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CMA report: Energy suppliers overcharging by £1.2bn — Updated

"The report has found that dual fuel customers could save an average of £160 a year by switching to a cheaper deal.":

Back in July 2014, the Competition and Markets Authority (CMA) launched an 18 month investigation into Britain’s energy market — namely the big six and what can be done to tackle their domination, behaviour and price rises.

Bills are a common source of complaints from customers, and the CMA investigation became concerned with them, along with the customer service received by households. The big six’s profits were also under the spotlight as an indicator of how much people are being overcharged; this comes at a time when debt to suppliers is high, including 97,000 forcibly installed prepayment meters last year.

An update in February of this year revealed how 90% of the big six’s customer base were inherited through customers never bothering to switch supplier (being “sticky” customers), and it looked like dismantling the big six was on the cards to stop them monopolising the market — however, this hasn’t happened.

The results are in

The provisional findings of the 18 month investigation were released Tuesday 7th July, along with a series of possible remedies for the issues raised.

The CMA have concluded that energy suppliers had overcharged customers by a staggering £1.2bn for their bills. The energy market is not as competitive as it should be, as had the big six been operating in a competitive market, they would have charged consumers less.

The four tariff rule implemented by Ofgem (limiting the number of tariffs on offer under each supplier) has been seen by the CMA to not have the desired effect on competition, and may have actually reduced the likelihood of suppliers offering cheap energy plans.

The introduction of a price cap has been proposed, that would act as a stop gap whilst encouraging competition, and getting energy suppliers to lower their tariffs; this is just one of the CMA’s proposed remedies

What does it mean for consumers?

Ann Robinson, Director of Consumer Policy believes the report correctly highlights the need to address low levels of engagement and boosting competition.

“Proper competition is essential to make this market work and so additional regulation should be a last resort.

In the interim, the idea of a transitional price cap could go some way to protect the 70% of big six consumers languishing on expensive, standard plans, while reforms to boost competition are made.

However, energy suppliers shouldn’t be waiting for regulators to tell them to cut prices when their own costs fall.”

Switching supplier is encouraged

This provisional CMA report suggested that not only were energy suppliers to blame for high prices, but consumer apathy and disengagement also needs to be dealt with.

Dual fuel customers are currently experiencing the largest savings in five years from switching their supplier, yet still millions of consumers are disconnected from their energy. The more proactive people become in saving as much money as they can on their bill, the market will have to adapt and be more competitive.

There are bigger savings to be made now than in the last five years

Consumers should make use of the biggest savings to be made in five years

Update – SSE introduce cheapest fixed plan

Days after the news of the big six’s overcharging, supplier SSE has introduced a competitive fixed energy plan. With an average bill size of £899 for a dual fuel medium usage household, this plan is the cheapest fixed plan currently available — and is also an eligible option for electricity only consumers.

Will this spark a price war with other big six suppliers following suit?

  • M.Tomlinson

    Why do energy companies never pass on the savings to customers even though prices on wholesale gas has fallen they seem to hold onto this only passing to us sometimes 12-18mnth down the line.Is this making them interest on our money, Or needn’t I ask?

    • stuart hills

      The answer the will give is that they anticipate the price will rise again later and so they can keep the price the same. Um more like it would affect their profits too much and wouldn’t want to lose their big bonus !!!!

  • e peden

    If I left my house empty for a year I would have to pay my power company £180 I’m standing charges and if I switch I would loose my £140 warm house grant

  • johnLoThorpe

    i tried to switch from BG to Good energy. No intetest whatsoever, refused to read my meter. switched back to BG again

  • Barbara Mackle

    I won’t change because it will be a nightmare and why do they refuse to acknowledge what a nightmare it is. Why do they out that is the consumers being lazy,if it were that easy don’t you think we would all be doing it.

    • Tom McDade

      10 minutes speaking to U-switch is all it takes to complete a change of supplier that will save you a lot of money !!

      • Barbara Mackle

        Well Tom I will give it a go and see what happens. I hope I am proved wrong but we shall see. It may be easy with U-switch but will my existing suppliers make it easy I wonder.

  • Michelle Abraham Ne Hartshorn

    We moved to first utility about September last year & it’s the best thing we did & the cheapest prices. As we switched in September, we hadn’t built up a winter credit but we had no nasty surprises with our dual fuel bill. First utility ask you to submit a meter reading every month so you can keep on top of it & never any big bills. I’d highly recommend them & the plus side for us as big rugby league fans, they sponsor superleague so we get emails about offers on matches.

  • Bidyutkumar Pal

    This is all very good…but what are the CMA or the Govt. doing about it. ? Always ask customers to switch another company….which company ? They all are the same……when you get the quote, you will find only a few pounds here and there. All those comments about “You save hundreds of pounds by switching” is rubbish.
    , I would invite the authorities to give an example where to switch……..This is nothing but just fooling public…but no action…….

  • Robert Poloha

    I’m very glad I changed! Once the big fat six have your trust and under their wing, they start deceiving! I was with NPower for about four years (and that was the second time with them!) I started paying them about £43 a month for both gas and electric. They then upped every year till I was paying £96 a month! Then I called them once too much and found them out – they had to refund me a total of about £150! If they are helping themselves to £150 extra from all their customers – how much interest are they making just on the money that doesn’t belong to them! They are fat thieves and robbers! Never again will I go back to them! It was very simple to change! Didn’t have any problems at all! As long as you are not under a bound contract you are OK! Now I am with Utility Warehouse – paying a total of £46 a month for gas and electric and still in a credit of three figures! And they are fully honest about it!

  • Gary Dale

    If you want prices to come down then you must regularly switch suppliers – the customers are partly to blame for these high prices as they refuse to do this, and the message to the supplier is the price can,t be too high then.

  • Christina Winstanley

    We were with British Gas until very recently. We were on prepaid meters for both gas and electric and found we were paying around £250 a month on gas and £90 for electric. There are just 2 of us in the house. Granted it’s a large property which is not all that modern in terms of boiler, heating etc but it still seemed excessive. Coming off the prepaid metres didn’t make a great difference either. I therefore did some online surveys and changed provider to OVO. We now pay £138 a month for the gas and electric combined! Saving us over £200! Best thing we did. This month I have submitted meter readings and OVO’s estimate of our usage was higher so our account is in credit and earning cashback. I don’t know how British Gas get away with it. Charging ludicrous tariffs through their meters fitted to help people in hardship! It makes me so angry! Should have changed a year ago.

  • GFM

    People who sit there and
    Moan will always have some problem or another.
    Switching suppliers is so easy these days, just a few clicks or phone call away. The money saved is astounding and you don’t realise until you’ve done it.
    No-one can switch for u, and the govt cannot possibly tell u which supplier is best for u, because everyone’s energy needs are different, depending on that your cheapest energy company will be different from your next door neighbours for instance.
    I’m back with First Utility now, and happier than ever !

  • Karen Gilmore

    We switched to Ovo in January from Scottish Power and I am so glad we did! Switching was super easy i think it only took about a month and all we had to do is give meter reads once a month and now our bills are so much cheaper in fact I agree with Christina, our bills went down because we got credit in our account and I think they give us some interest on the credit we put in too. Their online account is great too, I didn’t get any of that from Scottish Power!

    • jayee

      I have always compared energy suppliers and last year I switched to OVO. I have no complaints about the prices but I had virtually no service from them at all, despite several emails asking for my meters to be read because I am a widow with mobility problems and cannot bend down to read the gas meter situated sideways on in a cupboard in what was the front porch to the Victorian house before it was converted. I had to keep repeating the same facts over and over = e.g that they did not need access to my flat because the meters were easily accessible in the front porch. A kind friend read the meters for me so that I had some idea of how much energy I was using. I asked for the meters to be read BEFORE my contract ended. That fell on deaf ears too and I have switched suppliers. OVO still haven’t bothered to read the meters but have acknowledged they did not read the meters as they should have done. Elderly people – be aware!

  • Marktime

    Not much joy there then. When wholesale gas prices have fallen by 40% to 1.5 pence/kW do consumers have to pay over 100% more for their gas and over 700%
    more for their electricity? Good question Eh! These figures exclude the dreaded
    standing charge paid to National Grid for doing very little other than make massive
    profits, like the big six. It’s one big con

  • Chesta

    Ovo are good, but have one concerning flaw… Rapid growth of their customer base, I assume – and owing to glowing reputation, has meant Customer Service functions cannot cope. Their online facilities are good but not without technical hitches yet I find call wait times for service departments are desperately in need of review.

  • Harold Smith

    I been with First Utility 3years and just renewed 2 moor years

  • George Storer

    I am with British gas is there any cheaper out there

  • Edward

    All my life I have been a ‘sticky’ customer, never bothering to change from British Gas for both gas and electricity. That is, until last year when I did a bit of homework with uSwitch. At the risk of providing advertising copy for uSwitch, I was able to save over £1000 per annum. Admittedly we have a large house but this is quite staggering. We changed to Sainsbury’s whose gas is provided by? You guessed – British Gas.

  • jovisgoesnuts

    We were with Npower for years, they overcharged us and mis-sold to us. We switched to EDF Energy who were much better, and seemingly more upfront as it were. More recently however, we have switched to First Utility and that has been the best change of all. The tariff is clear, they seem honest and straightforward, and they are easy to work with. I sincerely hope it remains this way.

  • Michael Jackman

    How does customer so-called “apathy” justify overcharging by the big six?????

    • Tom McDade

      Easy ! They don’t have to justify, they just need to keep taking as much as they can for as long as they can. If more consumers would shake off their apathy or misguided ‘loyalty’ to their traditional suppliers then those suppliers would have to reconsider their position just like the principle supermarkets are being forced to do with the success of Lidle and Aldis.

  • Michael Jackman

    That’s your opinion TOM, what I was looking for is the reason the big six are allowed to overcharge and the report trying to blame it on Cutomers “apathy”. Do you now follow the thread??

  • RFP Williams

    I have given up trying to understand electricity bills just stick to my current company EDF.attempts to switch in past caused more trouble than in was worth