Member Article

Energy providers probed by CMA over inflated prices

The ‘Big Six’ energy providers are regularly charging higher prices to their long term customers, according to a case update from the Competition and Markets Authority.

The investigation by the CMA was launched last July in response to an earlier referral from the energy regulator Ofgem.

Ofgem had been concerned because of widespread disquiet at the dominance of the industry by just six big operators, and are now under scrutiny themselves over a market review leading to a reduced number of tariffs for customers.

Currently the big six energy firms - SSE, Scottish Power, Centrica, RWE Npower, E.On and EDF Energy - together account for about 92% of the UK’s energy supply market.

In total 95% of dual fuel customers on standard variable tariffs would have saved £158 to £234 a year if they had switched provider between 2011 and 2014 the CMA found

According to the evidence many of these are vulnerable customers.

Millions of these customers, who are on standard variable tariffs, rarely switch.

The report will say that 40% to 50% of customers have been with a supplier for more than 10 years. For one supplier the figure is as much as 70%.

But the report will warn that elements in the market seem to be consistent with the hypothesis that the six large energy firms have “unilateral market power” over these standard variable tariff customers.

It notes that the firms have consistently charged higher prices for these customers compared with those on non-standard tariffs which “provides some support to the view that these suppliers can segment the market and price discriminate”.

Jessica Lennard, head of Corporate Affairs, OVO Energy, a Which? recommended energy supplier said: “The CMA investigation has taken a massive step forward in highlighting how millions of energy customers, a disproportionate amount vulnerable, are being punished not rewarded for their loyalty.

“The sheer scale of this will come as a shock to many people. It’s fantastic news for customers that this issue is being brought into the spotlight. Companies taking advantage of their customers are now on borrowed time.”

This was posted in Bdaily's Members' News section by Clare Burnett .