Financial News

  • 26 June 2014, 15:38

Centrica Boss Welcomes 'Watchdog Referral'

The chairman of Britain's biggest energy supplier has told Sky News he welcomes an expected referral of the sector to the UK's competition watchdog.

Rick Haythornthwaite, who chairs the owner of British Gas, Centrica, said it was clear there was a lack of trust in the energy market, making it important that the Competition and Markets Authority provided an objective view.

He said: "There's a lack of trust in the system but, most importantly, there's a lack of a commonly-held, independent data set from which we can rebuild the trust.

"And I trust the CMA to provide an objective independent view taking the sector forward because we need to solve some pretty important things together."

Both energy companies and Ofgem itself are keen to de-politicise the sector ahead of next year's general election.

The Labour leader, Ed Miliband, shocked energy companies but won support in opinion polls when, during last year's Labour Party conference, he announced an incoming Labour government would freeze energy bills.

This has subsequently led to suggestions that energy companies have been reluctant to pass on recent falls in wholesale energy prices on the basis it will be difficult to raise prices subsequently ahead of the election.

Mr Haythornthwaite stressed, though, it was important for the CMA to look at as wide a picture as possible rather than focussing on the narrow issue of consumer bills.

He added: "What is really important is to look at it [the sector] as a whole.

"There's a lot of discussion about wholesale prices, but there's more than just that.

"Although they're going down right now with the warm winters, spring and early summers, the environmental costs are going up, distribution costs are going up and everyone needs to understand the basis of that.

"Equally, I think it's important to understand the role that government plays and the regulator in turning around this sector."

Mr Haythornthwaite disputed that, because none of the major suppliers had yet passed on recent falls in wholesale energy prices, it suggested the energy market was not efficient.

He went on: "In an efficient market, all the competitors have to decide what their target customers need. Ours say they're interested in price and predictability, in what is today an uncertain world, and it's not uncommon for some to believe in buying gas going forward.

"And so what is most important in a competitive market is that customers understand what's on offer to them, can make a choice based on the pure facts and can switch quickly. I hope, when the CMA looks at it, they'll understand there are lots of players in the market.

"We aren't free to create our own creative position through our prices and offering and we certainly can't switch quickly enough. Centrica is absolutely committed to being transparent to ensuring our customers' ability to switch quickly."

Centrica is facing a major overhaul of its top management later this year, with finance director Nick Luff set to leave to join publishing company Reed Elsevier by the end of the year.

At the same time, Chris Weston, the managing director of British Gas, will shortly leave to become chief executive of the temporary power supplier, Aggreko, while the City is buzzing with speculation that Sam Laidlaw, Centrica's chief executive for the last eight years, is poised to leave.

However, Mr Haythornthwaite insisted this did not mean Centrica was "rudderless", as one City analyst recently suggested. He said: "The bigger question I wanted to ask, when I first joined, is there strategic momentum?

"We have strength in depth, our strategy is clear and the company is driving it through. Sam is leading it and we will manage [his] succession in a measured fashion."

He said he had "no doubt" Centrica would find a good candidate for the job if Mr Laidlaw did decide to step down.

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