The Energy Watchdog Ofgem has today effectively admitted that the gas and electricity suppliers are out of control by referring the energy market to the Competition and Markets Authority (CMA) for a full investigation.
It recently carried out an assessment of the energy market, along with the now-defunct Office of Fair Trading and CMA, which concluded that competition isn’t working as well as it should for consumers.
The review revealed increasing distrust of energy suppliers, uncertainty about the relationship between the supply businesses and the generation arms of the six largest suppliers, and rising profits with no clear evidence of suppliers reducing their own costs or becoming better at meeting customer expectations.
In other words we’re fed up with soaring bills and more families being pushed into fuel poverty while the energy giants trouser ever-booming profits.
Announcing the referral this morning, Ofgem chief Dermot Nolan said: “Now is the right time to refer the energy market to the CMA for the benefit of consumers. There is near-unanimous support for a referral and the CMA investigation offers an important opportunity to clear the air.”
Campaigners have demanded a full explanation of why the cost of heating and lighting our homes has risen so rapidly while the Big Six energy giants have been pocketing record profits. Complaints about energy companies have rocketed, reaching a staggering 5.6m last year as customers queued up to moan about bills, meters, service and payments.
One proposal is for the Big Six energy companies to be split up, with their supply and generation businesses separated. That would, at a stroke, reduce concerns that they could be manipulating prices to their own advantage.
Richard Lloyd of Which? said: “This is a watershed moment for the broken energy market and millions of people struggling to cope with spiralling bills. The investigation must leave no stone unturned in establishing the truth behind energy prices, and while it takes place Ofgem must continue its renewed, tougher approach to protecting consumers. Energy companies must also not wait for the outcome of this inquiry but make urgent changes now to do better by their customers.
“We need to see radical reforms that will inject more competition into the market and help rebuild trust by giving consumers confidence that the price they are paying is fair.”
John Robertson MP, who sits on the Energy select committee, said: “If they are found guilty, the tens of millions in fines should go straight back into the pockets of consumers who have been ripped off all these years. It is time to stop fat cat energy barons raking in profits through ripping off their customers.”
“My faith in Ofgem has hit rock bottom. The companies have making these eye-watering profits for years and Ofgem are only now saying they are excessive. They should have pulled their finger out a long time ago and I hope now they will do their job properly and scrutinise what is actually going on.”