09 May 2003
Electricity companies were this week attacked for failing to pass on to consumers the 'substantial' cost savings brought about by government-led reforms in the sector.
The National Audit Office, the government spending watchdog, found that companies could be hoarding cash saved from the complex reforms to supply markets introduced five years ago.
In a report published on May 6, auditors found that the New Electricity Trading Arrangements (Neta) were 'associated with a fall in the wholesale price of electricity' – estimated at 40% since 1998 – but that the impact on bills paid by many domestic consumers had been more limited.
In particular, retail customers who had not switched supplier since the market had been decentralised had benefited much less from falling prices because suppliers had offered others incentives to switch.
Energywatch, the independent gas and electricity consumer watchdog, immediately blasted the electricity companies for failing to freeze or reduce prices during a period of falling energy costs.
A spokesman told Public Finance: 'The cost savings from Neta identified by the NAO are substantial. Questions must therefore be asked about where this cash is going. It is not seeping through to the public.'
The NAO report points out, however, that a few suppliers had experienced financial difficulties because they anticipated profits at pre-Neta prices. 'The bottom line, however, is that there are cash benefits out there that have not impacted on customers in a beneficial way,' an NAO spokesman said.
PFmay2003
