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Big Six face investor exodus over political interference

Fund managers controlling billions of pounds invested in UK energy companies have warned that they are considering pulling out of the sector because of political interference in the market, The Independent reported.

The Big Six suppliers have  been heavily criticised in recent weeks over the prices they are charging customers, with Centrica, npower, Scottish Power, SSE, E.ON and EDF – many of which have recently introduced above-inflation price rises – being accused of exploiting vulnerable consumers while at the same time making huge profits.

The controversy prompted Ed Miliband to promise a price freeze for 20 months if his party wins the 2015 election. In response energy companies claimed any such action would curtail their ability to invest and could even lead to blackouts.

The threat of political intervention has hit the share prices of the Big Six, and raised questions about future profitability. The speculation has angered some of the country’s leading institutional investors, who have said privately that they will act if the meddling continues.

The debate over energy costs is set to intensify in the run-up to George Osborne’s Autumn Statement on 4 December, when the Chancellor is expected to roll back the green levies imposed on energy companies. Such action has been vehemently opposed by the Liberal Democrats, with the Energy Secretary, Ed Davey, saying that he would fight “like a tiger” to preserve the incentives, which increase bills while promoting energy efficiency.

The energy company obligation (ECO) – which requires the Big Six better to insulate the homes of Britain’s poorest households – will add £47 a year, or 4 per cent, to an expected average bill of £1,267 in 2013, while the warm home discount, which entitles some vulnerable people to a £135 discount, and the rollout of smart meters will add another £11 and £3 respectively to the average bill this year.

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