A final report – two years in the making – on energy market reforms has also rowed back on its estimates for the scale of overcharging by the big six suppliers but still believes it amounts to £1.4bn annually.
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The CMA research also revealed that customers are now paying £1.4bn more than they would be in a fully competitive market.
A price cap will also be transitioned (2017-2020) in for the 4m households on a prepayment meter, this is meant to reduce the combined bill for these customers by £300m a year.The CMA believe that the detriment suffered by prepayment customers is particularly high and they have not been able to benefit from competitive prices in the same way as other customers due to the constraints we have identified.
Martin Cave, who was also on the panel, isn’t happy.
The CMA said suppliers would be ordered to give energy watchdog Ofgem details of all customers who have been on their default tariff for more than three years, which will go on to a secure database. However, the options to switch are much more limited for the four million households on these meters.
On Friday the CMA is set to publish a 500-page report, and according to The Times, it said the investigation cost them about £5m, including fees paid to external advisers and solicitors of about £440,000.
This will allow rival suppliers to contact people by letter and offer cheaper and easy-to-access deals based on their actual energy usage, the CMA said, though customers can opt out if they want.
The CMA is also introducing a range of measures to revitalise competition including reform of systems for measuring and charging energy that distort competition between suppliers; reducing the costs of transmitting electricity; and using competition to help ensure that financial support for low carbon generation is allocated at the lowest cost to customers.
“The CMA has completely missed the mark, having spent two years debating how to fix the industry”, he said. “Our measures will help more customers get a better deal and put in place a modernised energy market equipped for the future”, said Roger Witcomb, chairman of the energy market investigation.
It will get more powers to help it scrutinise the performance of the market and suppliers as well as the impact of policy.
The changes will be accomplished via a combination of CMA Orders and recommendations to Ofgem and government.
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The energy bills of about 4m households could be cut by £75 a year while millions more will be sent marketing mail urging them to switch supplier, under reforms unveiled by the United Kingdom competition watchdog. With the cost to consumers of an uncompetitive market standing at £1.4 billion, it’s high time for energy companies to accept they need to change.
