Uswitch responds to CMA energy investigation provisional findings

The Competition and Markets Authority (CMA) has today published provisional findings from its energy market investigation. Commenting on today’s preliminary report, Ann Robinson, Director of Consumer Policy at Uswitch.com, says: “Millions of consumers have been disconnected from the energy market for years. They have switched off from thinking about energy – putting up with poor service and unnecessarily high bills. The CMA is absolutely right to focus on addressing low levels of engagement to boost competition and help make the market work for consumers.

“The facts speak loud and clear: the cheapest energy tariff has plummeted by 17% in the past year, yet the big six standard variable plans – which around 60% of consumers are on – have been cut by a mere 2% in the same period. If more of us shopped around, suppliers would soon stop resting on their laurels with poor service and uncompetitive prices.

“Proper competition is essential to make this market work and so additional regulation should be a last resort. In the interim, the idea of a transitional price cap could go some way to protect the majority of consumers languishing on expensive, standard plans, while reforms to boost competition are made. However, energy suppliers shouldn’t be waiting for regulators to tell them to cut prices when their own costs fall.

“We agree with the CMA that Ofgem’s four core tariff cap, whilst simplifying the market, has actually gone too far and has restricted consumer choice. We welcome a review of this policy and believe that relaxing restrictions will help consumers by increasing innovation, choice and competition. In addition, it’s right that customers on pre-payment meters – who often pay the most – should be the first to receive new smart meters to help them save energy.

“Consumer confidence depends on being able to understand and feel in control of the energy we use. We believe that overcomplicated bills and ineffective annual statements are some of the biggest barriers preventing consumers from becoming more engaged with the market. Despite Ofgem’s reforms last April, bills remain unnecessarily complex, and so we welcome moves to better help consumers understand their bills.

“Many of today’s proposals, if implemented, won’t be in place by next winter or even the winter after that. Consumers need help now so that they don’t endure another winter of rationing the heating just to make ends meet.

“Given wholesale costs are at their lowest rates for five years, there can be no more excuses from the big six suppliers who refuse to pass on double-digit price cuts to standard tariff customers.

“Even with an increase in consumer engagement, some people will still struggle to pay for the energy they need. Some 4.5 million ‘fuel vulnerable’ households spend more than 10% of their income on energy, and more must be to be done to help them. It’s imperative that Government extends the Warm Home Discount and looks at deploying cash from winter fuel payments more effectively to help those struggling most with their bills.

“To tackle high energy costs, consumers can take matters into their own hands by using less, wasting less and paying less for their energy. With £367 a year difference between the average big six standard tariff and the cheapest deal on the market, consumers could also be better off making their own price cut by switching.”

For more information visit http://www.uswitch.com/ or call 0800 093 06 07