Wilson warns of deregulation rip-offs

The UK Energy Minister, Brian Wilson today warned that consumers are missing out on the benefits of greater competition in energy markets, despite wholesale reductions in the price of energy.

Consumers in the UK are missing out on the benefits of greater competition in energy markets, despite wholesale reductions in the price of energy, said Energy Minister Brian Wilson today.

On the eve of a meeting of the EU Energy Council in Brussels, Mr Wilson advised European counterparts to learn from the UK experience of energy liberalisation, so that consumers would benefit from the creation of a single EU energy market.

‘Our open energy markets in the UK have provided real benefits to consumers, but it is increasingly clear that the full wholesale price reductions have not been passed on, particularly to domestic consumers. It is important that our Regulator takes action here,’ said Mr Wilson, speaking to the Power 2003 conference in Madrid today.

‘This is a lesson for our EU partners as liberalisation evolves. Low wholesale prices do not automatically translate into a better deal for consumers, it requires constant regulatory vigilance,’ added Wilson.

Mr Wilson referred to a recent report by the National Audit Office (NAO), which had reported on the operation of the energy market under the New Electricity Trading Arrangements (NETA).

The NAO had found that while wholesale prices had fallen by up to 40% since NETA was introduced, such price savings had not been passed on to domestic consumers.

‘Domestic consumers who have not switched suppliers have largely missed out on the claimed benefits of competition,’ said Mr Wilson.

‘I find this unacceptable. There may be additional savings to be made for those who have become adept at switching suppliers, but there are many, including the elderly and vulnerable, for whom that process may be unfamiliar or unwanted.’

EU member states will move towards a single market for electricity and gas by 2007, enabling over 370 million customers to choose their supplier of energy. Mr Wilson warned European counterparts of the likely sales tactics energy companies would employ to win business.

‘EU-wide armies of gas and electricity salesmen will doubtless become a feature of the liberalised market, just as they now are in the UK. But the benefits of the competitive market must not be restricted to those who choose to switch suppliers. Apart from anything else, the costs involved in that process will at some point threaten to outweigh the savings which a competitive market is capable of producing.’