Let us make billions or the lights will go out, warns energy industry

Published on Saturday 2 February 2008 14:51

THE trade body for the energy industry says recent allegations of profiteering are a "fallacy" and warned that the alternative to price rises would be power cuts.

Duncan Sedgwick, chief executive of the Energy Retail Association, which represents the "big six" energy firms, said accusations that the industry is profiting excessively were "not borne out by the facts".

He launched an attack on consumer group Energywatch's call for a Competition Commission inquiry into the sector, saying that energy companies need to be left to make a profit or a situation could develop "where the lights go out".

He told Scotland on Sunday: "It is a complete fallacy when people say we're quick to put prices up and slow to bring them down. That is not borne out by the facts. This is just people jumping on a bandwagon of seemingly wanting to criticise the industry for doing the right things long-term. We don't want to be in a position in a few years' time when the lights start going out."

Energywatch last week called for a probe following price increases up to eight times the rate of inflation.

On Friday ScottishPower raised the price of gas by 15% (an average 89) and electricity by 14% (53). Scottish Gas raised prices by 15%, EDF Energy put up its gas prices by 12.9%, and nPower gas prices rose by 17%.

Consumer groups say the price hikes were unjustified given predictions that the energy companies will report annual profits of nearly 5bn for 2007.

But Sedgwick argued that energy companies are having to struggle with rocketing global oil and gas prices. As a result, he said, the percentage increases in profits is likely to remain low.

Companies should be left alone to make a profit and invest in new infrastructure, otherwise they will withdraw from the market, he argued.

Graham Kerr, spokesman for Energywatch in Scotland, said the group took no issue with companies making profits if those profits are reinvested back in the company. "Our concern is it's not only money going back into the business, there's also a fair amount of money going out to shareholders. Shareholders are doing very well, customers aren't."