Millions of households with pre-payment meters may see their energy and gas bills cut under changes to the UK’s energy sector expected to be announced today.
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Part of CMA’s plans include a transitional price control for the 4 million households who are on prepayment meters and that face limited competition from suppliers.
The CMA highlighted the argument that customers are paying over the odds for their energy, stating United Kingdom households are paying GBP1.70 billion a year more than what they would pay in a “competitive environment ” .
“Given the scale of the problems and the potential savings on offer, we think bold measures like giving rival suppliers the chance to contact long-standing SVT customers are justified”.
The CMA believe that the only consumers benefiting from competitive price plans are those that actively compare energy tariffs and switch supplier.
“We are pleased that the proposal to open up customer databases is focused on the most disengaged segment of the market – those who have been on expensive standard variable tariffs for more than three years”.
The report also outlined proposals to encourage customers to switch providers – a move created to break the dominance of British Gas, SSE, EDF Energy, npower, E.ON and Scottish Power.
Chief executive Iain Conn said: “The CMA’s proposed remedies are now subject to consultation”.
Energy and Climate Change Secretary Amber Rudd said the CMA’s proposals were a “wake-up call to the Big Six ” .
The CMA stopped short of the most radical proposals, last summer saying it would not recommend a break-up of the Big Six, while p roposals mooted past year for a wide-ranging price cap on SVTs have been rowed back.
She added: “Energy customers should get a fair deal from a market that works for them”.
The CMA estimated that customers have been collectively overpaying by around £1.7bn per year and those stuck on standard tariffs could be saving themselves around £300 by switching. The CMA has recognised that it is vital this is properly governed to avoid customers being bombarded with information from more than 30 suppliers, which could further damage trust.
The latest proposals follow a report last July from the CMA which found “widespread consumer disengagement ” .
But since then, the number of customers shopping around has picked up with the energy regulator recently reporting a 15% rise.
Over the course of the investigation to date, the group has commissioned and completed a general survey of 7000 domestic customers; a further survey of over 1200 domestic tenants and received over 200 submissions from energy suppliers, generators, government bodies, consumer groups, academics and other interested parties; held over 40 formal hearings with these parties; visited power plants and customer service offices in Scotland, England and Wales and published its provisional findings, an addendum to its provisional findings, a main notice of possible remedies and two supplemental ones, and its provisional decision on remedies.
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The CMA must deliver its final report by June 25.
