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Energy: Prices

Energy and Climate Change written question – answered on 24th November 2011.

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Photo of Eilidh Whiteford Eilidh Whiteford Shadow SNP Spokesperson (International Development), Shadow SNP Spokesperson (Women), Shadow SNP Spokesperson (Work and Pensions), Shadow SNP Spokesperson (Agriculture and Fisheries)

To ask the Secretary of State for Energy and Climate Change

(1) what assessment he has made of the effect of energy companies offering discounted prices to new customers only on competition in the energy market;

(2) what discussions he has had with Ofgem on the issue of energy companies offering discounted prices to new customers only;

(3) whether he has made an estimate of the number of energy companies operating loss-making tariffs in order to attract new customers; and if he will make a statement.

Photo of Charles Hendry Charles Hendry The Minister of State, Department of Energy and Climate Change

DECC Ministers and officials regularly meet with the Regulator and energy suppliers to discuss a range of market issues.

Following their Probe in 2008, Ofgem introduced new rules to prohibit undue discrimination and to ensure cost reflective pricing between payment methods. In order to allow suppliers to compete for new customers, these rules allow suppliers to offer time limited, introductory tariffs.

Competition is vital to ensure consumers get the best possible deal in the marketplace. Part of ensuring effective competition is opening the market to new entrants and it is therefore important that small suppliers are not disadvantaged if larger suppliers are cross-subsidising loss leader deals to attract new customers by charging their 'sticky' customers higher prices and we have therefore asked Ofgem to look into this issue.

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