Energy firms are not being straight with us …

The UK’s energy suppliers were accused of working against fair practice with consumers as Ofgem unveiled a proposed investigation of the industry. After an evaluation of the retail energy market, the energy watchdog said that for the first time it had evidence that the six largest firms had increased bills when responding to rising costs faster than reducing them when expenses fell.

Ofgem has threatened the main energy prociders with a referral to the Competition Commission if they fail to reduce the complexity of tariffs and prices. The regulator also wants them to sell off somewhere between 10% and 20% of their electricity output, thereby allowing smaller firms to enter the market and increase competition. The watchdog complained about the range and complexity of tariffs available and called on firms to reduce them, thus making price comparison easier for the consumer. Ofgem began its study in November after it emerged that increases in prices to consumers had allowed profit margins to soar by an average of 38% at the biggest suppliers which included E.ON Energy, EDF Energy, British Gas, npower, Scottish Power  and Scottish & Southern Energy.

Ofgem’s report was broadly welcomed by the Department of Energy and Climate Change and energy consumer groups. Ofgem chief executive Alistair Buchanan said: “Consumers must have confidence that energy companies are playing fair at a time when they are being asked to foot the £200 billion bill to pay for the investment Britain needs to ensure secure and sustainable energy supplies.”

The review identified that  competition was being “stifled” by complex tariffs, a lack of transparency and poor supplier behaviour. The range of available tariffs has risen by 180 to more than 300 in the last three years, leaving customers “bamboozled”, Ofgem said.


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