Energy prices to rise

British Gas and NPower have announced inflation busting price rises for the coming winter and other companies are likely to follow.

Media coverage has been very hostile. None more so than the Morning Star with:

“We’ve heard them, memorised them but we still don’t believe them because we know that the energy oligopoly is making grotesquely obsessive profits and handing out cosy dividends to shareholders while workers, pensioners and people living on benefits are having to tighten their belts. Many poor pensioners died last winter, forced to choose between eating and heating their homes after British Gas raised gas and electricity tariffs by 18 per cent and 16 per cent respectively in August 2011. Its pleas of “sorry, we had no choice” were put into perspective when the company declared profits of £742 million, up 24 per cent.”

Harsh, but largely accurate. Closer analysis tends to show that profits are not generated by the power companies retail operations. But that argument won’t impress many.

Ofgem come under further criticism:

“The spurious regulatory body Ofgem is as much use as a chocolate teapot. Its role is to monitor supposed “competition” and oligopoly spokespeople assert that Britain’s energy market is the most competitive in the world. The problem is that they compete to see which company can generate most shareholder value, not which of them can hold down consumer prices.”

Of course Ofgem doesn’t regulate retail prices, but their many reviews into the retail market have failed to tackle the root causes of market failure. The fuel poor will be the biggest losers of this winter’s price hike.

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