We’ve heard Ofgem talk before about how it intends to break the big six’s hold on the UK energy market.
But the news that the energy watchdog has recommended that the Competition and Markets Authority (CMA) undertake a two-year investigation of the industry might lead to one of the biggest shake-ups in energy since privatisation. It could eventually lead to the big six being broken up.
The recommendation forms part of a wider report, which found that 43% of people are distrustful of the energy market. It also reported that energy firms' profits have increased from £233m in 2009 to £1.1bn in 2012, with “no clear evidence of suppliers becoming more efficient in reducing their own costs”.
Jeremy Cryer, energy expert at Gocompare.com, said: "The 'big six' moniker is well-earned - together the UK's biggest energy companies supply over 94% of all household gas and electricity. With confidence in the energy market at such a low ebb, any move to increase transparency is welcome. While the energy giants' profits may be difficult to stomach at a time when people's bills are at a record high, the launch of a formal inquiry will at least help to either expose malpractice or prove that the market is, in fact, working."
The general issue of mistrust of the energy market which the Ofgem report highlights doesn’t just affect the big six – Cryer believes that consumers’ distrust is preventing them from switching their business to smaller suppliers who’ve been tarred with the same brush.
"Mistrust of the energy market doesn't just affect the big players, to whom most of the ire is directed," he said. "In a recent survey of householders who are currently customers of the big six, almost one in five (17%) said they wouldn't consider switching to a smaller supplier, with 22% saying this was because 'all energy companies are the same'.”
While the investigation – if it happens – will take some time to come to a conclusion, there’s still plenty you can do now.
"The CMA's investigation is expected to take another 18 months, so while the regulator continues to apply its measures to make energy bills less complex and improve energy companies' processes, householders also need to take charge of their outgoings and engage with the energy-buying process,” said Cryer.
“Go to a comparison site armed with your latest bill and compare the tariffs available to find the best one for your energy consumption, location and circumstances. Your gas and electricity comes through the same wires and pipes no matter who you buy it from, so make sure you're not paying over the odds unnecessarily.”