The Big 6 have been in the news a lot lately and not entirely for the right reasons. We hear so much about them, but the information usually only goes as far as price rises.

So who are these energy behemoths that fuel our gas boilers and heat our showers in the morning?
After privatisation on March 31st 1990 the energy industry changed dramatically. As a result 6 companies have emerged as key players in the UK energy market.

Npower
Npower supplies gas and electricity to around 7 million customers in the UK and employs over 11,000 staff. It predominantly produces energy using gas-fired, coal and oil powered stations with a small proportion being generated via renewable energy.
During the 1990s it acquired several smaller companies such as Midlands Electricity, Calortex, and Independent Energy and eventually became Npower in 2000.
They are currently a member of the ‘Percent Club’ which requires them to invest more than 1% of their pre-tax profits back into the community.

British Gas
British gas (including Scottish Gas & Welsh Gas) is the largest energy supplier in the UK and delivers gas and electricity to over 16 million domestic and commercial users. The company also operates in the U.S and Canada with recorded revenues of over $22 billion in 2010.
It currently operates 8 gas-fired power stations but also produces energy via various methods including the largest offshore wind farm in Europe. The giant wind farm covers an area of 20 square km and has 54 turbines.

EDF Energy
EDF energy was founded in 2002 and is owned by French state operated EDF SA. EDF stands for Électricité de France. The UK arm employs over 15,000 people and supplies gas and electricity to almost 6 million homes and businesses.
EDF has made a number of acquisitions including London Electricity, SEEBoard and British Energy. They continue to be a big supporter of green initiatives with EDF operating over 20 wind farms in the UK.

E.ON
E.ON supplies gas and electricity to over 9 million homes in the UK. They operate over 20 windfarms, but also utilise hydropower schemes in England and Wales.
It is currently part of the largest investor owned energy service company in the world delivering gas and electricity to over 26 million customers, their headquarters are based in Germany. The group reported revenues exceeding $92 billion in 2010.
E.ON used to be known as Powergen but was taken over in 2002 and renamed.

Scottish Power
Scottish Power was founded in 1990, employs 24,000 staff and supplies gas and electricity to over 5 million customers in the UK. It is also a subsidiary of Spanish utility company Iberdrola.
It is currently in partnership with Sainsbury’s. So if you buy your energy through Sainsbury’s you are in fact using Scottish Power.
Iberdola bought the company in 2007 for £11.6 billion and effectively incorporated it into its structure making it the third largest energy supplier in Europe.

SSE
SSE supplies 10 million customers with gas and electricity in the UK. They were the first company to be awarded the UK Domestic Electricity and Gas Supplier in Customer Satisfaction prize. They were also responsible for building the first deep water wind turbine in the UK.
SSE have also invested over £850 million in renewable generation, refurbishment and various other construction projects.

Guest Article by Louise Goldstein

One of the UK’s major energy companies has shocked its customers with a huge 19% rise in its gas prices and a massive 10% uplift in electricity tariffs.

Scottish Power has rocked the energy sector with the scale of its rises and will bring down upon itself the wrath of consumer groups already wondering how people can cope with such inflation.

The rises will come into effect on 1 August, but will only affect those not on fixed deals. This has prompted a number of experts to recommend people to sign up fixed deals as quickly as they can.

It’s feared that others will follow where Scottish Power has led and that the other big five energy companies in the UK will make similar rises soon.

British Gas, EDF, E.ON, npower and Southern and Scottish will make announcements soon as to their pricing intentions in the run up to winter. And British Gas has made strong hints that rises are inevitable, given the continually increasing wholesale costs.

But the extent of the Scottish Power increases has stunned customers and energy pundits alike. For the average bill, it has added about £170 which means over a year, the bill has climbed from £1,150 to £1,320.

Scottish Power has over five million customers and has never been adverse to leading the way in announcing price rises. Industry observers had noticed that for the last few weeks the company had been dropping hints about price changes, but the scale of the change has shocked many.

The company were quick to lay the blame firmly at the door of rising wholesale costs, but consumer groups were less impressed with that view, saying that the protection of margins was the real reason behind the rises.

People are being told to get themselves into long term fixed agreements before they might be withdrawn over the coming months.

In a case of almost shutting the door after the horse has bolted from the stable, the regulator of the energy industry is looking at the whole question of whether companies are justified in using wholesale price fluctuations as an excuse to raise their prices, especially when it appears to many that they don’t cut them when they fall again.

The energy companies claim that the situation is more complicated than people believe and that the process of buying energy some months ahead is complicated, and does not always follow what the wholesale market is doing.

One thing is for sure though, Scottish Power won’t be alone for long.

Guest Article by Neil Camp 

Energy prices are never far from the headlines and now a new story has emerged which puts the subject right back at the top of the political agenda.

An Ofgem Energy Enquiry is being launched into the UK’s power prices. The mega-regulator is concerned that some of the energy companies are acting anti-competitively when increasing domestic heating bills. They are concerned that three companies have raised their prices within days of each other and all have chosen a hike between seven to nine per cent.

The three energy companies are Centrica (British Gas), ScottishPower and Scottish & Southern.

Ofgem’s worries focus on a lack of transparency when it comes to the financial figures reported by the energy companies. This alledged lack of transparency is leading some commentators to fear that the energy companies are disguising the fact that they might be profiteering, because many customer prices appear to be rising at a faster rate than the wholesale prices.

Because of its fears, Ofgem has asked for increased powers from the Energy Secretary to be able to properly assess the situation. Currently, it can only order a referral to the Competition Commission.

But the energy companies have hit back, saying that they have done nothing wrong. A spokesman for Energy UK, which represents the UK’s major suppliers, told the media that:
“We have nothing to hide and believe in transparency in this complex marketplace. The review is the latest in a long line of investigations into the energy market in recent years and no previous investigation has found anything to concern the competition authorities.”

They went on to add that:
“It is a complex market, made more so in recent years by the growing number of environmental obligations on the energy sector. Customers bills today are made up far more than just the cost of the gas and electricity they use, but an array of costs associated with the need to decarbonise our power supplies.”

In other words, the case for the defense from the energy companies is that it’s the Government’s plentiful green taxes, imposed over recent years, which are actually causing the price increases.

But for many the energy companies stand accused of making too much money when wholesale prices are fluctuating. Some of the company’s profit margins have risen by a staggering 38% which underlines the fact that money is being made somewhere.

But the energy companies insist that wholesale gas prices have risen over 25%, a statement which ignores the fact that although fuel bills are now the same as they were roughly in the middle of 2008, then the wholesale price of gas was 50% higher than now. The argument is set to continue and power prices will remain in the headlines for some months to come.

Guest Article by Neil Camp 

Energy industry regulator Ofgem has announced that it has launched “misselling” investigations into four of the UK’s largest energy suppliers. The four named are nPower, Scottish power, Scottish and Southern Energy, and EDF Energy.

The investigation concerns whether the four energy suppliers are complying with new regulations after a recent Ofgem probe.

What’s more, Ofgem has established a “Hotline” with Consumer Direct, so that any customers with examples, or evidence of misselling can tell their woes. The number to reach this service is 08454 04 05 06. Customers are being urged to call if they are at all concerned about the sales tactics of the four energy companies when negotiating energy contracts. This might include face-to-face dealings, or by telephone.

Ofgem is keen to review any evidence of misselling.

The regulator is throwing its weight around after its recent retail market probe and tougher obligations placed on energy suppliers.

The Ofgem Senior Partner, Markets, Andrew Wright, said:
“Suppliers have existing obligations to detect and prevent misselling and new licence conditions were brought in following our probe to further increase protection for customers. We expect all suppliers to comply with these tougher obligations but if our investigations find otherwise we will take strong action.”

It was last October when the new Ofgem obligations were introduced. It meant that the energy suppliers had to be more proactive in the prevention of misselling to customers face-to-face and over the telephone. Key were the conditions that if the companies were selling face-to-face, then they are obliged to provide their customers with an estimate before any agreements, or contracts are signed. Furthermore, most customers should get a comparison of the supplier’s offer with their current deal.

Ofgem acknowledged at the time that these newer obligations were tougher than those used within the general consumer protection law, but argued that the importance of the issues raised in energy deals were such that it warranted tough sanctions.

Both Ofgem and Consumer Focus have also published a leaflet with has been designed to give consumers helpful advice and guidance when it comes to dealing with energy suppliers.

Ofgem goes on to say that just because they have launched the investigations, does not mean to say that all, or any one of the four energy suppliers involved has either broken a condition of the new rules, or has broken the law.

The regulator has had to fine companies before following similar investigations. In 2008 nPower was stung for £1.8 million and £2 million was levied on London Electricity (which is now part of EDF Energy) in 2002.

Should Ofgem get upset with one of the companies supplying the UK market, it has the power to levy a financial penalty of up to 10% of the company’s total turnover.

Such a fine would make a sizeable dent in any one of the four energy suppliers named by Ofgem in this latest investigation.

Guest Article by Neil Camp