UK Competition Watchdog Broadly Satisfied with Retail Market
The UK Competition & Markets Authority has concluded its two-year investigation of the retail market and found that it is working for most customers. Its statement made no reference to the grip of the big six suppliers, for example, the timing of their price rises and price cuts – or the threat to competition posed by vertically-integrated companies.
But it said June 24 as it published its findings that “over 30 measures will be brought in after the most comprehensive investigation into the energy market since privatisation.”
The chairman of the energy market investigation Roger Witcomb said: “Competition is working well for some customers in this market – but nowhere near enough of them. Our measures will help more customers get a better deal and put in place a modernised energy market equipped for the future.”
These measures will increase competition between suppliers and help more customers switch to better deals, including greater use of price comparison websites. They will also bring in technical and regulatory changes to modernise the market and ensure it works in consumers’ interests, including those on pre-payment meters, who will be among the beneficiaries of smart meters.
Suppliers will be ordered to give the regulator Ofgem details of customers who have been on the standard default tariffs for three years or more. These will be put on a secure database to allow rival suppliers to contact customers by letter and offer cheaper and easy-to-access deals based on their actual energy use but the customers will be able to opt out.
The CMA is also introducing a range of measures to revitalise competition including reform of systems for measuring and charging energy that distort competition between suppliers; reducing the costs of transmitting electricity; and using competition to help ensure that financial support for low carbon generation is allocated at the lowest cost to customers.
Roger Witcomb (credit: gov.uk)
Ofgem will also be given much greater influence over the detailed codes that govern the working of the market – and which allow established industry participants too much influence over decisions that affect competition and consumers. It will also have more powers to scrutinise the performance of suppliers and the impact of policy.
The changes will be accomplished via a combination of CMA Orders and recommendations to Ofgem and government. The CMA will publish a timetable setting out this remedies implementation process over the next six months.
William Powell