Energy regulator Ofgem launches 18-month investigation into the UK’s power industry

26th June 2014

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The energy regulator Ofgem has launched its biggest ever industry investigation by referring the UK’s power sector to the competition watchdog.

The Competition and Markets Authority (CMA) will begin its investigation immediately and is expected to publish its conclusions by the end of next year.

The energy sector and the big six, including British Gas, Scottish & Southern Energy (SSE), nPower, E.ON, EDF Energy and Scottish Power has been under fire for some time as a result of a combination of general poor customer service, and putting further pressure on consumers by raising prices despite enjoying rising profits. Earlier this month, Ofgem warned Npower that it must “take immediate action” to resolve its billing and complaints issues by the end of August.

A recent assessment of the energy market, by Ofgem in conjunction with the Office of Fair Trading and the CMA, showed that competition was not working as well as it should for consumers. Ofgem said the findings showed increasing distrust of energy suppliers, uncertainty about the relationship between the supply businesses and the generation arms of the six largest suppliers, and rising profits with no clear evidence of suppliers reducing their own costs or becoming better at meeting customer expectations.

The CMA’s new investigation is described by the regulator as “an important opportunity to clear the air and should ensure competition in the energy market effectively bears down on costs and drives improvements in customer service and innovation”.

Big Six: British Gas and co are under the microscope

Big Six: British Gas and co are under the microscope

 

The main areas the CMA is likely to focus on over the coming 18 months include:

Clare Francis, editor-in-chief at comparison site MoneySuperMarket believes that a full inquiry is long overdue.

She said: “For too long the energy market has been underwhelming in its support for bill payers, and it’s been down to the individual to seek out the best possible deal or suffer the consequences financially.

“We would like to see a radical overhaul of the industry so it works on behalf of consumers, not against them. Making bills easier to understand, simplifying the switching process by speeding up transfers, and also adding a ‘switching guarantee’ to protect customers should things go wrong, would go some way to addressing these concerns.”

Jeremy Cryer, energy spokesperson at Gocompare.com, added: “A full investigation by the CMA should expose once and for all if the UK energy market is dysfunctional, or put our minds at rest that everything is working as it should and consumers are getting a fair deal.

“The ‘big six’ moniker is well earned – together the UK’s biggest energy companies supply over 94% of all household gas and electricity – and with confidence in the energy market at rock bottom a move to increase transparency and rebuild consumer trust is long overdue.”

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