Yahoo Finance British Gas Boss Set For Energy Inquiry Talks
The owner of Britain's biggest energy supplier will attempt to persuade regulators on Wednesday that millions of its customers are not disadvantaged despite evidence showing that many of them have never switched to cheaper rivals.
Sky News understands that Centrica (LSE: CNA.L - news) , which is the parent company of British Gas, will hold talks with the inquiry panel of the Competition and Markets Authority (CMA) for a crucial oral hearing.
Sources said that Iain Conn, Centrica's new chief executive, will be the last of the bosses of the 'big six' energy groups to meet with the CMA ahead of the publication of its provisional recommendations to reform the market.
The series of hearings come weeks after the competition watchdog published an update on its energy market investigation.
Its statement last month provided some comfort to companies such as Centrica by saying that its analysis provided no evidence that the 'big six' had earned excessive profits from their power generation operations.
However, the CMA said that between 2012 and June 2014, over 95% of dual fuel customers of the six biggest firms could have saved up to £234 by switching tariff.
"The evidence that we have seen to date...suggests that the gross margins that the Six Large Energy Firms earn are higher for customers on the SVT [Standard Variable Tariff] than for those on non-standard tariffs over the last three years," the CMA said.
Centrica's meeting with the inquiry panel is seen as being particularly important because as the market leader in residential gas and electricity supply, it is the likeliest target of any attempt to break up big providers.
The CMA said last month that about 40% of Centrica's domestic gas customers had been with the company for more than a decade, which is likely to prompt questions at Wednesday's meeting about the profitability of these so-called 'sticky customers'.
Mr Conn is already facing a challenging start to his career as Centrica's chief executive, announcing several weeks ago that it was cutting its dividend for the first time since 1997 in the wake of sharp oil price falls and mild winter weather.
The move was designed to protect Centrica's credit rating, but it has since been downgraded by Moody's, the ratings agency.
An overhaul of the energy market is likely to feature prominently during the General Election campaign, with Ed Miliband, the Labour leader, having pledged to freeze energy prices until 2017 if he wins in May.
The political battle over the cost of living has led both sides of the Coalition to promise tough action against energy companies.
Matthew Hancock, the Conservatives' Business and Energy Minister, wrote to the largest energy companies, after which they all announced price cuts, while Ed Davey, the Energy and Climate Change Secretary, has repeated a public threat to break up the 'big six'.
EDF Energy, EOn (Taiwan OTC: 3411.TWO - news) , Npower, Scottish Power and SSE (LSE: SSE.L - news) have all met with the CMA inquiry panel in the last fortnight.
Centrica declined to comment.
