14th Aug 2014 08:29
LONDON (Alliance News) - UK power generator SSE PLC Thursday said it has an appetite for reform of the UK energy market, and suggested that government policy is paid for by taxation rather than through customer bills as one potential reform.
In a response to a recent statement by Competition and Markets Authority, which is investigating the UK energy market amid complaints that customers pay too much for energy, SSE also called for a review of regulations that it says complicate bills and tariffs, and a look at whether the different regional costs of transporting electricity could be passed on to suppliers as one national charge to make price comparisons easier.
It also wants the probe to examine whether the so-called carbon price floor - a UK tax on fossil fuels used to generate energy - could be reformed to improve longer-term liquidity in the energy market.
Energy market regulator Ofgem referred the UK energy market to the Competition and Markets Authority for a full investigation, asking it to investigate the barriers to competition inherent with the "big six" suppliers, on June 26.
The Big Six energy firms are Centrica PLC owned British Gas, E.ON, EDF, Npower, ScottishPower and SSE.
Ofgem added in June that it expects the CMA to look at the relationship between the supply business and generation arms of the six main suppliers, to study the barriers to entry and expansion for suppliers and the profitability of the "big six".
An issues statement from the CMA set out the scope of the investigation and initial theories on what could be adversely affecting competition in the energy market. These were broken down into four 'high level theories' including the possibility that the vertical nature of the UK energy market led by the Big Six energy suppliers harm the competitive position of the junior suppliers, or that energy suppliers do not face enough incentives to compete on price due to inactive customers, supplier behaviour and/or regulatory interventions.
The CMA is required to publish its final report by December 25, 2015 and has set out a timetable setting out a schedule for the various stages of the investigation.
Energy prices have become a contentious political issue of late, with bill increases toward the end of 2013 blamed on a combination of higher wholesale prices, rising costs for maintaining infrastructure, and the cost of the government's green energy taxes.
In December, UK Chancellor George Osborne announced that customers of the Big Six energy companies would see an average GBP50 reduction in their bills based on reductions in green and social levies.
Prime Minister David Cameron later announced a review of energy pricing and competition in the Commons, coupled with a pledge to cut green taxes next year.
Opposition leader Ed Miliband has said Labour will freeze energy prices for two years if elected to power in 2015, prompting energy companies to warn that they may not be able to fund investments and warnings from critics who say companies may raise prices even more ahead of any freeze.
"The Great Britain energy market is highly competitive but SSE continues to have an appetite for reforms that further benefit customers. For example, we believe that reviewing and amending energy bill regulations so that customers' bills are simpler or taking Government policy costs off those bills are two possible reforms that could benefit customers," SSE Chief Executive Alistair Phillips-Davies said in the company's statement.
"Over the coming few months SSE will keep trying to ask the right questions and remains committed to trying to find the right answers for our customers in an open and transparent way," he added.
SSE shares were up 0.5% at 1,473.95 pence Thursday morning.
By Steve McGrath; [email protected]; @stevemcgrath1
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