UK Edition
Millions of British households could receive compensation for being overcharged on their electricity bills after a rip-off scheme by a "cartel" of cable companies.
A class action lawsuit worth hundreds of millions of pounds has been brought against Nexans, NKT and Prysmian after the companies were fined €302m (£259m) by the European Commission for conspiring to inflate the prices of cables they sold to energy giants such as National Grid between 1999 and 2009.
They were among 11 businesses that made up the cartel, which sold high voltage and submarine cables to buyers in Europe, Japan and Korea.
The prices paid for these cables could have been passed on to millions of British consumers if the buyers, typically infrastructure companies, passed on the cost through network charges that are included in energy bills.
National Grid and Scottish Power have each already struck settlement deals with Prysmian after accusing the Italian firm of overcharging them millions of pounds.
But a legal claim filed with the UK’s Competition Appeal Tribunal is now also seeking compensation on behalf of British consumers.
It has been brought by law firm Scott + Scott and is being spearheaded by Clare Spottiswoode, a former energy regulator.
Ms Spottiswoode said: “I hope this will send a warning sign to any corporates who might contemplate anti-competitive behaviour in future and will recover appropriate redress for consumers who lost money as a result.”
The case must be approved by the tribunal if it is to proceed.
It came as the boss of Ofgem, the energy regulator, on Wednesday said that the best way to bring down sky-high energy bills was to speed up the switch to green power sources.
Jonathan Brearley, the regulator’s chief executive, said he had been shocked by stories of the difficult choices some consumers are making between “heating and eating” after the Ukraine war sent electricity and gas prices shooting upward.
But he warned that the energy industry cannot protect households from the “full impact” of price rises and said the only way to fix the problem was to more quickly transition towards “cheaper” green power sources such as wind and solar.
Mr Brearley said he had heard heartbreaking stories of consumers struggling with the cost of living, including one woman suffering from a brain tumour who was struggling to pay her energy bill.
“What was shocking was to learn that she feels more comfortable in hospital where she can eat and be warm than at home,” he said during a speech in Glasgow.
He said Ofgem and energy companies needed to do “everything within our power to help customers” with rising costs.
But he argued that ultimately the only way to reduce Britain’s exposure to volatile gas prices was to “focus on generating cheaper, cleaner power here at home”.
Mr Brearley added: “For years some have argued that you cannot move to a low carbon and renewable energy system and at the same time keep costs down for consumers.
“I have to say that that argument no longer holds weight – the economics of energy have fundamentally changed.
“Before the crisis, many forms of low carbon generation had already become cheaper than conventional generation. With the volatility we see in gas prices, the economic case is far stronger.
“In my view, the gas crisis and Russia’s invasion of Ukraine show us that we need to make the transition to net zero more quickly.”
He said the energy industry “cannot pretend that our actions can mitigate the full impact of future price rises” but “the best way of protecting customers from price shocks is to diversify and move faster to a cheaper, cleaner, more resilient net zero future”.
His comments came as National Grid, which operates Britain’s main gas and electricity grids, said it would hand £200m of excess profits it makes from interconnectors to Ofgem earlier than planned.
The money is the result of the “cap and floor” mechanism, which limits how much profit the company can make from the interconnectors it operates between the UK and Europe. Excess profits above the cap are handed back to Ofgem.
National Grid said the early payment would help to reduce the pressure on consumer energy bills.
Martin Young, an energy analyst at Investec, said the impact of the £200m spread over all consumers was likely to be small, making it largely a symbolic gesture.
But he added: “We view this as a very constructive approach from National Grid, and every little helps.”
Ofgem said it was looking at how the money could be returned to consumers.
John Pettigrew, National Grid’s chief executive, said: “While National Grid’s impact on customer bills is relatively small, we strive every day to keep our costs as low as possible.
“Given how challenging the current rise in overall energy costs is for people across the country, we want to play our part in helping reduce consumer bills.”