Ed Davey challenges Big Six with energy market review and promises '24-hour switching'

Government announces package of reforms to and vows make energy giants change

Ed Davey speaking in the House of Commons today (PA)

The Government has vowed to take on the so-called ‘Big Six’ energy companies and “put consumers in control”, as Energy Secretary Ed Davey appeared before MPs to unveil a range of reforms to the gas and electricity markets.

The biggest pledge he made was to make switching provider much quicker – down to 24 hours from the five weeks it currently takes.

The firms will also face a new probe into their accounts and the prospect of criminal sanctions where they are found to have fixed markets. They have recently been accused of using multiple branches of the same business to buy fuel from themselves at inflated prices – allegations which became a key point at the grilling of bosses by MPs this week.

Four of the Big Six companies have announced price hikes in recent weeks of around 9 per cent, despite reports from the industry regulator Ofgem which say wholesale prices have only gone up around 1.7 per cent.

The issue of what to do about energy bills has also become a major political football, amid an ongoing row between the Government and Labour on how best to rein in the firms and get a fair deal for customers.

Mr Davey said his department will be consulting on introducing criminal sanctions for anyone manipulating the energy markets.

And he called for a change to the way consumers change from one company to another – warning the firms not to use it as yet another excuse to raise bills.

“I am challenging the industry to deliver faster switching,” he told MPs in the Commons today.

“If you can change your broadband provider with a few clicks of the mouse why shouldn't you be able to do the same with your gas or electric?

“It shouldn't take five weeks for the change to take effect - 24-hour switching is my ambition.”

Ofgem’s reforms include changes to make it easier for customers to get the information they need to switch, Mr Davey said, and 500 volunteers will be trained up to work with vulnerable people to get them the best deal.

“Energy companies need to know that any wrongdoing will be uncovered and dealt with,” he said. “That's why the regulators are going to carry out annual competition reviews, to make sure the energy market is operating properly.

“We are going to consult on increasing the sanctions for manipulation of the energy markets, so that they carry criminal penalties for the first time.”

Not everyone was overly pleased with the announcement, however. Labour leader Ed Miliband, who has pledged a 20-month energy bill freeze if Labour wins the 2015 general election, dismissed the review.

And the shadow Energy Secretary Caroline Flint said: “We don't need another review, we need action - action to freeze people's energy bills and fix this broken market.”

Which? executive director Richard Lloyd, said: “There will be no great applause from the millions of consumers worrying about rising energy costs for the Government committing to make the regulators simply do their job.”

Gillian Guy, chief executive of Citizens Advice, was slightly more positive, saying: “The Government's announcements today will make switching faster, but it also needs to be easier. The most radical thing in this statement is the potential to force energy companies to pass key data to third parties like switching sites.

“At Citizens Advice we want to see a personal shopping service for energy customers. Using energy data, customers could ask switching sites to compare their bills and find the cheapest deal.”

Terry Scuoler, chief executive of EEF, the manufacturers' organisation, said: “EEF supports the announcement to hold a competition review on the UK's energy market.

“However, given the numerous reviews into the energy market and competition that have taken place over the years, and their subsequent failure to deliver any real change, Government must ensure that this time it will make a material difference by undertaking a rigorous evidence-based approach, with real teeth.”