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Energy market to face competition investigation

Energy market to face competition investigation

Category: Gas and electricity

Updated: 27/06/2014
First Published: 27/06/2014

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

There's no denying the fact that the cost of gas and electricity has increased considerably in recent years. For a lot of people, the lack of competition in the sector is thought the be the key reason for this – with the industry being dominated by the big six energy providers, there's not much scope for better prices. Happily it seems that the industry regulator agrees, and has launched an investigation into the matter.

Ofgem announced the investigation yesterday, when it was revealed that the energy market was being referred to the Completion and Markets Authority (CMA) for a full-scale review into its competition practices.

"The investigation is an important opportunity to clear the air and should ensure competition in the energy market effectively bears down on costs and drives improvements in customer service and innovation. This will help rebuild consumer trust and confidence in the market," it said in a statement.

"It will also help to provide the certainty that is needed for investment in the energy sector and complement our recent reforms to make the market simpler, clearer and fairer for consumers."

The competition review has been a long time coming, having first been proposed in March following an assessment which found that competition in the sector wasn't working as well as it should. It also found high levels of consumer distrust, not to mention rising profits with no clear explanation, or any indication that customer expectations were being met.

The announcement that the investigation is set to go ahead will be welcome news to consumers who have perhaps been struggling to pay the bills, with it being designed to "see if there are any features of this market which prevent, restrict or distort competition and, if so, what action might be taken to remedy them". Hopefully this would lead to improved competition in the sector and, ideally, lower prices for customers.

The CMA will begin its investigation immediately and is expected to publish the results of its findings by December, and it can't come soon enough for many. Mark Todd, director of, comments: "The UK energy market is failing customers. Those who do not switch are often being exploited for huge profit margins as there is no price cap in the market, so suppliers can basically charge them whatever they like.

"[It's] served up year after year of price rises … it is no wonder that customer confidence has collapsed. The prescription potentially is some major surgery that goes way beyond the regulator's powers, and could lead to the break up of some of our biggest energy companies.

"Ofgem stated that it has found 'rising profits with no clear evidence of suppliers reducing their own costs or becoming better at meeting customer expectations.' That is an incredibly damning verdict for a normally softly spoken regulator and one which fires a very clear warning shot across the bows of the big beasts in the industry."

It could lead to a huge shake-up in the energy market and will hopefully lead to good things for customers, but in the meantime the advice is clear. "At energyhelpline we urge customers to switch as that is the only way they can really turn the tables on the big boys and get a good deal in this market," added Mark Todd, and it could prove to be the best solution.

There are a lot of smaller companies out there that can offer highly competitive deals, and until the competition investigation has done its job, comparing the options and pouncing on the best tariffs can help keep your costs in check.

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