The U.K. power and gas market “manifestly” isn’t working for consumers, Prime Minister Theresa May said in her strongest signal yet that she’s preparing to intervene to contain price hikes by the so-called “Big Six” utilities.
“Our party did not end the unjust and inefficient monopolies of the old nationalized energy corporations only to replace them with a system that traps the poorest customers on the worst deals,” May said at the Conservative Party Spring Forum in Cardiff, Wales, on Friday. “So we are looking very closely at how we can address this problem, and ensure a fairer deal for everyone. We will set out our plans very soon.”
The remarks are a shot across the bows of the country’s biggest energy suppliers, adding to pressure that was ratcheted up earlier in the week when Business and Energy Secretary Greg Clark said the “time is up” for utilities that raise energy prices. Five of the Big Six — SSE Plc, Electricite de France SA, Innogy SE, Iberdrola SA and EON SE — have raised tariffs in recent months, with only Centrica Plc’s British Gas unit keeping a freeze on rates.
Government must “support competitive markets and an open economy: that means recognizing where markets are not working for customers, and being ready to step in on their behalf, so that consumers get a fair deal,” May said. “One market that is manifestly not working for all consumers is the energy market.”
The Competition and Markets Authority said in 2015 that British consumers overpaid on their bills by 1.2 billion pounds ($1.5 billion) a year from 2009 to 2013 by not changing suppliers.
Until now, the government has relied on softer measures to put pressure on the utilities, encouraging the growth of smaller competitors, and getting the energy regulator, Ofgem, to publish a league table of suppliers to show consumers how much money they could save by switching provider.
Centrica has fallen 7.4 percent this year, the third-worst performer in the Stoxx 600 Utilities index that has gained 0.9 percent in the same period. SSE has dropped 3.4 percent.
“The vast majority of consumers, especially those with the lowest incomes, are on the most expensive tariffs,” May said. “Relying on switching alone to keep prices down is clearly not working.”