MPs to question energy bosses over big price rises

Reuters
An electricity cable is plugged into the mains at a home in southern England
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An electricity cable is plugged into the mains at a home in southern England January 6, 2008. REUTERS/Luke MacGregor

By William James and Sarah Young

LONDON (Reuters) - The chiefs of six companies accused of abusing their grip on Britain's energy market will be questioned by MPs on Tuesday over escalating home electricity and gas prices in a dispute that could affect the next general election.

The issue of soaring energy bills has jumped to the top of the political agenda in Britain since opposition Labour leader Ed Miliband promised to freeze energy bills for 20 months if his party wins the 2015 vote.

It has fanned a wider cost-of-living debate at a time when price rises on everything from utility bills to train tickets have outpaced stagnant wages while a Conservative-led government has cut social spending to close a big budget gap.

Parliament's cross-party energy and climate change committee said it would seek explanations from company executives after four of Britain's six biggest energy suppliers lifted charges for heating homes in the coming winter by more than three times the rate of inflation.

"We will want to see whether the companies can justify their increases in terms of costs and investment or whether it's prima facie evidence of monopoly power," said Peter Lilley, a Conservative member of parliament on the committee.

Even though the economy is reviving, Labour, who are just ahead in most opinion polls, says many Britons are faced with a choice between "eating and heating", and it accusing Cameron's Conservatives of being out of touch.

Energy prices have already risen 24 percent in the past four years, according to regulator Ofgem, ramping up pressure on household finances as wages have lost ground to inflation.

Under pressure to regain the initiative in the energy debate after Miliband's pledge, Prime Minister David Cameron said last week he would cut green taxes partly responsible for surging prices and try to improve competition in the sector.

POLITICAL FOOTBALL

The six companies, who control 99 percent of the retail energy market, have blamed the rises on increased wholesale energy costs, the cost of using the national grid and levies attached to government social and environmental programmes.

The parliamentary committee has called in energy executives before in the past two years - most recently in April - to explore prices, profits and competition in their sector.

But the subject has now become political football and the questioning on Tuesday is expected to be aggressive.

Labour lawmaker Alan Whitehead told Reuters the panel had been driven to convene by the stir over Miliband's pledge to freeze prices and other proposed interventions, including ex-Conservative prime minister John Major's call for a windfall tax on profits, and Cameron's plan to trim green taxes.

Miliband's move capitalised on accusations from consumers and some media that the "big six" energy companies have exploited their dominant position to impose big price rises.

Representatives from EDF Energy, Centrica, SSE, RWE npower, E.ON and Iberdrola's Scottish Power will appear over the course of two sessions on Tuesday afternoon.

Ofgem could be asked to investigate competition in the sector should the panel find that firms have the power to raise prices by more than the increases in their costs, said Lilley.

"I hope it won't just be a 'bash the big six' session...," Whitehead said. "What I hope will be more constructive is to try to delve a little further into exactly what the factors behind the price rises really mean."

(Additional reporting by Karolin Schaps, Editing by Mark Heinrich)

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