UK ENERGY FIRMS

The decision by Britain’s biggest energy firms to send junior executives to face a grilling by MPs at this week’s select committee inquiry into soaring utility bills beggars belief.

The distinct absence of energy bosses, who are paid mega-buck salaries, goes to the heart of important issues of power, responsibility and accountability in this country. The nonappearance of chief executives also suggests that energy firms have learned little from recent history about the relationship between large consumer businesses and the customers they profess to serve.

It is not inconceivable to think that the absent bosses had in mind the cross-examinations endured by bank chiefs (including Fred Goodwin of RBS) by MPs in the wake of the government bailout of two of Britain’s major banks. Mr Goodwin – formerly Sir Fred, who has since been stripped of his knighthood – and his colleagues had to make humbling apologies for their actions as MPs held them to account.

If energy bosses had hoped to body-swerve a similar scenario as they are being held to account for inflation-busting price hikes, then they have fundamentally misunderstood their privileged position in British society, and their responsibilities in relation to regulations set out by Parliament.

Energy firms cannot take the view that their business is a private matter between them, their shareholders and their consumers. If that ever was the case – and the apparent powerlessness of the OFGEM regulator has often made it seem so – it is certainly not the case now.

Energy bills and the way they are being calculated now stand at the nexus between industry, politics and austerity. The ‘cost of living’ factor is a key voter concern and has become a major political issue in the run-up to the 2015 General Election. The main topic of political discourse was thrown open ever since Ed Miliband threw down the gauntlet at the Labour party conference, promising a price freeze and cutting electricity and gas bills if he made it into Downing Street. For the Conservatives, former prime minister Sir John Major floated the notion of a windfall tax on the energy firms, should a particularly harsh winter produce bumper profits. In Scotland, the Scottish Nationalist Party produced its own riposte, with a pledge that energy bills would be reduced by 5 per cent in an independent Scotland. The political battle over energy is heating up.

With the cost of living set to continue to be the most pressing political concern, Britain’s energy bosses need to accept they can run, but they cannot hide. They need to engage with this process – by listening, explaining and being open to market reform – or they will end up on the receiving end of both political and public indignation.