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A damning indictment o​f​​ ​the energy industry

Energy prices up

Millions of us are paying more for energy than we need to – that’s what a long-awaited investigation into the industry has found. So where do we go from here?

This morning the Competition and Markets Authority (CMA) has published the provisional findings of its year-long inquiry into the energy market – and possible solutions to the problems.

It’s a damning indictment of how the market is failing customers – with British households overpaying by around £1.2 billion a year and ​most consumers ​not switching to get the best deals. One in three had never even thought about switching.

What the CMA’s energy report says

The CMA found that the biggest suppliers have taken advantage of millions of households – who have at the same time been hit with the costs of government energy policy.

And the CMA found that tariffs offered by the big six energy suppliers – who have around 90% ​of the ​market between them – were around 5% higher than they should be between 2009 and 2013.

So what does that mean? For the average household it means they now spend about £1,200 each year just on energy. And for the poorest 10% of households, energy bills now account for about 10% of all their spending.

How can the problems be solved?

Among the solutions the CMA has suggested is a transitional ​regulated tariff while reforms are made to the energy market.

Our executive director Richard Lloyd said:

​​‘Now that we have a clear, official assessment of what’s wrong, we want the regulators to work with consumers to make sure their reforms will be effective this time.

‘In the meantime it’s right to put in place strong extra protection for consumers who don’t, for whatever reason, get a fair and competitive price. We also expect the big suppliers to quickly put in place changes that will bring more transparency and competition in the wholesale energy market.’

We’ve been highlighting the failures of the energy market for many years and welcomed the decision of the regulator, Ofgem, to refer it to the CMA​ last year​.

More than 200,000 people have backed our Fair Energy Prices campaign, calling for simpler and fairer energy pricing.

What do you think of the CMA’s findings? Have you switched provider? If not, are you happy with your current provider or has something stopped you switching?

Comments

When I first signed up with dual fuel with British Gas I was guaranteed no standing charges which was good, I think. It was recommended that I join the new tariff where prices were guaranteed no price rise for 1 year, even if prices increased. But if prices fell, we were also guaranteed that our costs fell accordingly. However it wasn’t explained that I would lose my No Standing Charges guarantee. Also, I am on pre-pay meters whereby I pay more than standard metered customers. I think that this grossly unfair when you consider that we do not incur costs of reminders etc; Surely it would be fairer that we pay LESS, not MORE!

I thought we lived in a democracy where people decide what’s right and wrong. Clearly the powers that be only care about filling their pockets and don’t really care about the dear old lady who froze to death because she couldn’t afford to buy energy. It’s a dog eat dog world. The utility giants don’t care about us. They just want to maintain their profit margins at our expense. The government doesn’t seem to care. If they did then democracy would have sealed the long overdue fate of the few filthy rich individuals who exploit and extort from the everyday person who is simply trying to get by, day by day. The rich and powerful rule, always have, always will so.

“I thought we lived in a democracy where people decide what’s right and wrong”

Not really; almost every government is elected with fewer than 50% of the votes cast. That’s because of our voting system. We had the chance to choose a form of proportional representation – exactly what the Scots and Welsh have – but we rejected it, mainly because voters were swayed by a lot of misinformation.

With world oil prices going down,with the industries workers wages falling because of inflation ( that is no pay rises , or rises below inflation ) how can they justify price increases !
It seems to me the wealthy just want more and more wealth ,just as it was pre ww2. We are most certainly heading in that direction. Unfortunately young people are not interested in our social past as paid slaves,so are completely unaware of what is coming.

Michael, you may be right about oil prices vs energy charges, but UK inflation is currently close to 0% (June 0%, July 0.1%, August 0%) while average weekly earnings have increased by 2.8%. A real gain.

I do not understand why economists don’t like zero inflation. To my mind it can only be good – why should we relish price increases? In particular it keeps prices and wages in perspective. No longer would we have wages and salaries increasing in a spiral simply because prices increase – in the same spiral because labour cost increases contribute to price increases.
Perhaps an economist out there could explain – i’m sure I am missing something simple.