Ofgem is this week set to unveil the most thorough investigation ever carried out into the UK energy market.
The investigation will be led by the Competition and Markets Authority (CMA), is expected to take 18 months and aims to determine if there is any truth behind allegations of the big six colluding and profiteering.
The launch coincides with the release of information relating to wholesale energy prices dropping drastically. Despite the latter, customers have yet to see their energy bills drop and actually saw price increases last winter.
Alistair Phillips-Davies, head of SSE, has welcomed the move: “Regulators, politicians, customers and SSE all want the same thing: an energy market that not only works for customers, but is also trusted and seen to do so. We welcome any efforts to clear the air.”
Bill rises and wholesale price drops
Earlier this month wholesale gas prices dropped to their lowest level since 2010, and were 38% lower than at this point last year. In a similar vein, electricity prices also hit their lowest level since 2010 and dropped by 23% year on year.
These price drops have not resulted in the big six lowering their prices or offering what Ofgem deems a reasonable explanation for not doing so. As a result, Ofgem Chief Executive, Dermot Nolan has told households to “vote with your feet” and switch energy supplier.
‘Wholesale prices have fallen […] and consumers have seen no reduction’
Speaking on the investigation, Shadow Energy and Climate Change Secretary Caroline Flint said: “Just in the last week we’ve learnt that wholesale prices have fallen substantially this year and yet consumers have seen no reduction to their bills. This investigation must address problems like this and stop them happening again in the future.
“However, it shouldn’t paralyse politicians from taking action now to improve the lack of competition and weak regulation in the energy market, which has resulted in customers getting a poor deal.”