UK government may force energy firms to cut gas, electricity prices

18 December 2008

Energy companies in the UK are facing the heat for refusing to pass on the benefit of the sharp fall in oil prices to consumers. Several ruling Labour Party MPs have demanded a one-time tax on the profits of energy companies even as deputy leader in the Commons Harriet Harman has said the government was considering legislation to force energy price cuts.

The government move follows a coordinated campaign by centre-left pressure group Compass against profiteering by the `big six' energy suppliers who solely look to profit margins at the cost of the consumer.

Gas prices have doubled since 2000 while electricity prices have grown 61 per cent. Energy suppliers too have seen their profits rise from £557 million in 2003 to over £5 billion today.

Households that get gas and electricity supplies from the same company have seen their bills go up by more than £300 over the year despite a big fall in oil prices.

Oil prices have fallen from the $147 a barrel peak of July to below $45 a barrel now, but energy firms continue to charge consumers the same higher rates charged earlier this year. And they seem to be in no mood to cut prices either.
 
The harried government has now no other way than to act.

"The energy companies must pass on the price cuts to consumers - both businesses and families. They must also treat all consumers fairly,'' said Harriet Harman.