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Do you think the Big Six are out of touch?

energy prices

Our latest analysis of energy prices demonstrates the Big Six energy providers are out of touch with the market with the price gap between their standard tariffs and the cheapest deals on the market almost doubling.

In just a few weeks the Competition and Markets Authority (CMA) will publish its final decision on how to fix the energy market. You may remember that, with your support, we’ve been campaigning for the CMA’s investigation into the energy market for over the past two years to tackle the lack of competition, the sheer number of people paying over the odds for their energy and the limited protection for vulnerable customers.

Energy prices

Well our new analysis has looked at energy prices over the last two years since the CMA started its investigation. It reveals that the gap between the average Big Six and the cheapest on the market has risen from £182 to £329.

That’s a big gap, and it’s been increasing since 2014.

Yet, despite the significant savings available the official figures for switching rates highlight that there’s only been a small increase over the last two years.

So what’s going on? The CMA recently set out its initial thoughts on the energy market and how it intends to fix it, the report highlighted that the cost to consumers of an uncompetitive market stands at around £1.7 billion, a figure that’s rising.

The CMA proposed a range of measures including a central database of ‘disengaged’ consumers open to energy suppliers to contact each other’s customers; a ‘cap’ for customers who have pre-payment meters; a programme of testing by the regulator Ofgem and; the removal of some of the rules surrounding what tariffs energy companies can provide to their customers.

In our opinion, it isn’t clear how the CMA will judge its investigation and proposals as being successful.

Our call on the CMA

That’s why today we’ve set a challenge to the CMA ahead of its final report.

We want to see how the CMA will be evaluating the success of its remedies, as well as how it will make sure vulnerable people who’ve never switched supplier and are overpaying will get better outcomes and pay a fair price.

We also want to see energy suppliers step up and begin to work harder to restore trust in the energy market.

With almost 500,000 of you who’ve joined our call for fair energy prices, there’s a weight of expectation on the shoulders of the CMA. It’s time to deliver.

So what do you think to the energy prices you pay? Have you switched your energy provider recently? How easy did you find it?

Comments
Member

Privatisation has introduced competition, but at a cost. We have a significant number of people, including the most vulnerable members of society, paying higher prices, effectively subsidising those who engage with the switching game. We have also also allowed foreign countries to have considerable control over our energy industry, which seems very unwise to me.

I recognise the benefit of competition, but there is no reason why this has to happen at the point of sale. The energy companies could compete for a share in electricity and gas supply and all consumers could pay the same price. That would be fairer than the present system.

Member
E. Gibello says:
10 June 2016

Energy should not be privatised, as Post and other necessities for life These should always be in the hand of an elected( proportional voting system still lacking in UK)Government.

Member
colin brockwell says:
11 June 2016

I agree 100% gibello

Member

If the government were to put away a few billion pounds each year into a re-purchase fund we could probably achieve this in around twenty-five years [with compound interest]. Of course, we would have to forego what that money buys in the meantime.

Member

Hang on a minute – didn’t an elected( proportional voting system then lacking in UK)Government – decide to privatise these industries?

Why should we trust a Government that doesn’t want to own and run these industries to run them efficiently and fairly?

Member
Frank Greaves-Shaw says:
11 June 2016

I don’t get your point at all on having to put awaay billions of pounds to buy back these services.
They got them for a drop down cost and have reaped billions from them since. So it would be quite logical and even legal, to take them back into public ownership at no cost to us..

Member

Yes, Frank, a future government could pass legislation to compulsorily re-acquire all the shares in the companies that provide utility and other essential services [plus a few more that were still in their infancy in the 1980’s like mobile telecommunications or, indeed, barely embryonic like satellite broadcasting]. Having been bought from the original buyers of the privatised companies these shares are largely held now by institutional investors [like pension funds and managed personal investment portfolios] and by foreign companies or governments. Many, and possibly most, of the utility companies are themselves foreign-owned so it would not be straightforward but arguably it is one way of getting on in the world if nothing else matters.

I seem to recall that the money received by the government for the whole privatisation programme was around £30 billion at historic prices – not exactly a “drop down cost” – and some companies have appreciated in value enormously since privatisation so their current market value is very high; but some of the industries that were privatised have little relevance to domestic consumers [so would presumably be outside a buy-back programme] or no longer exist in recognisable form.

I wrote at the beginning “a future government” because such a measure would require a totalitarian regime to sustain it and we do not enjoy such liberty in our present situation.

Member

Further to Frack GS’s post, from my very limited experience of EUlaw in action, I am sure that, without proportionate compensation payments to the current owners, re-nationalisation would be illegal.

Member