Probe into ‘broken’ energy market demanded

Shadow Cabinet minister Caroline Flint
Shadow Cabinet minister Caroline Flint
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Regulators are being urged to launch an investigation into the energy market amid fresh claims that it is “broken”.

Consumer group Which? and the Federation of Small Business (FSB) will today announce that they have written a joint letter to the Office of Fair Trading, Ofgem and the Competition and Markets Authority, saying that competition needed to be increased.

The groups said nine in 10 consumers believed the energy market should be referred for further investigation, while seven in 10 are worried about energy prices and only one in five trusted energy companies.

The big six gas and electricity suppliers are expected to hear soon, possibly later this week, whether there is to be a full competition inquiry into the energy industry.

The financial, energy and consumer regulators have been reviewing the working of the market for the past three months and are expected to publish a final report within days.

There is speculation that the report could trigger a full competition inquiry, comparable to those seen in the supermarket sector.

The news comes against the backdrop of considerable rises in the cost of gas and electricity, often rising far ahead of the rate of inflation. It was revealed earlier this month that fuel costs had risen by as much as 55 per cent in the past 10 years and Chancellor George Osborne announced in last week’s budget that he would be looking to help cut energy costs for small businesses struggling with repeated rises in their bills.

Labour leader Ed Miliband has previously pledged that he would freeze energy bills for 20 months if Labour won next year’s General Election. The average annual fuel bill is now thought to be more than £1,300 a year.

Which? and the FSB said in their letter that ever rising energy bills were a “major concern” for small businesses.

“It is clear that the energy
market is broken and urgently needs fixing. Top of our concerns is the need to increase competition and to make trading transparent.

“For too long the lack of competition in the energy market has not been addressed. It is now time for radical changes that deliver an effective, competitive market that works for everyone, before the scale of this crisis worsens.

“We all want to see a transparent market where consumers and businesses alike can understand their bills, compare prices and switch easily.

“We want to see the presence of strong competition right across the industry drive affordable pricing that gives everyone the confidence they are paying a fair price for their energy,” said the letter.

Caroline Flint, Shadow Energy and Climate Change Secretary, said: “Rising energy bills are causing a cost-of-living crisis.

“Consumers need to be confident that the energy market works for them and the prices they pay are fair. Anything which can help shine a light on the workings of the energy market is welcome.

“But consumers will be rightly disappointed if the Government uses this review as an excuse to kick the problem of rip-off energy bills into the long grass.

“We have hardly been short of reviews of the energy market in recent years – but what has been missing is decisive action to protect consumers.

“The next Labour government will undertake the biggest overhaul of our energy market since privatisation.

“Our plans will break up the big energy companies, put an end to their secret deals and make tariffs simpler and fairer.

“And until these reforms kick in, we will put a stop to unfair price rises by freezing energy bills until 2017, saving the average household £120.”