Shaking up the Energy ‘Big Six’

Published: 8 April 2014

I think it would be almost impossible not to be aware of the latest controversies surrounding the rising costs of energy in the UK, with the ‘Big Six’ energy firms hitting the front news pages and channels daily. Following an increase in energy prices of 37% in three years (eight times the rate of earnings) Ofgem has finally decided to refer the sector to a competition enquiry that could potentially lead to a breakup of the major players’ Supply and Generation businesses with the aim of providing clarity to the way in which they operate and their profit-making.

I am in no doubt that the political spotlight and media storms have been enormous contributors to this latest Government measure, but will the review really solve the root cause of fuel-poverty and the soaring costs of energy? Undoubtedly, we all want to pay less for our energy and to have clearer visibility over the way in which our bills are calculated. Also, any initiative that has the potential to help so many households in the UK out of fuel poverty should be supported with gusto. However, will the ‘Big Six’ investigation provide us with the solution? This, I cannot answer but there are many other factors that we, as a nation, should be aware of.

At the same time as the review, the current Government is proposing to lower energy bills by reducing the “green taxes” that fund fuel poverty work across the UK. An example is the Energy Companies Obligation (ECO) scheme that provides energy-efficiency measures, such as new boiler installations and insulation to low-income households.

Furthermore, it is estimated that the Ofgem investigation could take up to two years to complete, which could have significant implications on our energy security whilst we are in a critical phase of improving our ageing infrastructure. I wonder how the investigation will affect investor confidence at a time when £110 billion of new infrastructure investment is needed. In two years time, will we be back-pedalling in a race against time to build new power stations before the lights go out? With Ofgem’s predictions that Britain’s spare electricity capacity could fall as low as 2% by 2015-2016, this should be a huge concern. On the flipside, there is a high consensus that an independent process will help to secure investor and consumer confidence, not just in the short term but also in the much longer term.

It remains to be seen whether the investigation will be a positive step that will clear the myths surrounding the energy market and save our pockets, or a measure that will further stifle the nation’s much-needed infrastructure investment. I hope for the former and that soon we will be rejoicing in the cost-savings that we have made on our energy bills, which can then go towards the rising costs of cable, transport and food. Another subject entirely.....!

I co-lead the Energy Practice at Berwick Partners, where we recruit senior leaders into the Energy sector. We also hold regular ‘Perspectives on Energy’ leadership events, which bring together senior executives and industry leaders to share their views and thoughts on the challenges that the UK faces in terms of energy security and supply. From investors and start up businesses, to larger corporates in the sector, Energy Market Reform has been widely debated, and the opportunities and challenges for attracting and retaining talent to this ever-evolving sector are increasingly complex.

Our next event is taking place in May where we will be joined by a range of senior HR and Resourcing professionals to discuss the skills shortage and diversity agenda in line with this.

If you would be interested in attending future “Perspectives in Energy” events or finding more out about the offering of the Energy Practice at Berwick Partners then please contact Victoria Jordan

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