Competition inquiry

The full-scale competition review of the UK’s energy market which will be announced later this week is a challenge the industry should welcome. The inquiry will absorb a huge amount of time and effort over the next year but it offers the chance both for the industry to clear its name by removing the cloud of public suspicion over pricing policies and simultaneously for individual companies to examine their own strategic positioning in a market which is changing rapidly.

Of course, the competition review will add to uncertainty and will reinforce the reluctance to invest in new generating capacity, which is already evident, but the sense of doubt will exist in any case, and the review may help to produce some longer-term clarity. In the short term the government will have to find a new mechanism to ensure that supply is adequate to meet demand – and doing so with an expensive plan for emergency electricity supplies. But that is a separate issue from this fundamental analysis Read more

Wholesale gas market faces investigation. Getty

The announcement of an inquiry into the wholesale gas market in the UK reflects the increasing concern about the way in which pricing structures operate in a business with a limited number of powerful players. It would be wrong to prejudge the specific inquiry. What matters is that the sector as a whole needs to regain consumer trust.

From the wholesale electricity business and retail gas supply, to the negotiations between the government and private sector over subsidies to wind and nuclear power generation, there is a culture of complexity with too many decisions taken in private. The commitment to transparency from the new energy minister, John Hayes, is very welcome and long overdue. Read more