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Major Electricity Suppliers Should Be Applying Price Reductions Now

Even if the major electricity suppliers do not apply price reductions now, they should at the very least forego any further electricity price increases.

After all, the profits that have been reported have been generated from the unprecedented rise in wholesale prices - yes, those same wholesale price rises that necessitated the retail price increases in the first place.

Yet they, like all the other major suppliers, seem determined to have their cake and eat it by once again claiming that the retail business is a separate entity from upstream generation.

Those energy giants who operate in both generation and supply gain a massive advantage by not having to go to the wholesale market for their supplies. Their supplies are simply transferred from their generating activities.

Those of us whose only option is to purchase from the wholesale market discover that prices are distorted by virtue of the energy giants' absence. The market is too small to operate properly and is therefore illiquid. The end result is a barrier to the very competition that de-regulation was supposed to create. Like Energywatch we believe there should be a competition commission investigation into whether the market really is working. If prices fail to come down, it will only add weight to the call for market structure change.

The only feasible solution to redress this imbalance would be to force all parties to source their supplies from the one wholesale market which would be likely to drive down prices and lead to a far better deal for the energy consumer.

The European Competition Commission is currently investigating the barriers to competition in gas and electricity markets throughout Europe and is expected to enforce the break up of supply companies who also own the distribution networks. However, if the Commission is serious about creating truly competitive markets it must eventually aim to remove the advantages clearly evident to those suppliers with generating activities.

About the Author: Graham Paul is the Sales & Marketing Director of Electricity4Business Limited. E4B is an independent business electricity supplier

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