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Centrica seem to win whether wholesale costs are high or low says Consumer Focus

by Steve Beasant on 29 July, 2011

Responding to Centrica’s interim results announced today Audrey Gallacher, Director of Energy at Consumer Focus, said: 

‘Centrica seem to win whether wholesale costs are high or low. Retail profits margins may have been reduced by recent increases in wholesale prices – but as they are also major gas and electricity wholesalers, they can still make healthy profits at the other end. 

‘Consumers will be more worried by their increasing bills than which part of an energy company makes the most money. Given Centrica profits remain strong, consumers are bound to question whether recent large price hikes were necessary.

‘The most important issue is not whether Centrica’s profits go up or down. What matters is whether the energy market works for consumers and if it does not, what can be done to make it work. 

‘Consumers should be able to be confident that the energy market is fit for purpose and deserves their trust. That won’t preclude companies making profits, which will be needed to  invest in essential infrastructure changes.  But it should mean that they do so in a market that is fair, open and competitive.’ 

Consumer Focus is highlighting that with six companies, who are both suppliers and wholesalers, dominating the market it is hard to see where the competitive spark that will provide a better deal for consumers will come from. At the very least the consumer watchdog thinks we need greater transparency on whether retail prices are fair. British Gas is more transparent than other suppliers but it is still impossible to tell if the scale of price rises are warranted. 

Consumer Focus believes a number of measures are necessary to reform the energy market including:

  • A competition review of the structure of the energy market and moves to improve transparency so consumers can know whether their bills are fair
     
  • Measures to boost the number of new entrants to the retail energy market
     
  • A clear strategy to help cut consumers’ bills and help those in fuel poverty. This must mitigate the impact of necessary costs for improving our energy supply, through effective energy efficiency, smart meter and social assistance schemes.
     
  • An end to cold call doorstep energy sales, with clear and urgent agreement between industry, Government and consumer groups on how face-to-face sales should be taken forward in future
     
  • An end to complex and confusing tariffs
     
  • The Big Six must treat their customers fairly, right from how they market products through to how they treat people who cannot afford to keep warm 
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