Energy experts at the University of Sheffield have warned that MPs' recent findings into the high levels of UK energy prices are superficial and that urgent action is needed to protect consumers.
Their warnings come at a time when energy bills in the UK are set to reach a record high.
Research carried out by Professor Philip Wright and Dr Ian Rutledge, from the University's Management School, contradicts the main findings of the recent Bu
siness, Enterprise and Regulatory Reform (BERR) Committee. They believe that the report does not go far enough in addressing the energy problems in the UK and that the only way forward for the benefit of the consumer is to reintroduce price control regulation.
In its report published on Monday (28 July 2008), the BERR Committee concluded that greater liberalisation and transparency in mainland Europe's gas and electricity markets "would do more to improve UK market conditions than any other domestic or international initiative."
However, Professor Wright and Dr Rutledge have provided substantial evidence to the Committee stating that price control regulation is required to protect domestic consumers from being overcharged under the cover of rising wholesale prices. They also believe that rate of return regulation would be a better option than the previously favoured price-cap form of price control regulation.
One thing that the University of Sheffield researchers do agree with the BERR Committee on is that consumers switching energy supplier is ineffective as a way of curbing company power. Their evidence shows that the loss of customers has not prevented companies from increasing profits.
Professor Wright said: "Companies involved in the market have arranged their affairs so that they can sustain high and rising profits whatever the level of their final prices to households and small businesses. Companies can therefore be observed to make more money with fewer customers—hardly a punishment for driving their customers to switch."
"The MPs' report was correct when it stated that higher gas and electricity bills would have serious consequences for millions of households. However it did not look at the bigger picture in terms of providing real solutions for the benefit of the consumer."
"With households already feeling the pinch and with energy bills at a record high, there is a real sense of urgency for the government to step in and take action."
The full article contains 395 words and appears in n/a newspaper.
