Ofgem aims to get tough with electricity suppliers

The Office of Gas and Electricity Markets is worried that electricity generators may collude to keep prices unreasonably high.

Director general Callum McCarthy says that complex trading arrangements are 'open to manipulation and collusive action'. Recent investigation into wholesale prices in the first two weeks of July found that they were 80% higher than the same period last year.

At the same time, National Power and PowerGen both showed substantial increases in their profits, Ofgem noted.

McCarthy now proposes to insert 'good behaviour' clauses into generators' licenses opening the door to enforcement orders and civil action if prices are raised artificially. Commenting on this plan, energy minister Helen Liddell said: "The Electricity Pool (where wholesale prices are set) has been open to market abuse for too long. Increased prices add significantly to manufacturing costs and jeopardise business opportunities."

Meanwhile, environment minister Michael Meacher has told an audience of scientists that he believes climate change will be one of the biggest issues we face in the next century. Effective control of greenhouse gas emissions, especially the carbon associated with energy generation and consumption, will require measures well beyond anything adopted so far, he warned.

Elliott Chase