18th Feb 2015 09:35
LONDON (Alliance News) - SSE PLC on Wednesday said it will work with the Competition & Markets Authority after the UK competition regulator published a report which indicated energy suppliers in the UK are charging long-term customers higher prices.
The CMA on Wednesday published an updated issues statement on its probe into the UK energy markets, outlining its initial thinking on the evidence it has received so far and the analysis carried out to date. It said it has not made any conclusions and that its view could change in light of further evidence yet to be collected in the ongoing investigation.
The CMA found a total of 95% of dual-fuel customers on standard variable tariffs would have saved GBP158 to GBP234 per year had they switched provider between 2011 and 2014.
The regulator said the overall earnings figures from the UK's Big Six energy companies "mask considerable variation in the profits and average prices associated with different types of tariff offered to domestic customers".
The Big Six comprises EDF Energy, E.On, nPower, SSE, Scottish Power Ltd, which is part of Spain's Iberdola Group, and British Gas, which is part of Centrica PLC.
The CMA said in the period between the start of 2011 and the end of the second quarter of 2014, the average revenue per kilowatt hour from the standard variable tariff, paid by the significant majority of Big Six customers, was 12% higher than the average revenue from other tariffs for electricity offered by the Big Six. It also said the Big Six's revenue from standard variable tariffs for gas were 13% higher than their revenue from other tariffs for gas.
SSE said it intends to continued "working constructively" with the CMA, adding it "continues to believe that an independent and authoritative market investigation will help to address key issues and as a result help to restore the confidence of both customers and investors".
"While they clearly result in a degree of short-term uncertainty, the continuing energy market investigation along with the forthcoming UK general election do provide opportunities to achieve greater regulatory and policy stability in the Great British energy market, for the benefit of customers and the required investment in the country's energy system," said SSE Chief Executive Alistair Phillips-Davies.
"It is in everyone's interests that we have a trusted energy market that not only works for customers but is seen to do so," said Phillips-Davies.
SSE shares were down 0.6% to 1,546.00 pence on Wednesday.
The initial findings from the CMA report come after the Department of Energy and Climate Change on Monday launched the 'Power to Switch' campaign to encourage people in the UK to switch energy suppliers.
The DECC said there are 13.5 million households in the UK that could save more than GBP200 per year by switching suppliers. The campaign will run for four weeks and will include national, regional and online advertising to try to encourage people to switch and save.
UK Energy and Climate Change Secretary Ed Davey, who launched the campaign on Monday, said the Department has "reformed the market so that there are more suppliers, more competition, and a much faster and simpler process to switch. That means millions of people can switch supplier and save hundreds of pounds today."
"With Ofgem?s strengthened Confidence Code for price comparison sites, people will be able to have greater confidence than ever before that by switching, they?ll see real savings," added Amber Rudd, the energy and climate change minister.
The UK government said it has reformed the market by halving switching times, encouraging new suppliers into the market, which has brought the total number of independent suppliers to 20, and working with the UK gas and electricity regulator Ofgem to make energy bills clearer for customers, according to the Department of Energy and Climate Change.
In January, Ofgem urged consumers to switch to a fixed-price energy tariff, despite major firms committing to introducing price cuts to their variable tariffs in February, and said independent suppliers, rather than the Big Six, are offering the cheapest deals.
By Sam Unsted; [email protected]; @SamUAtAlliance
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