Bullies on the grid
— by Juliette Smith @ 03 Jun 2008
The top six British energy companies are “failing to compete” and some are stockpiling cheap North Sea gas in summer so they can sell it back at twice the price in the winter months.
As a result prices are rising faster in Britain than almost anywhere in Western Europe. Many of the companies holding British gas consumers to ransom are foreign suppliers rationing the country’s own gas, and the reason they can get away with it is that the same companies were never ordered to build large strategic gas storage supplies within the UK.
The UK government is mainly to blame that the country has such tiny gas holding facilities. Labour was repeatedly warned by civil servants that strategic reserves needed to be augmented.
There is enough storage to supply the country with gas for only 13 days, compared with 99 days in Germany and 122 in France.
Industry groups said today they want the European Commission to break up the monopoly control of Continental power supply by a few giants.
They say that unless urgent action is taken, Britain could remain vulnerable to gas rationing and higher prices for at least another ten years.
The firms in the firing line are RWE of Germany, which owns nPower in the UK, E.on of Germany, which has a UK subsidiary, and EDF of France, which also operates in the UK.
These firms not only own vast quantities of gas in storage, but also control pipelines that could bring supplies from Russia to the UK.
This stranglehold gives them enormous power over supplies and prices.
UK energy prices have jumped 13.6 percent in the past year, adding hundreds of pounds to domestic bills. This compares with 9.5 per cent in Germany, 12 per cent in France and just 2.8 per cent in the Netherlands.
And there are warnings that UK household bills could rise by a further 25 per cent this autumn.
Yesterday large- scale gas users warned a House of Commons Committee that Britain’s energy needs were at the mercy of foreign businesses.
Some manufacturers face a 100 per cent rise in energy bills when their annual contracts come up for renewal in the autumn. This could drive many to the wall, bringing up to 100,000 job losses.It has been clear for 20 years that North Sea supplies were dwindling and that the country would rely more on gas held in storage and imports during peak demand in the winter.
Industry bodies told MPs their problems are compounded by the fact the ‘big six’ power companies within the UK - British Gas, E.on, Npower, EDF, Scottish & Southern Energy and Scottish Power - are failing to compete.
The official consumer body Energywatch has called for a Competition Commission inquiry, saying the big six do not fight for customers based on price or service.
The net result is that there is a price gap of just £30 a year between the cheapest and most expensive firm based on a dual fuel contract for householders.