Guardian: “The biggest ever investigation into the UK energy market will be unveiled next week by the industry watchdog, Ofgem, amid public anger over high bills and bad service from gas and electricity providers.”
“An 18-month inquiry into claims of collusion and profiteering will be undertaken by the Competition and Markets Authority (CMA) and could end in the big six firms having their businesses broken up and reduced in scale.
….At the start of June gas prices for next-day delivery reached their lowest level since September 2010 and were 38% lower than the same time last year, Ofgem has noted. Prices for electricity reached their lowest level since April 2010, and were 23% lower than June 2013.
Despite this, the regulator said suppliers including SSE, EDF Energy, Scottish Power, E.ON, npower and British Gas were showing no signs of reducing prices, or explaining to customers why not.
….Ofgem noted in March, after a preliminary review of the sector, that the biggest six firms – Centrica , SSE, RWE npower, E.ON, Scottish Power and EDF Energy – had seen their profits rise from £233m in 2009 to more than £1bn by 2012.
The formal investigation could recommend that individual big six members separate their units that generate power from those units that sell it to households to try to make inroads into their 95% market share.
….Ofgem, which appointed Dermot Nolan as chief executive this year, refused to comment on any referral to the CMA but has in recent weeks shown its resolve to become tougher on the companies it oversees, with the launch of several initiatives. The CMA also declined to comment on the likelihood of an investigation but confirmed it would be able to demand that divestments were made, although it cannot fine companies under market referral rules.
….This week Which? revealed there had been 1.7m complaints about the big six in the first three months of 2014. Meanwhile Ofgem warned npower it would force the firm to dismantle its telesales team unless it improved its customer performance. It also launched a new investigation into the company’s prolonged billing problems.”
FT: “The UK’s big six energy companies have been formally referred to the Competition and Markets Authority for a full investigation, regulator Ofgem announced on Thursday, in a move designed to “rebuild consumer trust” in the sector.
The probe, which is the first major referral to the new competition agency, is expected to take up to two years to complete, and will examine accusations of excess profitability in the sector, pricing practices and whether energy companies should be broken up.
….Labour reiterated its pledge to freeze power prices for two years if it wins the general election. “The launch of a full market investigation is a clear admission that Britain’s energy market is broken and that radical action is needed,” said Caroline Flint, the shadow energy secretary.”
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