M&C Energy Group (M&C Energy Group), one of the UK's largest purchasers of energy, has warned that British Gas' profits announcement, following yesterday's results from ScottishPower, will further anger consumers facing huge energy bills.

The comment was made by M&C Energy Group's energy analyst, David Hunter, on this morning's BBC Radio 5's Wake Up To Money, as parent Centrica struggled to defend British Gas' operating profits of £595m.

David Hunter said: "Suppliers are naive if they believes consumers will fall for the ‘we buy energy in advance' as a valid justification for not passing on huge reductions in wholesale energy prices when British Gas, and other suppliers, passed on hikes in wholes prices in 2008 within a matter of months.

"The reality is that wholesale prices have been in freefall for over a year and suppliers have been very slow to pass on any savings until after the peak heating season has passed."

Since Summer 2008, wholesale gas prices have dropped from a peak of over £1 per therm to around 38p - electricity from £90 per MWh to around £37 - falls in the region of 60%. Meanwhile costs to homes are as much as 35-40% higher for gas and 10-15% more for electricity than before the huge price rises of 2008.

Mr Hunter added: "British Gas have been the first to cut prices, even if only on gas and by less than they should be. This, is not as they would like consumers to believe, the energy market working for the consumer. It is a clear cut case of the Big 6 energy suppliers' stranglehold on the generation and supply of energy.

"Competition just isn't working for the consumer - they have a choice of high prices or high prices. The small and insufficient reductions they will probably make over the coming weeks are a case of 'follow my leader' - the regulator OFGEM has already indicated that the others often wait for British Gas as first mover.

"Energy UK, the "Big 6" suppliers' body, has tried to defend their members' pricing structures with a series of smoke and mirrors, however the profits announcements really tell us what is going on - and no amount of spin will get away from the fact that these companies are enjoying huge and increasing profits paid for by homes and businesses in the UK.

"Energy companies are cashing in on market conditions - they win from production when wholesale prices go up, and when they come down they win by delaying retail price cuts.

"For years, OFGEM has claimed the market is working when it is glaringly obvious that people are simply paying too much to light and heat their homes. The regulator created the market, and has defended it for too long.
"We welcome plans for increased liquidity in the wholesale markets announced recently. This will give independent suppliers a fighting chance of competing with the dominating 'Big 6', whether through new routes to market, forced energy auctions or restrictions on self-supply.

"What we need is competition and transparency, not smoke and mirrors".

/ENDS 


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