CMA energy market investigation leads to huge reforms

The Competition and Markets Authority (CMA) publishes report investigating energy market

CMA energy market investigation leads to huge reforms

The Competition and Markets Authority (CMA) has at last concluded their 2 year study of the energy industry.

The CMA has found that up to 70% of households are currently on standard tariffs with the Big 6 energy suppliers and consequently could be overpaying by as much as £1.4 billion. They have also announced that customers could save £300 a year through switching.

The investigation into the market which is set to cost the industry more than £80 million, has led to a number of recommended new measures to shake up the market, which by and large disagree with the reforms made by industry regulator Ofgem.

In what is possibly the most unexpected measure, the CMA has suggested that the details of every household which hasn’t switched in the last three years be registered on a national database.

The households featured on this database can then be used to allow other suppliers to approach these customers and offer a better deal. However, households will be able opt-out of featuring in the database at any given time.

Other recommendations include, a cap being placed on prepayment tariffs to protect the 4 million customers that currently pay significantly more for their energy. However, this would only be until the introduction of smart meters in every UK home.

Scrapping the four tariff rule imposed on suppliers by Ofgem and also allowing said suppliers to negotiate exclusive deals with comparison sites to increase competition within the market.

In response to CMA’s report, Dermot Nolan, chief executive of Ofgem, has said: ‘The CMA's remedies, combined with smart meters and faster switching, clear the way to secure a new and better deal for all consumers, especially the vulnerable.

‘Ofgem urges the industry to get behind the entire package of remedies and to work with us to deliver an energy market that works for both active and disengaged customers as quickly and effectively as possible.’


Mark Todd, co-founder, energyhelpline said –

“The CMA has turned back the clock two years, hitting a huge reset button on the energy market, sweeping away many of OFGEM’s (the regulator’s) recent reforms.

Following the CMA report, expect tariffs to once again have more complex pricing structures, more tariffs per supplier, and more exclusive offers and cashback. A more vibrant switching market in short.

The onus is back on the consumer to switch as no market can work unless the buyers take an interest. To protect yourself, consumers must compare and switch regularly, and price comparison sites are the best tools available to do so. The CMA highlight that the rewards are great - by switching, customers can save over £300 a year or £3,000 over a decade if you get in the habit. Yet many don’t and, if you don’t switch, the hard truth is that you are likely to end up on an expensive standard tariff and get ripped off.”



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