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Energy companies: bigger fines...or more competition?

By Paul Goodman
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Screen shot 2013-04-04 at 17.29.44The Financial Times (£) conceded this morning that "For SSE, the £10.5m fine is hardly onerous".  The Sun wrote that "perhaps SSE isn’t bothered by the penalty. It represents just one per cent of its profits".

That was the range of reaction across Fleet Street to a record OFGEN fine, in response to conduct that drew from Michael Fallon, no enemy of capitalism, an unambiguous response: “I have rarely seen a worse case of consumers being misled".

It would be easy to call for a bigger fine - though an unscrupulous company would have little difficulty in passing its costs on to consumers.  What's really needed are more of the market disciplines for which Mr Fallon is enthusiastic.

In his, The Atomic Clock, Tony Lodge, a frequent contributor to this site, made the point that both the sale and generation of electricity are morphed together under our present supply system, which is dominated by the Big Six.

Until or unless there is more transparency and liquidity in the system, consumer choice will be unnecessarily constrained.  And while it is constrained, the risk of further SSE-type behaviour will be greater - and the choice consumers have will be smaller.

Fuel and electricity prices are a pressing problem for voters - especially workers who rely on cars and older people on fixed incomes.  As I've said before, action on energy prices is even more important to them than tax cuts.


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