Big Six energy firms 'deliberately inflated' price paid for electricity from their own power stations

It's left customers out of pocket by up to 150 over the last three years Caroline Flint says Big Six paid 4bn more for power than market rate Firms accused of paying over odds to increase profits in other divisions Energy regulator says they are 'looking into' accusation, but that the market is not 'transparent' enough to know for sure
By Daily Mail Reporter PUBLISHED: 04:44, 2 January 2014 | UPDATED: 10:34, 2 January 2014

'Deliberate inflation': Shadow energy secretary Caroline Flint said the so-called Big Six paid 4billion m ore for pow er than the m arket rate

Energy firms deliberately inflated the price they paid for electricity from their own power stations leaving customers out of pocket by up to 150 over the last three years, it was claimed today. The so-called Big Six - British Gas, SSE, E.ON, EDF, npower, and Scottish Power - paid 4billion more for power than the market rate, according to shadow energy secretary Caroline Flint. The Labour politician accused the companies of paying over the odds to increase profits in other divisions of their companies or doing deals that were bad for customers. She told The Guardian : These figures reveal the full extent of the way consumers have been

overcharged for their electricity. Energy companies always blame wholesale costs when they put up bills, but it now looks like they could have deliberately inflated prices to boost profits from their power stations. The time has come for a complete overhaul of our energy market. Labour will break up the big energy companies, put an end to the secret deals and force them to do all of their trading on the open market. Labour's analysis compared the price paid for electricity by the energy giants, the weighted average cost of fuel, with the average market price a year ahead provided to them by small supplier First Utility. But Energy UK, which represents the big six suppliers, told The Guardian that Labour's research was wrong because the figures could not be compared. A spokesman said: It also covers losses, the energy element of reconciliation-by-difference (RBD) costs and balancing and shaping costs incurred by the supply. The additional costs included in the weighted average cost of fuel make them a totally different figure to the basic wholesale market price.' Ofgem, the government's watchdog for the energy industry, said today they were 'looking into' the accusations, but said the energy markets were so so difficult to analyse that they could not know for sue. Ian Marlee, a senior partner at the organisation, told the Today programme: 'What we identified in our recent work was that actually there isnt enough transparency to be able to actually look at that.' However, he added that planned reforms to the industry would help eliminate any problems by increasing competition and removing the possibility for such loopholes. He said: 'Weve effectively created more transparency... [before the reforms] there wasn't enough trading going on at the point at which people wanted to buy energy. 'Were making it far easier for independent suppliers to buy the electricity they need to compete with the big six.' The accusation from Labour comes as Lib Dem Energy Secretary Ed Davey called for Britain to be part of a fully integrated European power market to bring bills down. The Liberal Democrat dismissed Labour's plans for a price freeze and insisted a giant network of underground and under-sea cables allowing energy to be shifted between the UK and mainland Europe would push down prices. He said there was an urgent need to build a giant network of electricity interconnectors across Europe, allowing vast amounts of energy to be moved between countries, driving down prices - shaving a possible 10 per cent off bills.

Urgent need: Energy Secretary Ed Davey has called for Britain to be part of a fully integrated European pow er m arket to bring bills dow n

Mr Davey told The Independent: Literally in the last three or four years, there has been a complete change in the differential between the North American price for gas and energy and the EU price for gas and energy. That represents a strategic change in the terms of trade and is very significant. The EU needs to respond to this very quickly. Although there are some gas interconnectors already linking countries within Europe and electricity interconnectors between the UK and France, the Netherlands and Ireland, Mr Davey called for swift action to boost the system to ensure Britain can compete with the United States, where energy prices are far lower. We need much better grid interconnectors around Europe to enable energy to flow across the EU. Connecting the UK with mainland Europe and different parts of the periphery of Europe with central Europe, he told the newspaper.

ENERGY WATCHDOG: BILL REFORMS MEAN 'THERE ARE SAVINGS OUT THERE'
The government's energy regulator has said that changes to energy bills coming into force today will show consumers that 'there are savings out there' and stop them being 'bamboozled' by complicated tariffs.

'Bam boozled' no m ore: Ian Marlee of Ofgem , pictured, said energy m arket reform s w ould help consum ers

The changes brought in by watchdog Ofgem mean that a wide array of tiered plans and discounts which often did not provide the savings people expected - have been banned. Now energy companies are limited to offering four tariffs for gas and four for electricity, which is meant to make it easier to compare companies and access the best deals. Hailing 'the most radical set of reforms to the retail and wholesale market since competition began', Ofgem senior partner Ian Marlee told the Today programme that 'this market is getting easier and there are savings out there they can make. He said: 'Were responding to what consumers have told us. What they want is that combination of choice and simplicity and thats what were delivering. 'Putting all this package of reforms together is actually about making this market much more competitive so that theres appropriate pressure on prices, profits and quality of service for consumers. 'The real message to consumers today is this market is getting easier and there are savings out there they can make.' However, Ofgem was criticised by consumer group Which? for not going far enough to help customers. A statement said that the reforms are 'a welcome step in the right direction', but 'do not go far enough... at a time when millions are struggling with the cost of living.' This is why the Government should intervene with more radical measures including simpler pricing, greater transparency and scrutiny of the cost of energy policies, and the separation of supply from generation businesses. 'More must be done to keep prices in check and give consumers confidence that the price they pay for their energy is fair.

Comments (140)
Share what you think Newest Oldest Best rated Worst rated Loading... enemde, corby, moments ago And what will be done about it...............NOTHING..........because the government are in on it as well!

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VOTE UKIP, TIME FOR CHANGE TIME FOR UKIP, United Kingdom, 5 minutes ago Re-nationalise the power companies, the government sold them off to cheap anyway, and now we are paying the price!!!!

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Click to rate Nigel can, cheshire, United Kingdom, 21 minutes ago Caroline Flint a Labour mouth piece who constantly mouths off lies

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Click to rate Terry, Chichester, 41 minutes ago Secretary of State for Energy...under the last Labour Government.......Ed Milliband.....did prices go up each year...yes...did he do anything to regulate prices.....no.... Labour are in no position whatsoever to make any comment about energy prices.....they have no credibilty on this and most other subjects. Everyone remembers what happened under Labour.....borrowing, debt, spending, debt...."Sorry we've spent all the money, there's none left..."...Liam Byrne Labour Chief Sec to Treasury.

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Click to rate Dave, Oban, 43 minutes ago And we're constantly being told that the energy companies need to 'invest in new facilities' - isn't this what shareholders are for? Issue more shares and use the proceeds from them to 'invest in new facilities' - THEN let those shareholders reap the rewards. As it is, owning shares seems to be a win-win for those who can afford them.

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Click to rate MrWrighty, La La Land, United Kingdom, 56 minutes ago So the Energy regulator says that the market is not transparent enough to know if they paid too much. Hang on, the prices for Gas and Electricity are available on the open market through trading, if the prices at these times are higher from their own suppliers against the open market traded prices then surely that is evidence enough. These companies should always be buying at the lowest possible rate.

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Justin McMahon, Uckfield, 1 hour ago Ah yes, this is the Caroline Flint who famously said, when speaking of politicians making baseless promises, ''..... well, hot air isn't going to keep pensioners warm this winter, is it?'' Some mothers.....

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Click to rate Truthsayer, Brighton, United Kingdom, 1 hour ago Privatisation = worse service, profits for the few, less for the rest And this government is still privatising the NHS - can't wait till the next election. Labour all the way this time!

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James, Lancashire, United Kingdom, 1 hour ago

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It will be no different under labour. They won't have the money to renationalise, just as they left it during their last tenure. 1 5 Click to rate

john c, Essex, United Kingdom, 57 minutes ago Yeah ...they would solve everything wont they ? 0 2 Click to rate jason69, Durham, United Kingdom, 1 hour ago Oh really ? Turned over by the power companies , what a surprise ! Tory ideology selling off everything for fat profit while the consumer gets stuffed ! Nothing changes and as proved now clueless Dave just spouts ' switch supplier ' , he may as well be more honest and say stuff the bill payers of the UK , I might actually respect him more !

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Click to rate Alvelon, Melbourne Australia, Australia, 1 hour ago """OH""" THE POWER COMPANY'S, WERE SOLD OF BY THE CONSERVATIVES, AT BARGAIN BASEMENT PRICES. THE GOVERNMENT DID NOT OWN THEM TO SELL. JUST LIKE THE RECENT ROYAL MAIL SELL OF. I BELIEVE ALL WERE JUST SCAMS, TO MAKE A FEW PEOPLE VERY WEALTHY. WE only, have to look at what has happened, to the productive British industry's, since all the privatization being done. LOOK AT WHAT HAPPENED TO RUSSIA. Albert of Alvelon.

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Malcolm, Huddersfield, United Kingdom, 44 minutes ago The last liebour shower were in for 13 disastrous years, why did they not renationalisation it. 0 1 Click to rate delman666, london, United Kingdom, 37 minutes ago are you saying that the british car industry or electronics industry would be around today if the government hadn't "sold" them off ? NO what caused the failure of british industry was the unions ..IF you are old enough to actually have been around at the time you would know this ...take for example this little story ..when you got phones ONLY through the GPO i ordered a lime to be installed in a flat ..the line was already there all that had to happen was for it to be made active and the engineer to come and connect a phone as you couldn't buy a phone you had to have one from them ...the waiting time was three months ..when they finally got round to me at 5:30pm of the day of the appointment i was told he couldnt fit it because he wasnt left handed and i had to remake an appointment for a left handed engineer again ...another 4 months passed before i got a phone .. the continuous trikes by unions destroyed industry bnoth public and private in the UK NOT thatcher 1 1 Click to rate The views expressed in the contents above are those of our users and do not necessarily reflect the views of MailOnline.

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