Ofgem announces plans to launch an official investigation into the big six energy companies because of excessive profits, increasing prices and lack of competition.
Which? has called for this investigation and it is the first ask of the Which? energy campaign to Fix the Big Six.
The big six energy companies are British Gas, EDF Energy, Eon, Npower, Scottish Power and SSE and together cover about 95% of the domestic energy market. Ofgem’s report found that profits from the energy suppliers retail businesses increased from £233 million in 2009 to £1.1 billion in 2012.
Ofgem has announced that it will refer these energy companies to the Competition and Markets Authority in order to improve the market for small energy suppliers and, more importantly, consumers.
Which? energy campaign
Which? executive director Richard Lloyd said: ‘It is the right decision to refer the energy market to a full-scale investigation and a hugely important step towards restoring trust in an industry that has lost the confidence of its own customers.
This investigation must work quickly to expose what is really happening in the energy market and confirm where competition is lacking. It is make or break time for the energy suppliers, who should not wait to be forced into action but instead start now to put customers first, keep costs as low as possible and trade transparently.
Which? will work to ensure the voice of consumers is heard throughout the investigation, and we will continue to argue for radical reforms that ensure the outcome is a market that works competitively for everyone and especially for the millions struggling with spiralling bills.’
Four in five consumers do not trust their energy provider
Although it may take up to 18 months before a decision is reached, the pressure placed on these energy suppliers could have positive effects for consumers in the near future, as companies vie to keep their existing customers. The regulator’s announcement comes a day after SSE said it was freezing its prices until January 2016.
The separation of the generation and retail chains of the energy companies could also spell the end of the monopoly of the energy market, and consumers might be able to look forward to lower, more competitive prices for their gas and electricity.
The Which? consumer insight tracker has shown that energy is still the biggest concern that consumers face today, with 77% of consumers worried about energy prices.
To find the best energy deal for you check out Which? Switch to see how much you could save on your energy bills.