Independent UK: Power to the people: watchdog bows to pressure for energy inquiry (price gouging)

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Power to the people: watchdog bows to pressure for energy inquiry
Victory for consumers as regulator launches inquiry into gas and electricity suppliers
By Martin Hickman, Consumer Affairs Correspondent
Friday, 22 February 2008


The UK's energy companies could be fined billions of pounds after a wide-ranging inquiry was launched yesterday into claims that consumers are being ripped off.

Armed with sweeping powers under the Enterprise Act, investigators acting for the regulator Ofgem will have the right to raid offices and seize documents.

They will be looking for evidence that the inflation-busting price rises announced this year have been co-ordinated or that smaller rivals are being thwarted from competing by hidden transactions. Ofgem announced the inquiry after British Gas revealed a 500 per cent rise in profits to £571m, four weeks after increasing its prices.

The company and four others – EDF, E.On, nPower and ScottishPower – say that they have been forced to raise bills by about 15 per cent because of soaring wholesale prices affected by the booming oil price. But consumer groups complain the rises have been suspiciously similar and warn that low-income customers are being forced into having to choose between eating and heating. If any of the players in the £24bn-a-year industry is found guilty of colluding to fix prices or engaging in other forms of anti-competitive behaviour, Ofgem can impose a fine equal to 10 per cent of worldwide turnover.

As a result, Centrica, which owns British Gas and has a turnover of £19bn, would face a maximum fine of £1.9bn, while other companies such as EDF, owned by the French state operator, and the German power giant E.On, would face similar fines.

Ofgem, which revealed the new inquiry just seven hours after Centrica announced its profits to the Stock Exchange, stressed yesterday it had no evidence to suggest that any supplier had acted illegally. .......(more)

The complete piece is at: http://www.independent.co.uk/news/uk/home-news/power-to-the-people-watchdog-bows-to-pressure-for-energy-inquiry-785585.html