The UK's wholesale gas market should not be excluded from the Competition and Markets Authority's investigation into the country's energy market, Scotland-based utility SSE said Thursday.
"SSE sees no need to exclude the wholesale gas market from examination to the extent that it has an impact on the retail market, as the UK is now a net importer of gas and this is one of the main cost components of electricity," CEO of SSE Alistair Phillips-Davies said.
The comment came in response to an announcement made late last month that the CMA would investigate the UK's energy market, focusing on "four theories of harm" which include: opaque prices and/or low liquidity in electricity markets creating barriers to entry; vertically integrated electricity companies harming the competitive position of non-integrated firms; market power generation leading to higher prices; and weak incentives for energy suppliers to compete due to inactive customers.
SSE said it was "fully committed" to supporting the CMA in its investigation and called it an opportunity to test the market structures and regulations.
But unlike rival Centrica -- which earlier this month said there was no need to focus on wholesale gas markets -- SSE encouraged the CMA to keep an open mind on the matter.
"SSE welcomes the letter from [CMA panel chair] Mr Roger Witcomb to Mr Tim Yeo MP confirming that the CMA would be mindful of the impact of the wholesale gas market on the retail market, maintaining an open mind as to whether further investigation into the wholesale gas market may be warranted," Phillips-Davies said.
The company also used the response to criticize the set-up of the Carbon Price Floor.
"The Carbon Price Floor has had a negative impact on long-term liquidity due to uncertainty around future levels, which can be set at every budget," the SSE CEO said.
He said the investigation is an opportunity to consider such matters.
He also defended the vertically integrated model.
"SSE highlights the advantages to consumers and the benefits of the 'natural hedge' in providing a more stable investment environment for companies owning both supply and either generation or having long-term generation agreements in place," Phillips-Davies said.
The model does not enable the firms to harm the competitive position of non-integrated players and there are already regulatory safeguards in place, he said.
