Energy industry needs to accept tougher regulation, says SSE chief

April 09, 2014, 12:32 PM GMT+0

Terry Macalister, Energy Editor of the Guardian, attended the latest YouGov-Cambridge Conference and published the following write-up next day:

The chief executive of SSE, one of the big six energy providers, has urged the industry to move away from its confrontational stance and embrace all market reforms that benefit the customer.

Alistair Phillips-Davies also called on the Competition and Markets Authority (CMA) to undertake the widest possible investigation of all aspects of the sector in a bid to clear the air.

"As privatised utilities, we should always view with humility the regulatory, political and public scrutiny on our activities," he argued, adding: "We all have to acknowledge that energy is not perfect and we have to look at reforms that benefit the customer."

He went on: "A market reference [investigation] should provide a platform for achieving greater political and regulatory stability for the Great Britain energy market, for the benefit of customers. It must therefore be broad enough."

The peace overtures from Phillips-Davies, whose company also broke new ground recently by freezing its prices until 2016, contrast with the more aggressive comments in the past from his rivals. Sam Laidlaw, the head of Centrica, was quick to warn about the lights going out when the CMA probe was proposed, saying it would freeze investment in new power stations for another two years.

Phillips-Davies was speaking at an event in London organised by the market research company YouGov and Cambridge University, under the banner of Energy, Politics and the Consumer.

YouGov used the occasion to release a survey showing more than a quarter of the public strongly believed the big six energy companies failed to act in the best interest of consumers and society, while 67% believed the firms operated a cartel.

The poll of 2,000 adults showed customer satisfaction with energy companies is lower than with banks, while over half of poll respondents said they had been forced to turn their heating down or off to keep soaring gas and electricity bills affordable.

The damning results give more support to Ofgem and the CMA, which last week called for a full competition inquiry into the energy market after a period of rising profits and increasing customer dissatisfaction.

Ed Davey, the secretary of state for energy and climate change, said the YouGov poll confirmed what he had been saying to the suppliers that "this is a 'Fred the shred' moment" for the energy industry.

"With the government's action to reduce bills on average by £50, the energy companies have said there should be no prices rises this year unless there is a substantial spike in wholesale costs – and some have gone further by freezing prices for longer.

"And with the full blown competition inquiry proposed by Ofgem, the energy suppliers have a once in a generation opportunity to show people they get it, keep prices down, improve their service and regain people's trust."

Caroline Flint, the shadow energy secretary, said the poll findings underlined why her party was right to demand an immediate price freeze, but expressed concerns that the probe by the CMA could last till 2016. She said there was little comfort for consumers "because it leaves them in the bizarre position of being told that competition in this market is not working and the prices they pay are not fair, but that nothing will be done with it for two years."

In a separate development, more than 100 MPs, academics and businessmen – including Ian Marchant, the former boss of SSE – have put their names to a document urging the European Commission to reject the state aid request from the British government that would enable the building of new reactors at Hinkley Point, Somerset.

The signatories – co-ordinated by Paul Dorfman, senior research associate at the Energy Institute at University College, London – oppose the funding of the reactors for a variety of reasons, including cost and safety, but also for potentially distorting the market against wind and other renewable technologies.

The document says: "The development of sustainable and affordable low carbon energy remains a growing economic sector with huge potential for job creation. To seek to delimit this diversity through state aid support of nuclear power at the expense of other potentially more flexible, safe, productive, cost effective and affordable technologies seems, at the very least, unwise."

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