1 Introduction
1. The UK's energy system will be subject to significant
changes in the next few years in order to deliver the form of
capacity required in future. Our recent report, Consumer Engagement
with Energy Markets found that public trust in energy companies
was low and there was a clear sense of a lack of transparency
around energy company prices and profits.[1]
If changes in the energy system are to be successful, the Government
and energy companies will need to strengthen public confidence
and trust in their ability to deliver a fair deal to consumers
and protect the most vulnerable, fuel-poor households. DECC's
latest fuel poverty statistics showed that in 2011, 4.5 million
households were in fuel poverty in the UK. Energy price rises
in 2012 and 2013 will have exacerbated the situation for low-income
households.[2]
2. We launched our inquiry on the Floor of the House
on 20 December 2012.[3]
We received 37 pieces of written evidence.[4]
We held four oral evidence sessions during our inquiry. A full
list of witnesses can be found at the end of this report.[5]
We would like to express our thanks to all those who contributed
to our evidence-gathering. As part of our work on this inquiry
we visited Centrica's trading floor and head office in Slough
and also held a Parliament Talks outreach event in Glasgow where
we heard local people's concerns about energy price rises and
fuel costs (see transcript at Annex 1). We are grateful to those
who took the time to meet us and provide us with this first-hand
experience of the concerns people have about energy prices. We
were also supported by two specialist advisers, Marc Ozawa and
Dr Anthony White. We are very grateful for their time and for
helping to explain what is a very complicated topic.
3. In this report, we consider, through an analysis
of energy prices, energy company profits and fuel poverty, what
is being done to ensure consumer protection and fairness in the
energy market. Chapter two looks at the energy price rises since
the middle of the last decade, the factors other than profits
(which we consider in chapter three) which are contributing to
this trend and how energy companies and the Government communicate
this to customers. It also discusses how the retail market could
be made more competitive. Chapter three evaluates whether rising
energy company profits are linked to rising energy prices. It
explores the difficulties in determining this link and assesses
current mechanisms which try to increase transparency. It also
discusses how the wholesale market could be made more competitive.
Chapter four assesses how rising energy prices could exacerbate
fuel poverty, the implications of the proposed new definition
of fuel poverty, and the delivery of fuel poverty policy.
1 Energy and Climate Change Committee, Fifth Report
of Session 2012-13, Consumer Engagement with Energy Markets,
HC 554-I Back
2
DECC, Annual report on fuel poverty statistics 2013, May
2013 Back
3
HC Deb, 20 December 2012, col 1015 Back
4
List of written evidence, p 73 Back
5
Witnesses, p 73 Back
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