with the rest going from the Liverpool office.

ScottishPower, which is owned by Spanish firm Iberdrola, posted profits of £925 million in the first six months of this year and paid chief executive Keith Anderson £1.35m last year.

However, the retail arm of the Glasgow-based energy company, which supplies gas and electricity to almost five million households in the UK, has suffered a fall in profits.

The company complained in the summer that the energy price cap prevented the firm passing on higher energy costs to customers.

They said: “The inability to pass on the high energy costs due to the price cap mechanism continues to lead to a strain on earnings.”

The workers who are losing their jobs earn between £23,000 and £35,000.

One member of staff who is facing compulsory redundancy said: “Teams have been butchered.

“There are 300 jobs going in the restructure and that process will complete in December.

“They are outsourcing to Spain and South Africa, which will save them a fortune.

“There may be more jobs cut next year if they don’t achieve the savings.

“What’s added insult to injury is many of us are going at Christmas and, at the same time, they are advertising hundreds of green jobs.”

ScottishPower Renewables, a more profitable arm of the business, is taking on 1,000 staff in a move described by CEO Keith Anderson as the firm’s biggest recruitment drive.

Ian Perth, of trade union Prospect, which represents some of the workers who are losing their jobs in the retail division, confirmed 300 jobs are going.

“It’s evenly split between the Glasgow and Liverpool offices,” he said.

Scottish Power said it was reviewing its organisational structure.

The Scottish Sun

Energy theft reports soar amid rising gas and electricity bills

Reports of energy theft have soared as Britons face rising bills for electricity and gas, figures show.

With the cost of living crisis mounting, the number of reports made to the Crimestoppers charity has almost trebled since 2017-18 – with a rise of more than 20 per cent in just six months.

The chair of an influential select committee of MPs warned the increase shows the “desperation” of households hit by rocketing electricity and gas prices.

Electricity theft, which pushes up bills for customers, carries a maximum prison sentence of five years, while gas theft is also illegal. Crimestoppers figures show 8,289 reports of energy theft in the UK in the year to the end of July, a rise from 2,876 reports in the 12 months to July 2018.

In the six months to the end of July, there were 4,559 energy theft reports to Crimestoppers in the UK, up from 3,730 in the six months before that – representing a 22 per cent increase when comparing the two periods.

Crimestoppers is contracted by the non-profit Retail Energy Code Company (RECCo) to run the energy theft tip-off service, allowing people to anonymously make reports. RECCo’s website explains: “Crimestoppers securely notify the tip-off to the relevant gas or electricity supplier for investigation.”

Additionally, energy fraud reports to trade body UK Revenue Protection Association (UKRPA) increased by 54 per cent in just six months – from 717 in the six-month period from July to December 2021, up to 1,104 from January to June this year. Police forces in England and Wales received nearly 3,600 reports of “dishonest use of electricity” in the year to March, up 13 per cent year on year.

Peter Smith, director of policy and advocacy at the fuel poverty charity National Energy Action, said: “Whatever the motivations, it’s truly shocking that despite the danger and the criminality of energy theft, it appears to be on the rise.”

The Independent

Thames Water tops league table for highest number of complaints

Thames Water is at the top of a league table charting the number of written complaints made to water firms in England and Wales last year, with the number more than doubling since 2017.

The number of written complaints received by the firm from household customers has risen from 17,039 in 2017/18 to 40,060 in 2021/22, according to the most recent figures from the Consumer Council for Water (CCW). The firm accounted for nearly half (47%) of all written complaints to water and sewerage firms in England and Wales last year. (See Utility Week’s report from last month)

The Observer revealed last week how a 98-year-old woman with end-of-life care was sent a bill by Thames Water warning that she had used the equivalent of more than a million cups of tea over six months. The usage was later found to have been caused by a leak.

Thames Water had 68 complaints per 10,000 connections last year, compared with Wessex Water which had 10 and Anglian Water which had 17. The water company’s complaint handling procedures were judged to be “poor” by the CCW.

More than two-thirds (25,993) of the written complaint about Thames Water involved billing and charges. It also received more than 14,000 complaints about water supply and sewerage service.

Southern Water received the second-highest number of complaints. The number of written complaints received by the firm has increased from 6,259 in 2017/18 to 9,131 in 2021/22. Its complaint-handling procedures were also judged to be poor.

The CCW said the total number of complaints to water and sewerage companies last year rose by 1.5% to 85,238. It said the majority of companies had reduced written complaints, but Thames Water and Southern Water stood out as “poor performers”.

The Observer

Utility Week’s weekend press round-up is a curation of articles in the national newspapers relating to the energy and water sector. The views expressed are not those of Utility Week or Faversham House.