UK: Energy companies dodgy sales tactics pressure customers
Date: 25 Jul 2011
A parliamentary select committee has said that energy companies are using sales trickery to push people into switching energy suppliers on the doorstep. It called for the firms to compensate people who were mis-sold gas and electricity contracts.
In a report, the energy and climate change select committee said that new deals offered were sometimes worse than the terms the customers received on their current tariff. It said that vulnerable customers were being particularly targeted by unscrupulous salesmen in order to earn commission.
Nearly the whole energy market in the UK is held by six companies. One of the 'big six' providers, Scottish and Southern Energy, recently suspended all doorstep selling having been found guilty of malpractice in a court judgement. The committee called on the remaining companies to follow suit.
The political temperature for energy companies has been raising in the face of big increases in energy prices over recent months and the impact these have on fuel poverty. Scottish and Southern, for instance, raised gas prices by an average of 18 percent over the last year. The companies blame higher wholesale gas prices, but the situation is making commentators focus very sharply on profits declared by the company, and any sign that the group is abusing a virtual monopoly.
The more difficult atmosphere comes at a time when energy companies need to make long term decisions for future energy capacity which will be controversial. For instance, Scottish Power and Scottish and Southern are the targets of a boycott call by some groups opposed to the large wind power development the companies are pursuing. Centrica, on the other hand, is under pressure from the City for its planned move into new nuclear plants.
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In a recent article, the BBC's economics editor Robert Peston highlighted the fact that in 2012 the chances are that the economy - punch drunk as it is from the various flavours of debt crisis it has been pummelled with over the course of the year - will be hit by the collapse of a major bank and / or government.
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