Energy giants are facing a crisis of trust that could leave them as publicly disgraced as the banking industry was after Fred Goodwin's mismanagement of RBS left it needing a £45 billion state bailout in 2008, Energy secretary Ed Davey warned.
Speaking at the Energy UK conference, Davey said the industry faced its own "Fred the Shred moment" to avoid "the reputational fate of the banks", warning them not to treat customers like "cash cows".
"It is so difficult for people to work out what exactly they are paying for, that they fear the big energy companies are taking them for a ride when bills go up," he added.
"Fair or not, they look at the big suppliers and they see a reflection of the greed that consumed the banks."
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Davey's warning comes hours after EDF became the fifth of the 'Big Six' energy giants to unveil a price rise, announcing prices would rise 3.9% in January.
EDF's price hike comes after a series of above-inflation increases by other big firms like British Gas, Scottish Power, SSE and nPower.
How Does Goodwin's Salary Compare To Energy Company Bosses?
- In 2008, RBS CEO Fred Goodwin was paid a £1.3 million salary, but did not get a bonus. Phil Bentley, chief executive of British Gas, got a basic salary of £1.3 million in 2010, and an extra £2.7 million in share options.
- In 2007, Goodwin's salary was just £1.29 million; however he got a £2.86 million bonus. Sam Laidlaw, chief executive of Centrica, who recently swore to forego his bonus, was paid £2 million salary and a further £2m in shares.
John Robertson, Labour member of the Commons Energy Commitee, told the Huffington Post UK: “I think they hit the ‘Fred the Shred’ moment years ago and I have known for a long time that energy firms are ripping their customers off to pay off shareholders and eye wateringly high salaries and bonuses to those at the top.
"Sadly, the energy barons seem to be even worse than the representative of bankers’ greed. For every £1m salary there are thousands in fuel poverty and people are dying as a result of the greed of the energy firms.”
The energy industry hit back, with Energy UK saying: “The energy industry is already working hard to ensure everyone can keep the lights on and stay warm this winter. The best way to do this is for everyone to work together which is why this tit for tat Punch and Judy show of insults is so unproductive.”