Gas and electricity Updated:
Energy firms are regularly coming under fire for their ever-increasing prices, and now it seems they could be under further investigation after a report by industry regulator Ofgem criticised the lack of competition in the sector.
Ofgem has called for the Big Six energy firms to be fully investigated by the Competition and Markets Authority (CMA), a move which could take up to 18 months, with the report having highlighted the lack of switching by consumers as a key indicator of market competition not working.
Industry experts have said that, effectively, the report admits that Ofgem hasn't done enough to regulate the market, with the referral of the investigation to the CMA being intended "to consider once and for all whether there are further barriers to effective competition".
The overriding feeling is that this lack of competition could perhaps, in part, account for some of the rapid price rises in recent years. The public is growing increasingly mistrustful of energy companies, with the report saying that firms' profit increases and further price hikes have only served to intensify that level of distrust. Therefore, a market investigation is needed to "clear the air".
The big six account for roughly 95% of the UK's entire energy supply market and many have higher profit margins than might be expected, so it's no wonder their competition practices have been brought under question. The firms themselves have welcomed the referral of the investigation to the CMA, with it being ultimately hoped that it'll restore public confidence in the energy sector as a whole.
The report was published a mere day after SSE pledged to freeze their prices until 2016, putting clear pressure on their rivals to do the same. However, as pointed out by price comparison site energyhelpline.com, savvy consumers would have realised that they can already fix their tariff with SSE to March 2017, with this new pledge only applying to standard tariffs.
"Energy bills need to be lowered, not simply frozen," said Mark Todd of energyhelpline. "With purse strings being pulled tighter than ever, it is essential that energy bill payers switch to ensure they are on the best possible tariff."
It's hoped that the competition inquiry could encourage the price drops that consumers are waiting for, with improved competition and more transparency ensuring customers can get the best value possible.
Of course, time will tell whether or not this will be the case, and there are even suggestions that some of the big six could be broken up, so in the meantime make sure to shop around to find the best tariff for your needs and see how much you could save.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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