French-owned firm EDF Energy have been responding to criticism, as energy companies in the UK are hitting their customers with double-digit price rises.
A government consumer watchdog has queried the difference in the price paid by French customers for their electricity against that charged to their UK counterparts.
The difference in pricing has been estimated in official government figures as around £110, or 25 per cent of UK bills. It costs an average of £442 a year for electricity in the UK against £332 for those supplied by EDF in France.
EDF says the answer is quite simple, calling into question the UK government’s continued commitment to nuclear energy, claiming that 80% of French energy is nuclear based while 75% of UK energy is fossil fuel based. It is this dependence on fossil fuels in the UK that makes the process and ultimately the price more susceptible to fossil fuel price increases.
The UK government renewed its commitment to nuclear power in January 2008, but it will not be until around 2020 that we start to see the extra generating capacity come online. How the UK government deal with this discrepancy is an issue, as they want the UK consumer to get the best deal on one hand, but need EDF’s financial muscle to develop the new nuclear power in the UK.
EDF was the first leading energy company to announce price rises for its five million domestic UK customers, of 22 per cent for gas and 17 per cent for electricity, two weeks ago. It was followed last week by British Gas, which increased prices for gas customers in some regions by as much as 44 per cent. Scottish Power is expected to announce double-digit price rises for its 5.2 million gas and electricity customers in the coming days. E.ON, npower and Scottish & Southern Energy (SSE) are also thought to be preparing further rises to household and business bills in the coming weeks.
We reported this month that the Business and Enterprise Select Committee ruled out price fixing by the big six suppliers. Chairman Peter Luff however did state that there were “very real problems in the energy markets at all levels”. The main problem cited was that the UK market is a comfortable oligopoly between major companies, where it is too “easy for players to make informed judgments about the behaviour of their competitors. This alone can distort competition without any actual collusion occurring”.