MP asks Ofgem to investigate The Big Six
Ed Davey - he's the energy secretary - has asked Ofgem to investigate the profits that the Big Six energy companies have made. If it is found that they've been ripping us off, he'll consider breaking them up into little pieces.
Seeing as Davey is a Lib Dem in a Coalition run by Tories, the likelihood of them letting him do anything of great importance is slim-to-piss-all, so the Big Six inevitably didn't lose a wink of sleep over this news.
The minister said the debate about energy prices had focused on the cost of electricity, when really, we should be looking at gas prices. In some instances, companies are making five times the profit on gas than they are electricity.
He said that Ofgem should do a "full-scale market investigation", adding: "I want them to think radically. There could be a number of remedies, including the breakup of some of these companies if they have abused their market power."
This comes on the back of Ed Milliband promising to go after the energy companies, saying that, should Labour win the next election, they'll freeze prices (you'll notice those prices aren't dropping) and reform the market.
Davey wrote a letter to Ofgem's chief executive, Andrew Wright, and singled out British Gas pointing out that there is evidence that they tend "to charge one of the highest prices over the past three years, and has been on average the most profitable". He continued: "Clearly you will wish to consider whether this is prima facie evidence of an issue in the market and so whether it merits a market investigation reference with the whole gamut of potential remedies that could follow including a breakup of any companies found to have monopoly power to the detriment of the consumer."
"Alternatively you may of course conclude that no action is needed or potentially some intermediate measure which can be taken by the sector regulator."
Ofgem, it is over to you.
**UPDATE** Stocks have slumped after the news of a potential breaking up of the Big Six. More here.