Energy secretary throws down ‘trust’ gauntlet

UK Energy Secretary Ed Davey today told the bosses of British energy companies that “government and society will not accept a closed shop in energy”.

He said that “trust between those who supply energy and those who use it is breaking down” and to remedy this he called for an “opening up” from utilities.Ed Davey

He said this meant “opening up the wholesale markets, opening up the retail markets and opening up your books”.

Davey (pictured) was speaking at the annual conference of EnergyUK, the trade group that represents energy companies in Britain, on the day that EDF became the fifth out of the so-called ‘Big Six’ UK utilities to increase its prices.

While he made a point of the efforts being made by energy firms to ensure that “a Britain of blackouts remains a memory of our past, not part of our future”, he said consumers feared “big energy companies are taking them for a ride when bills go up”.

“Fair or not, they look at the big suppliers and they see a reflection of the greed that consumed the banks.”

He said trust was a key element in helping to “ensure that we drive investment into the system ” not scare it off or freeze it out”.

“By far the biggest energy security challenge is to make sure that we create one of the most competitive and attractive electricity investment markets in the world that drives the transition to a cleaner, low-carbon energy system.

“But it is imperative that the markets, both wholesale and retail, deliver for the end-user. Because ultimately markets that fail to meet the test of affordability for customers are markets that are broken.”

He said “customers are not just cash cows to be squeezed in the pursuit of a higher return for shareholders. And frankly, the latest round of bill rises have not been fully and openly justified.”

Davey’s speech comes against a backdrop that has seen energy prices hit the headline across Britain and dominate debate in the House of Commons.

Part of the furore is over the levies included in energy bills that goes towards renewable energies, with some MPs calling for this to be stripped out and added to general taxation.

Indeed, EDF’s price rise today of 3.9 per cent is significantly lower than those of its competitors and the company says this is because it is anticipating action being taken over the green levies.

The leader of the Opposition, Ed Miliband, has said that if Labour were returned to power at the next general election in 2015 it would freeze energy prices.

Davey addressed both the green levies and the price freeze in his speech. “Some on the right wants us to turn our back on our social and environmental responsibilities by axing programmes to help the fuel poor and boost green energy. The left is in danger of reverting to type by bashing business, and proposing to fix prices.

But neither of these approaches actually solves the problem in the long-termࢀ¦ price fixing would crush competition rather than encourage it.”

He said the level of support for investment incentives for renewables “will remain as planned and as published because these are essential for investor confidence in the renewables sector and our commitments to a low-carbon economy”.

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