7th Jul 2015 06:43
LONDON (Alliance News) - The UK Competition and Markets Authority on Tuesday published its provisional findings following a year-long investigation into the energy market, finding that a range of problems have hindered competition in the market and proposing a series of potential remedies to the issues it has identified.
The Big Six energy providers in the UK comprise British Gas, which is owned by Centrica PLC, SSE PLC, ScottishPower, E.On, EDF and nPower.
The UK's competition regulator found the average household in Britain currently spends about GBP1,200 on energy each year. For the poorest 10% of households, energy bills now account for about 10% of total expenditure. However, widespread consumer disengagement is impeding the proper functioning of the market, the CMA said.
As a result, the watchdog found that dual-fuel customers could save an average of GBP160 per year by switching to a cheaper deal. It also found that around 70% of energy customers are currently on the 'default' standard variable tariff, "despite the presence of generally cheaper fixed-rate deals".
The CMA said regulatory interventions made to simplify prices are not having the desired impact of increasing engagement among customers and have limited discounting and reduced competition. The regulator, therefore, proposes that the retail energy market should be based on "clear principles that allow the benefits of competition to be gained and promote measures."
In addition, it will consider whether safeguards, such as a transitional price cap on the most expensive tariffs, will be needed to protect consumers until other measures drive a more competitive market.
By Sam Unsted; [email protected]; @SamUAtAlliance
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