The promise that accompanied energy market liberalisation in 1999 was that competition between providers would keep a lid on prices and drive up levels of service. Things have not worked out like that. When the wholesale cost of energy was low, the big six firms kept their consumer prices high. Yet since the wholesale price has shot up, they have passed all the increases to their customers. And, as the Commons Energy Committee points out today, customer service has been dreadful too. Consumers are being pressured by commission-hungry salesmen to sign up for deals that they do not understand. And given that the number of different rates has risen from 180 to 400 over the past 18 months, this lack of comprehension is hardly surprising.
There are two fundamental problems in this market. The first is that there has been too much consolidation. Large firms have been allowed to carve up the market between them. The second is that regulation has been weak. Ofgem has been toothless over profiteering. And it has done nothing to force firms to set transparent tariffs. Until this changes, this market will continue to work in the interests of producers, rather than customers.Reuse content