The respective prices of gas and electricity have risen by around 125% and 75% in just 10 years. While that's partly due to the cost of green tape and investment in infrastructure, it's no wonder that consumers and small businesses have grown increasingly fed up with toll energy bills take on their wallet.
Before the General Election the Labour party was ridiculed for offering a cap on bills, but today it seems that the competition regulator doesn't share the critics' scorn. The Competition and Markets Authority's long-awaited report into the energy market confirmed what we all knew: a lack of clarity combined with consumers' disinterest in switching have led to higher prices.
'There are millions of customers paying too much for their energy bills – but they don’t have to,' said Roger Whitcomb, chairman of the investigation. 'Whilst competition is delivering benefits to increasing numbers of customers, mainly through the growth of smaller suppliers with cheaper fixed-price deals, the majority of us are still on more expensive default tariffs. Many customers do not shop around to see if there’s a better deal out there – let alone switch.'
Some had hoped the CMA would call for the breaking up of 'The Big Six' energy suppliers, but it seems the regulator is more concerned with the way consumers behave than the state of the market. It has, however, floated the idea of a temporary price cap that would be set by the CMA or Ofgem and would shift those who don't switch at the end of their contract onto a default tariff.
The cap would remain in place 'until other measures have led to a more competitive market.' Those include increasing the role-out of smart meters to encourage consumers to be more 'engaged' with their energy use and other unspecified measures to encourage consumers to shop around. Reducing the burden of regulation could help new entrants flourish, but then a regulator wouldn't recommend that, would they?
The CMA report could have been a massive headache for The Big Six, but despite the prospect of a temporary cap they are likely feeling pretty relieved today.