Competition watchdog publishes report on energy market

24 July 2014

energy The folks at the Competition and Markets Authority (CMA) have published their report into the energy market.

Are you all set to have your mind blown? Ready to be told things that will make you scream with glee that someone is on your side?

The CMA have identified opaque pricing, the dominance of utilities and an uncompetitive retail market as the main negative factors of the industry.

Doesn't that feel amazing? Finally, someone is sticking up for us all! They've translated our feelings into a succinct report! And, obviously, we should hand the CMA a degree in stating the bleedin' obvious.

Their investigation into the energy market isn't finished yet and they'll publish a final one before Christmas Day in 2015.

"We are looking to identify the underlying causes, at both wholesale and retail level, which could be leading to the widespread concerns that have surrounded this market in recent years - including rising energy bills, service quality, profitability and uncertainty over future investment," said Roger Witcomb, chairman of the Energy Market Investigation Group.

The CMA statement said they'd spotted "four candidate theories of harm" which explain how market characteristics were adversely affecting competition. Shall we break them down?

- Opaque prices and low-level liquidity in wholesale power and gas create barriers to entry in retail and generation.

   - Vertically integrated electricity companies harm the competitive position of non-integrated firms to the detriment of customers.

   - Market power in electricity generation leads to higher prices.

   - "Energy suppliers face weak incentives to compete in retail markets, due in particular to inactive customers, supplier behaviour and/or regulatory interventions."

So in short, the Big Six aren't keen on telling us how they come up with their prices, there's not enough competition to get the prices down, it is too hard for new energy companies to start up and people can't be bothered to switch suppliers because they're all rubbish. You knew that. Everyone knew that.

"This is a market which is very complex so it is important at an early stage to focus the investigation on the most relevant issues," said Witcomb.

TOPICS:   Utilities

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