Demands for inquiry into ‘broken’ energy market

Regulators are being urged to launch an investigation into the energy market amid fresh claims that it is “broken”.

Picture: Getty

Consumer group Which? and the Federation of Small Business (FSB) have written a joint letter to the Office of Fair Trading, Ofgem and the Competition and Markets Authority, saying that competition needed to be increased.

The groups said nine in ten consumers believed the energy market should be referred for further investigation, while seven in ten were worried about energy prices and only one in five trusted energy companies.

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The “Big Six” gas and electricity suppliers are expected to hear soon, possibly later this week, whether there is to be a full competition inquiry into the energy industry.

The financial, energy and consumer regulators have been reviewing the working of the market for the past three months and are expected to publish a final report within days. There is speculation it could trigger a full competition inquiry.

Which? and the FSB said in their letter that ever-rising energy bills were a “major concern” for small businesses.

“It is clear that the energy market is broken and urgently needs fixing. Top of our concerns is the need to increase competition and to make trading transparent. For too long the lack of competition in the energy market has not been addressed. It is now time for radical changes that deliver an effective, competitive market that works for everyone, before the scale of this crisis worsens.

“We all want to see a transparent market where consumers and businesses alike can understand their bills, compare prices and switch easily. We want to see the presence of strong competition right across the industry drive affordable pricing that gives everyone the confidence they are paying a fair price for their energy,” said the letter.

Caroline Flint, shadow energy and climate change secretary, said: “Rising energy bills are causing a cost-of-living crisis.

“Consumers need to be confident that the energy market works for them and the prices they pay are fair. Anything which can help shine a light on the workings of the energy market is welcome.

“But consumers will be rightly disappointed if the government uses this review as an excuse to kick the problem of rip-off energy bills into the long grass. We have hardly been short of reviews of the energy market in recent years – but what has been missing is decisive action to protect consumers. The next Labour government will undertake the biggest overhaul of our energy market since privatisation.

“Our plans will break up the big energy companies, put an end to their secret deals and make tariffs simpler and fairer. And until these reforms kick in, we will put a stop to unfair price rises by freezing energy bills until 2017, saving the average household £120.”

Earlier this month, Which? said that just a third of consumers are able to choose the cheapest energy deal despite the introduction of simplified tariffs.

The watchdog said Ofgem’s new rules for standardised tariffs were “a step in the right direction” but found that two-thirds of consumers still failed to identify the cheapest deal.

The consumer group challenged people to spot the best deal using the standard tariffs of the Big Six energy suppliers – British Gas, which trades as Scottish Gas in Scotland, EDF, E.ON, Npower, Scottish Power and SSE.