Energy News

Government to intervene in energy price debate

Monday 7 January, 2008

Chancellor of the Exchequer Alistair Darling has demanded a meeting with energy regulator Ofgem, in a move to ascertain exactly why the npower price hikes were necessary.

Wary of the negative effect that household bills of over a thousand pounds will have on the economy, Darling has written to Sir John Mogg, Ofgem chairman, and Alistair Buchanan, its chief executive, asking how such price increases can be justified.

This follows npower’s 17% rate rise last week, which was blamed on rising wholesale costs. In a provocative move, the Chancellor has requested explicit details of how the relationship between wholesale prices and consumer charges works.

Ofgem, whose role is to regulate fuel prices, rather than impose pricing controls, has been quick to defend UK fuel prices this week, stating that UK consumers currently enjoy the ‘lowest domestic fuel costs in Europe.’

It is hoped that Alistair Darling’s intervention will embarrass energy suppliers into voluntarily lowering prices.

Chris Eagle, commercial manager at EnergyChoices.co.uk, heralds the move as ‘positive’, and questions whether energy suppliers are still working progressively:

"The decision to immediately raise energy prices shows a distinct lack of innovation in thought on the supplier’s behalf. It’s disappointing that in the face of rising wholesale prices the energy suppliers first move is to hit their customers wallets, hence the government intervention is welcomed. Suppliers still appear to be making huge profits, so how can these increases possibly be justified?"

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