Ever since Ed Miliband politicised the issue of energy profiteering by pledging a price freeze, the "monopolists have outdone themselves", says Seumas Milne in The Guardian."Squealing that such interference threatened power cuts", one after another has further jacked up prices.
The Big Six, which control 98% of the energy supply, have now increased prices by over 9% blaming green levies and global costs while wholesale prices have risen 1.7% in the past year and profit per customer' has doubled.
What is going on? No one really knows, says The Daily Telegraph. The exchanges between representatives of the Big Six energy groups and MPs this week in the House of Commons were not enlightening. It was supposed to be a "forum for uncovering whether and why the former nationalised utilities still exhibit monopolistic tendencies".
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Instead, it simply confirmed most people's suspicions that their "financial practices are too opaque". The energy bosses said price rises were due to matters outside their control and that, in any case, average profit margins of 5% were modest and they needed to invest in infrastructure, but many questions remained unanswered.
In addition to more competition, a "deep audit of energy policy, its subsidies and market corruption is desperately needed", says Simon Jenkins in The Guardian. "Otherwise none of us will know where to begin."
The issue is politically "toxic" for David Cameron, says Philip Stephens in the FT. Energy firms are now almost as unpopular as banks. The biggest threat to Cameron's electoral success in 2015 is the perception that he stands for the privileged few, not the many.Siding with the energy bosses won't help.
Cameron should heed Sir John Major, who said tackling high bills should be a priority, even if Miliband's proposed price freeze is unworkable. Prices could be cut by abolishing green taxes and taking insulation subsidies off our bills, but nationalising the industry would "not make bills magically cheaper", says John Rentoul in The Independent.
Wholesale prices are rising; energy companies have to buy energy well in advance, and a 5% margin is roughly what Tesco makes in a "ferociously competitive grocery market". The laws of economics can't be ignored.
-
House prices rise 2.9% – will the recovery continue?House prices grew by 2.9% on an annual basis in September. Will Budget policies and ‘higher-for-longer’ rates dent the recovery?
-
Nvidia earnings: what to expectNvidia announces earnings after market close on 20 November. What should investors expect from the semiconductor giant?
