A question of greed: Davey hits out at ‘big six’ energy firms
Ed Davey will send the government's clearest warning to the energy sector yet later, when he tells energy bosses they risk becoming the next 'Fred the Shred'.
The energy and climate change secretary will use his speech at the Energy UK conference of company bosses to warn the 'big six' they risk losing public trust altogether if they do not change their approach.
It follows E.ON's decision to raise its prices by 6.6%, more than double the rate of inflation, earlier this week. Its chief executive Tony Cocker had pledged to MPs to avoid price rises for as long as possible in his appearance before the energy and climate change select committee last month.
Davey will acknowledge energy companies need to make profits because they needed to be able to continue to invest in the UK's energy infrastructure.
He was expected to add that "those profits cannot come at the expense of the elderly, the vulnerable, and the poorest in our society", however.
Davey will insist: "Customers are not just cash cows to be squeezed in the pursuit of a higher return for shareholders."
His speech makes clear the problem is one of trust in the energy companies, which is "breaking down" because customers struggle to understand what they are paying for.
"They fear the big energy companies are taking them for a ride when bills go up," he is expected to add.
"Fair or not, they look at the big suppliers and they see a reflection of the greed that consumed the banks."
He will warn the energy firms they face a "'Fred the Shred' moment" in which the 'big six' bosses risk being demonised in the way suffered by ex-RBS chief Fred Goodwin.
"You deliver an essential public service, so your industry must serve the public – and the public must have trust in what you do," Davey will say.
"But our commitment must be matched by a commitment in industry to open up your books and set out exactly how you are bearing down on your own costs to make bills as low as possible."
Energy UK's chief executive Angela Knight said energy had become a "lightning conductor for general concern about the cost of living".
"We need political, legal and regulatory certainty – and none of it can be done for nothing," she said.
Last week research by ComRes found that the energy company bosses were the new public enemy number one.
Seventy per cent of the public have an unfavourable view of energy firms, with just five per cent still having a favourable view, pollsters Comres found.
Sixty-eight per cent viewed politicians unfavourably. But anger at the banking sector, which caused the 2008 financial crash, seems to have fallen, with just 45% viewing them negatively.