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Four of Britain's big energy suppliers came under fire from MPs today over their plans to cut their gas and electricity prices for residential users.
Two of Britain's big six suppliers, British Gas and Scottish and Southern Energy (SSE), have already announced price cuts, and the cross-party energy and climate change committee asked senior executives from the remaining four when they would follow suit.
The heads of Eon, npower, EDF Energy and Scottish Power said they were optimistic price cuts were on the way, with E.ON UK's commercial director, Jim Macdonald, promising: "We are likely to move soon." However, they said details of the timing and size of the cuts was commercially sensitive.
Committee chairman and Labour MP for Scunthorpe, Elliot Morley, observed tartly that: "Fine words butter no parsnips."
The firms said wholesale prices had risen far more sharply than increases to residential customers, and that they had been helping consumers by keeping prices down.
British Gas is reducing gas prices by 10% later this month, while SSE will trim electricity bills by 9% and gas prices by 4% towards the end of March.
SSE's chief executive, Ian Marchant, said that from his company's perspective he hoped those rivals that had yet to move would not do so, allowing him to win some of their customers. "That's probably not the right answer for UK plc," he said, adding that those that had yet to cut prices should "get off their back sides and do something".
The committee's questions threw up divisions between the two UK companies – British Gas, which is part of Centrica, and SSE – and their competitors, which are foreign-owned.
Phil Bentley, managing director of British Gas, complained the UK energy market was far more open than those in continental Europe, with European companies able to buy gas in the UK in a way British Gas could not in continental Europe.
"Over the last 120 days the interconnector (linking the UK and the continent) has been exporting gas from the UK to the continent for more than 100 days."
The companies were asked what profits they made in which areas, with Bentley and Marchant pointing out that, as UK quoted companies, they had to make far greater disclosure of the performance of their respective businesses. "How much tax are our competitors paying in the UK?" Marchant asked. "Between [SSE] and [British Gas] we will be paying more than £1bn."
All the companies were asked if the credit crunch was having an impact on their ability to raise money to invest in new power generating capacity to replace existing coal and nuclear plant, which would have to be taken out of service over the coming years. Up to 16 gigawatts of generated power need to be replaced, leading to concerns about a "generation gap".
The executives said their companies were able to raise money in the current climate, but shareholders were concerned about issues such as how long it would take to get planning permission for new plant, particularly nuclear ones, and by the uncertainty over the future price of carbon.
The executives were asked if there was a contradiction between the pressure on them to reduce prices and the expectation to invest billions of pounds in new plant.
Marchant said: "There are times when one wonders why one bothers because it seems in my case I am the most hated man in Scotland," adding, to laugher, and in a reference to MPs' grilling of the former chiefs of the Royal Bank of Scotland and HBOS 24-hours earlier: "Well, maybe he appeared here yesterday."
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