So said the Energy and Climate Change Secretary Chris Huhne in his speech to the Lib Dem conference yesterday.
However, to encourage small, new companies you have to look back to the start of competition in the gas and electricity supply markets. New, small companies came in then and took people’s money by offering cheaper payments. They then failed to issue bills or statements to people to let them see how much fuel they were using and work out if they were in credit or debit. These companies failed to invest in a billing system that would do this working out. They had to be “taken over” by the bigger companies and customer’s transferred.
I worked for British Gas during this period and I know that hundreds of thousands of people did not get proper bills for 2 or more years thanks to this early competition. That’s how we’ve ended up with 6 companies, you have to be big to invest in proper billing systems. When British Gas went into the electricity market it had to buy a licence to use on of the Regional Electricity Company’s billing system and pay for some customisation.
For any new, small company to come into the market now, they will first have to invest several millions of pounds in getting a billing system in place before they can sign up any customers.
Mr Huhne said that new companies would be encouraged by:
“Cutting red tape so they can grow bigger.
Making it easier for them to buy and sell electricity in the wholesale market.
And with Ofgem, we are cracking down on any bad practice that could smack of being anti-competitive.
It’s not fair that big energy companies can push their prices up for the vast majority of their consumers – who do not switch – while introducing cut-throat offers for new customers that stop small firms entering the market.
That looks to me like predatory pricing.”
What he left out is the need for any new, small company to invest in a proper billing system. That costs a lot of upfront money. And that, I guess, will prevent any new entrant.
“We want to encourage new small companies to come into the market”
So said the Energy and Climate Change Secretary Chris Huhne in his speech to the Lib Dem conference yesterday.
However, to encourage small, new companies you have to look back to the start of competition in the gas and electricity supply markets. New, small companies came in then and took people’s money by offering cheaper payments. They then failed to issue bills or statements to people to let them see how much fuel they were using and work out if they were in credit or debit. These companies failed to invest in a billing system that would do this working out. They had to be “taken over” by the bigger companies and customer’s transferred.
I worked for British Gas during this period and I know that hundreds of thousands of people did not get proper bills for 2 or more years thanks to this early competition. That’s how we’ve ended up with 6 companies, you have to be big to invest in proper billing systems. When British Gas went into the electricity market it had to buy a licence to use on of the Regional Electricity Company’s billing system and pay for some customisation.
For any new, small company to come into the market now, they will first have to invest several millions of pounds in getting a billing system in place before they can sign up any customers.
Mr Huhne said that new companies would be encouraged by:
What he left out is the need for any new, small company to invest in a proper billing system. That costs a lot of upfront money. And that, I guess, will prevent any new entrant.