POLITICS

Energy Firms 'Deliberately Inflated' Costs Per Family By £150

02/01/2014 12:15 GMT | Updated 23/01/2014 15:52 GMT
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Households have been left up to £150 out of pocket over the last three years by energy giants deliberately inflating the price they pay for electricity from their own power stations, Labour has claimed.

The "Big Six" energy giants, British Gas, SSE, E.ON, EDF, npower, and Scottish Power, paid £4bn more for power than market rate, according to shadow energy secretary Caroline Flint.

Flint accused the firms of overcharging customers and deliberately paying over the odds in order to increase profits in other parts of their companies.

Flint 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.

However, Energy UK, which represents the big six firms, said that Labour's research was wrong as its 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.

"It is also worth pointing out that there isn't a single 'wholesale' price. Different companies buy at different times, from different people, for different prices depending on demand, forecasts and a whole host of other factors. These different business practices mean that each energy company will be paying a different amount for its wholesale energy."

Labour's attack on energy prices comes energy secretary Ed Davey called for Britain to be part of a fully integrated European power market to bring bills down.

The Liberal Democrat insisted that 10% could be shaved off energy bills if a giant network of underground and under-sea cables was built across Europe, which could transfer vast quantities of energy between countries.

Davey told The Independent: "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. We need Eastern and Central Europe to be better connected with Germany and France and we need the Iberian peninsula to be better connected through France."