The UK energy supply market regulator OFGEM has endorsed the Competition Authority report which found that millions of retail customers are paying hundreds of pounds more a year than necessary – a collective total of some £1.4 billion.
This is because they are paying the expensive ‘standard rate’ for their household gas and electricity rather than switching away from the Big Six providers who dominate the market to independent rivals who offer better deals – which can be more than £300 a year cheaper.
Dermot Nolan, OFGEM Chief Executive, said: “The CMA report marks a watershed for the industry and consumers. We referred the market to the competition authority for investigation because we did not think it had been working in the interests of all consumers.
“The CMA found the wholesale markets to be broadly competitive and that vertical integration of the large suppliers was not detrimental to competition.
“But it also found that the retail market is functioning as a two-speed market, leaving two-thirds of households disengaged and paying more for their energy than customers who have switched supplier.
“The CMA has put forward a package of remedies to free-up competition and innovation in the market in order to drive down bills and improve service for all consumers. Combined with other changes already happening, such as smart meters and faster switching, these remedies provide an opportunity to transform the energy market and give consumers a new, better deal.
“The CMA’s final report into the energy market points the way to a better future for consumers. We expect suppliers to compete for all consumers by offering good value and innovative deals and providing good customer service.
“We are acting on these reforms and we expect energy companies, consumer groups and government to seize this opportunity to deliver a more competitive and fairer energy market for all consumers.
“We will closely monitor how the energy market develops as these reforms are implemented, and will do so with a particular focus on consumer outcomes. We are committed to assessing competition and consumer outcomes in the GB energy market, and we will not hesitate to take action if we feel that outcomes for consumers are not as good as they could be.”