* Ovo Energy founder chides Britain's "big six" firms
* Ovo founder wades into political row over prices
* British PM Cameron clashes with Labour over energy
* Ovo says big six are overcharging customers
By Sarah Young and Guy Faulconbridge
LONDON, Oct 30 Lambasting the country's dominant
energy companies for gouging customers, the founder of a small
English supplier has emerged as an unlikely hero in a row over
soaring power and gas prices that could influence the 2015
Taking on the six companies which control 99 percent of the
British energy retail market, Ovo Energy founder Stephen
Fitzpatrick turned a parliamentary grilling of energy bosses
into a dazzling marketing pitch for his 4-year-old company.
A former corporate bond trader at J.P. Morgan and Societe
Generale who decided to set up Ovo in 2009 in exasperation at
poor service in the energy sector, Fitzpatrick told lawmakers
that if the "big six" had used Ovo's pricing in 2012, customers
would have saved 3.7 billion pounds ($5.94 billion).
He cast Ovo as the David of the energy market pitted against
Britain's "big six" Goliaths which he said profited by
dominating a dysfunctional and badly regulated energy market.
Though he later cautioned that he was not accusing the big
six of colluding to fix prices, Fitzpatrick said following the
money trail was almost impossible.
"You will always be trying to find out where the money is
going. Time and time again, you will have clever, complex and
confusing answers, and you will never get to the bottom of it,"
Fitzpatrick told lawmakers.
"These guys are among the best filibusterers in the
business," said Fitzpatrick, whose company as a 0.5 percent
market share. "We need more competition."
Fitzpatrick's rhetoric has thrust him into the eye of a
political storm over soaring prices after four of Britain's "big
six" energy suppliers raised charges for heating homes by more
than three times the rate of inflation.
Energy dominated Prime Minister's Questions, a rowdy weekly
question and answer session for David Cameron, with the
opposition Labour leader Ed Miliband casting Britain's leaders
as the defender of the "big six" energy companies.
"He is so on the side of the energy companies... we should
call them the big seven - the prime minister and the big six
energy companies," Miliband said.
The big six - RWE nPower, Scottish Power, a unit
of Spain's Iberdrola, EDF Energy, Centrica
, SSE and E.ON - say wholesale energy
prices, political meddling, government-imposed levies including
green taxes have forced them to increase prices.
When asked for reaction to Fitzpatrick's comments, Centrica
and EDF declined to comment while E.ON UK referred to the
comments made in Tuesday's hearings. SSE and nPower said they
had different trading and pricing strategies to Ovo. Scottish
Power could not immediately be reached for comment.
Representatives of the big six were cast as "power cowards"
with gas flames under their photographs by Rupert Murdoch's Sun
newspaper, Britain's most popular daily newspaper, while "the
bloke from Ovo" was lauded for speaking sense.
The Sun encouraged its readers to switch to Bristol-based
Ovo: Fitzpatrick "appeared to actually care that customers
should get a decent deal." Fitzpatrick declined to be
Cameron, who has pledged to roll back green taxes, said
Miliband's proposal to freeze energy bills for 20 months if he
wins power in 2015 was a "con" as wholesale gas prices were not
controlled by politicians.
Since Margaret Thatcher took on energy monopolies, Britain
has gone further than most European Union member states in
liberalising its energy market, imposing few pricing
But for Ovo's Fitzpatrick, the big six, the regulator and at
least a generation of British politicians, have failed to build
a properly functioning energy market.
"I just couldn't understand why the energy business was so
complex and service so poor," he tells prospective employees of
his decision to found Ovo as a plucky start-up run from his
kitchen table in the English county of Gloucestershire.
"Everyone kept telling me it wouldn't be possible for
someone outside of the industry to come in and make energy
cheaper, greener and simpler. I'm very pleased to have proved
Fitzpatrick, who before Ovo traded credit default swaps,
said he did not understand the reasoning behind price rises as
wholesale prices were below those of 2011.
So what is his secret?
Size may be part of the success: Being nimble and accepting
a thinner profit margin than the big six's average of between 5
and 7 percent may have helped Ovo, according to Matt Osborne, an
analyst at energy consultancy Inenco.
Ovo, whose name is supposed to represent a fresh start in
the industry as it comes from the Latin for "from the egg", has
a customer base of nearly 150,000 households, while Centrica's
British Gas business, the country's biggest gas provider, serves
around 12 million homes.
A former trader himself, Fitzgerald may also be more
versatile and more ready to take punts while the Goliaths seek
to hedge potential losses.
"We employ some very bright people in our trading
team and it sounds as though we are managing to beat the
professionals here at buying energy at the right price. We are
passing those savings on to customers," he told lawmakers.
But Tony Cocker, the chief executive of E.On, told the BBC
that some smaller companies had a cost advantage as they were
excused from paying some environmental and social levies.
"The biggest problem is the lack of competition," he said,
dismissing Miliband's idea of breaking up the generation and
retail operations of the big six.
When asked about Fitzpatrick criticism of the energy market,
Cameron's spokesman said he wanted more suppliers.
"What the Prime Minister would note in relation to Ovo is
that of course we want more suppliers in the market and we want
greater competition," Cameron's spokesman said.
"I believe there are eight new suppliers that have entered
the market since 2010 and it is good that there are more of
these, such as the company you refer to, but we want to go
further in terms of competition."
Ovo's website claims that its customers save an average 139
pounds ($220) a year when they switch to Ovo, equivalent to 10
percent off the average British household bill for gas and
Comparison website uSwitch said that Ovo's energy charges
are not the cheapest and comparisons are difficult to make
because bills depend on whether you've switched suppliers
recently, how much energy you use and where you live.
"I was on Ovo myself until two years ago. I had gone from
one of the big six to Ovo and then after reviewing my prices at
the end of the year, I went back to one of the big six," uSwitch
spokeswoman Ann Robinson said.