Harry Cockburn: Centrica’s “blackout” threat is short-term posturing

The British energy market is in a sorry state. Businesses and families are at the mercy of the Big Six energy suppliers, which control 95% of the market. Prices have risen at up to eight times the rate of earnings, and have gone up a staggering 55% in a decade.

Customers are furious, from manufacturers to pensioners, everyone is having to cough up more. Recent figures have revealed that an astonishing 90% of consumers think the energy market requires examination.

Announcing the sought-after investigation into the market, the energy regulator, Ofgem, yesterday suggested “tacit co-ordination” between the Big Six when it came to setting prices.

Unsurprisingly, the Big Six are not happy. As things stand, they run the market, set the prices and reap the rewards. The biggest of the Big Six, by quite a considerable margin, is British Gas. The energy giant has a 40% market share in UK gas provision, and 25% in electricity.

The investigation has prompted a hysterical reaction from Centrica, owner of British Gas. Centrica chief executive, Sam Laidlaw, has said that the investigation could halt investment in the sector and lead to blackouts.

This form of blackmail, designed to cripple urgently required action, is a poor effort to maintain the status quo.

Firstly, Laidlaw is wrong. According to Energy Secretary Ed Davey, who dismissed Laidlaw’s claim as “absolutely, totally wrong,” there are already 14 power projects in the pipeline for the UK over the next 15 years.

Secondly, Laidlaw’s empty threats merely prove that there is something to hide and is an effective admission that the energy market is indeed “broken”, as recently described in a letter to Ofgem from Which? and the Federation of Small Businesses.

Does Laidlaw think this is a sensible way to win and keep customers?

In the long term, businesses need access to dependable affordable power. The Big Six is not delivering this, and government plans, on both the left and right, to deal with energy problems are a shambles.

In Germany and in the USA, large power-hungry firms have begun to generate their own energy from renewable resources. Companies in the UK have begun to take notice. With energy prices rising, could we see a swing towards self-sufficiency? If so, then Sam Laidlaw’s problems have only just begun.

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