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What does the competition investigation mean for energy consumers?

By OVO Energy Wednesday 18 February 2015

The latest report from the Competition and Market Authority (CMA) is good news for energy customers. It is an important step in making sure that loyal customers are no longer punished because of the way the energy market works.

A bit of background. The CMA inquiry was launched last year. It followed years of complaints that the energy market was not working properly and that many customers, in particular some of the most vulnerable, were losing out. The CMA is looking at every part of the energy market and has gathered a huge amount of information and data from energy companies (including OVO). They then work out what is working well and what is not working. 

Today, the CMA published its latest thinking of where the worst problems are. It will reach firmer conclusions in the summer and the final findings are due (a piece of cruel punishment for energy geeks like me) on Christmas Eve.   

The most important findings that the CMA highlighted, from the latest paper, include: 

  • 95% of duel fuel customers of the Big Six (British Gas, EdF, EoN, npower, Scottish Power and SSE) could have saved money by switching supplier or tariff in the last couple of years. On average they would have saved between £158 and £234 a year.
  • A third of customers surveyed by the CMA said they had never even considered switching or thought it was impossible. This group is more likely to include pensioners, people living in social housing, or those on lower incomes.
  • 40-50% of customers have been with a supplier for more than 10 years. For one supplier, the figure is 60-70%.
  • Customer complaints for the Big Six have increased fivefold between 2007-13.

So why is this bad news about the problems in the energy market good news for customers? Most importantly, the CMA shone a spotlight on the fact customers on standard variable tariffs with the Big Six are losing out. While it’s been reported that the Big Six have around 70% of their customers on their expensive tariff*, OVO has around 75% of customers on its cheapest tariff. By exposing these problems, particularly with how loyal and often vulnerable customers lose out, it makes it more likely that these problems will get fixed.  

There is still a long way to go. But a better energy market where suppliers compete on great service they offer and making life easier for customers (as well as keeping their prices low for all) is a step closer. Fixing the market is a nice Christmas present for all of us… 

*UK Utilities: What To Expect from the CMA Investigation on Energy Retail? - The Detailed Low-down, BernsteinResearch, 28 Oct 2014

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1Monthly cost - Representative monthly direct debit costs based on a non-economy-7, dual-fuel, medium user (3100 kWhs elec. and 12500 kWhs gas) paying in advance by direct debit, including online discount.  All rates correct as of 23/08/16, but may go up or down.

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