The Energy Retail Association responds to the BERR select committee hearing of 24 June and explains why the British energy market operates in the way it does

Tuesday 24 June – Duncan Sedgwick, Chief Executive of the ERA, which represents the six major energy suppliers in Great Britain, has launched a strong defence of the industry, following ERA members’ appearances at the BERR Select Committee:

‘Nobody likes the fact that life is getting more expensive. Wholesale energy prices are rocketing because of unprecedented global demand for oil, gas and coal. Our dwindling North Sea reserves have meant that energy companies are increasingly reliant on gas from European wholesale markets, where prices are higher.

However, Britain’s competitiveness means energy suppliers are protecting consumers from the excesses of the volatile wholesale gas market. Between 2004 and 2007 wholesale gas prices rose by 170% but household bills increased by an average of 95% during this period. It is because of this competition that 100,000 people are choosing to switch supplier every week, making the energy industry more dynamic than broadband, home insurance, credit cards, mobile phone and mortgage brokers.’

Mr Sedgwick went on to say:

‘Energy suppliers give more direct help to their most vulnerable customers than any other industry. Suppliers recently announced an extra £225 million for the period 2008 – 2011 in voluntary contributions, in addition to the £150m already allocated and the £1.4 billion energy efficiency commitment to help customers most at risk. There is no other industry that spends that much money to reduce demand for their own product and provide more direct help to their vulnerable consumers.

If we are serious about keeping the lights on for future generations then companies need to be given the freedom and opportunity to innovate and invest for the long term. The introduction of smart meters, the growth in renewables and the provision of the right energy mix require us all to face up to difficult choices.’

                                                                                                                               
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