Ofgem has today announced a competition investigation into the energy sector to ensure a “simpler, clearer and fairer” energy market for consumers.
The investigation follows on from Ofgem’s recent assessment of the sector, which highlighted issues of consumer trust in relation to energy suppliers, as well as the relationship between the supply generation and retail business branches of the large energy providers.
The energy regulator has also said it was not satisfied by energy suppliers’ explanations for the failure to drop gas and electricity prices despite falling wholesale costs.
The investigation will be managed by the Competition and Markets Authority (CMA) and is expected to run for a period of 18 months.
Ofgem first announced its plans to run a full investigation back in March this year.
‘If anyone can sort out the energy industry it’s the heavyweight CMA’
Speaking on the investigation, Ann Robinson, director of consumer policy at uSwitch, said: “There is at last hope on the horizon for fairer prices and better service. If anyone can sort out the energy industry it’s the heavyweight CMA – and it has quite a job on its hands.
“This is last chance saloon for energy companies – but rather than sit back and wait for two years, they have a chance to make things better for consumers in the here and now. We welcome Ofgem’s commitment to implement further changes during this investigation, including the move to allow customers to switch energy supplier in just three days by the end of 2014.”
Consumers can take control of their bills today
“There are also simple steps consumers can take to reduce their bills, by using energy more efficiently and making sure they are on the cheapest tariff,” added Robinson.
At present there is a gap of close to £300 between the most and least expensive energy tariffs available on the market. First Utility’s iSave Fixed August 2015 is the cheapest plan available, costing the average household £992 per year, but there are plenty of options for anyone looking to save money on their energy bill.
Ofgem: ‘Investigation should ensure no barriers to effective competition’
Dermot Nolan, chief executive at Ofgem, said: “Now is the right time to refer the energy market to the CMA for the benefit of consumers. There is near-unanimous support for a referral and the CMA investigation offers an important opportunity to clear the air. This will help rebuild consumer trust and confidence in the energy market as well as provide the certainty investors have called for.
“A CMA investigation should ensure there are no barriers to stop effective competition bearing down on prices and delivering the benefits of these changes to consumers.”
Nolan added that the investigation was also important as it would ensure there are no barriers to the ongoing developments taking place in the energy sector. Of these he listed the smart meter rollout, electricity market reforms and closer integration with European energy markets.