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Consumers will finally know the truth, says Energy Advice Line

Consumers will finally learn whether lack of competition in the UK energy market has delivered them a raw deal from energy suppliers, according to the Energy Advice Line.

Julian Morgan, managing director of the price comparison, switching and advice service for energy users, said the recently announced full competition investigation into the industry was long overdue.

Energy regulator OFGEM, concerned about the dominance of the Big Six energy suppliers, has referred the energy market to the newly created Competition and Markets Authority for a full enquiry. It will probe into why British Gas, SSE, Npower, EDF, Scottish Power and e·on control 95% of the market.

“OFGEM has finally recognised that consumer confidence in the energy market has reached rock bottom and most people don’t trust energy companies or believe the market is transparent,” Mr Morgan said.

“We obviously welcome the investigation and hope that it will shine a much-needed light into why the big suppliers have stung consumers with excessive price rises in recent years.

“The big question will be whether it’s right that these companies supply themselves with energy to sell to consumers, while smaller companies have to buy energy from the Big Six. That issue is fundamental to the lack of competition in the market.”

The investigation, which is expected to take up to 2 years, will examine how the profits of energy suppliers have quadrupled to £1 billion in 3 years.

It will also look at why consumers who do not switch suppliers pay more for their energy than new customers, and why 60% of consumers never switch supplier.

“Suppliers have long used various tactics to make it difficult for consumers to switch suppliers, and it’s suspected they have made their profits from the large number who never switch,” Mr Morgan said.

“Bills and tariffs are still incredibly complicated, despite recent initiatives to simplify them, which still makes it difficult for consumers to compare prices like-for-like.

“We hope that investigation exposes some of these tactics and makes recommendations to completely overhaul the switching system to make it quick and simple for consumers to shop around.

“It’s estimated that people can still save on average £250 a year just by changing supplier.”

The investigation is likely to start in June and could theoretically see the Big Six broken up, with their supply and customer-facing arms separated.

Suppliers have warned the investigation could see suppliers halt crucial infrastructure investment if there is a possibility that they will be forced to divest these parts of the business.

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