We all saw this coming, didn’t we?
The Competition and Markets Authority (CMA) today published its report into the energy market, and it isn’t good news for the big six. The report has found that the Big Six suppliers – British Gas, SSE, EDF Energy, E.On, npower and ScottishPower – have charged prices that were on average 5 percent too high from 2009-13. It is estimated that collectively energy customers paid the big six £1.2 billion a year too much (that’s around £50 per household).
As a result of this finding among others, the CMA is to take action. It has proposed that suppliers’ standard variable price plans be scrapped and replaced with safeguard tariffs or maximum price level tariffs to ensure that customers never pay too much. This is a radical proposal, however, as roughly 70 percent of energy customers have a standard variable price plan and scrapping them would cause much confusion. However, it would put an end to the practice of automatically putting customers onto a default tariff. This would mean lower energy bills for households, and also for businesses as the CMA’s report affects them too.
Also in its report the CMA criticised Ofgem. The CMA said that measures introduced by Ofgem to limit suppliers to four tariffs may have left customers worse off.
The CMA’s findings come as Amber Rudd, the new energy and climate change secretary, called for the big six to lower energy prices not long ago. Like many people, Rudd is concerned about the rising cost of energy to UK consumers and doesn’t believe that they are getting the fairest deal. This has been backed up with fact by the CMA today.
Whatever happens next, you can safely bet that the big six will be working overtime to spin this story into something positive. No doubt they will “welcome” the report and its findings – but let’s not forget that it took a report for the big six to own up to what they have been doing.