Regulators to probe UK’s big six energy companies

27 Mar 2014

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Regulators in the UK plan to investigate whether the "big six" UK energy suppliers prevented effective competition in the UK energy market

The BBC reported the energy regulator Ofgem, has, in a report called for an investigation by the Competition and Markets Authority (CMA) which could stretch over 18 months.

Responding to the move Centrica boss Sam Laidlaw said an investigation would lead to delays in investment and "an increasing risk" of blackouts.

The report by the regulator has criticised the ineffectiveness of competition.

About 95 per cent of the UK's energy supply market is controlled by the so called big six - SSE, Scottish Power, Centrica, RWE Npower, E.On and EDF Energy.

Though the report suggests "possible tacit co-ordination" on the size and timing of price rises, it has not accused the major energy firms of collusion over prices.

According to the BBC's industry correspondent John Moylan, the report also cited low levels of switching by consumers and the fact that the market shares of the big six suppliers had not changed significantly over time.

Richard Lloyd, executive director of consumer group Which?, said the regulator was conceding that it had failed to do enough to regulate the market and that the energy companies were privately admitting "they had made a mess of things."

Pointing to the low public trust in the companies that warranted an investigation, Ofgem said, "Profit increases and recent price rises have intensified public distrust of suppliers and highlight the need for a market investigation to clear the air."

Centrica, the UK's biggest supplier which owned former monopoly British Gas, rejected any suggestion of tacit coordination on prices with other suppliers, warning the threat of a break-up could result in lower investment, Reuters reported.

The country's big six are now under intense political scrutiny due to soaring utility bills as the UK gears up for a national election next year.

According to energy bosses and investors, a lengthy inquiry could sow uncertainty that would deter the £200 billion investment they say was needed to avoid potential power shortages in future decades.

"We will act on that uncertainty and that's something the company and the country will have to deal with," Nick Luff, Centrica's finance director, told journalists.

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