ACS has welcomed Ofgem’s decision to refer the energy market to the Competition and Markets Authority.
The investigation, which is due to commence immediately, will look at the following areas:
- The relationship between the supply business and generation arms of the six largest suppliers
- Barriers to entry and expansion for suppliers
- The profitability of the six largest suppliers
- Whether or not there is sufficient competition between the large energy suppliers
- The trend of suppliers consistently setting higher prices for consumers who have not switched
- Low consumer engagement that contributes to weak competitive pressure in the market
ACS Chief Executive James Lowman said: “This investigation is long overdue. There are clear issues in the energy market which act as a barrier for our members, both in terms of trust and engagement with suppliers. The business marketplace is often seen as more competitive, but within the convenience sector there are still a significant majority of stores that are supplied by the ‘big six’ energy companies and it is important that the investigation considers improving competition both for domestic customers and small businesses.”
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.”
