Written by our recommended Tax specialist Nigel Reynolds from Reynoldsandco.
Following an 18-month investigation into the UK energy market, the Competition and Markets Authority (CMA) has proposed a raft of reforms to increase competition and give consumers a better deal.
The watchdog found that, in total, customers may have been paying around £1.7 billion a year more than they would in a genuinely competitive market. Its recommendations include:
- that the regulator, Ofgem, keeps a database of customers that have been on a standard rate for three years, which will then be opened up so that these customers can be targeted directly by other suppliers
- ending the restriction on suppliers to offer just four tariffs
- strengthening the ability of price comparison services to help consumers find the best deal
- tackling ‘rollover contracts’, whereby customers are automatically put on less favourable terms.
It also recommends a price cap for all households using pre-payment meters – numbering around four million – until new smart meters are rolled out in 2020.
Responding to the CMA report, Energy Secretary Amber Rudd said: ‘This is a wake-up call to the big six [energy providers]. Energy customers should get a fair deal from a market that works for them. That’s why we called for the biggest ever investigation into the energy market and won’t hesitate to take forward its recommendations.’
Rhian Kelly, Confederation of British Industry (CBI) Business Environment Director, said: ‘Ensuring the energy market works for consumers is key. We need a market that bill payers have confidence in and can navigate easily, and we hope this ongoing investigation helps ensure this.
‘The proposal to lift the cap on deals that providers can offer is good news. It will give consumers more choice and help companies innovate to bring costs down.
‘It’s important that other reforms focus on supporting consumer engagement. Where caps on tariffs are considered, these should be targeted at the most vulnerable customers, helping those who are less able to shop around for the best deals.’
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