Financial News

  • 27 June 2014, 11:45

Ofgem To Open Energy Market Investigation

Ofgem has announced an investigation in the energy market, to ensure there are no barriers to effective competition.

The regulator said it has referred the energy market to a probe by the Competition and Markets Authority (CMA).

It said the investigation is the best way to ensure that consumers are receiving the best quality, service and price availability.

The so-called big six energy providers have come under increasing scrutiny over profits, rising prices and how their wholesale and retail firms are structured.

The six big firms control around 95% of the UK retail market.

Ofgem said it would continue to protect consumers amid planned major changes to the energy market.

It said the CMA would begin its investigation immediately and a final report would likely be published before the end of next year.

Ofgem chief executive 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.

This will help rebuild consumer trust and confidence in the energy market as well as provide the certainty investors have called for.

"The energy market is also going to change rapidly over the next few years with the roll-out of smart meters, the Government's electricity market reforms, and closer integration with European energy markets."

The energy watchdog said it has made an assessment, along with the Office for Fair Trading and the CMA, and found that competition is not working in consumers' best interests.

The regulator now expects the CMA  to consider action against the sector to improve competition and protect consumers.

Ofgem will also use its powers to address any "structural or behavioural issues" that may undermine competition.

After the announcement was made SSE chief executive Alistair Phillips-Davies said: "This reference will be an important opportunity to demonstrate the competitiveness of the energy market, address any issues of public concern and deliver good outcomes for consumers and a stable framework for investors.

"Throughout the reference SSE has an appetite for reform that is in the interests of customers and competition generally, as demonstrated by our price freeze until 2016."

Centrica CEO Sam Laidlaw, of the parent company of British Gas, said: "We want an energy market that is trusted by customers, and we believe that an in-depth and thorough review by an independent and respected authority can help to achieve this. So Centrica welcomes the investigation."

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