The results are in...why have our energy prices been so high?

You may recall that toward the end of 2013 the 'big six' energy companies all raised their energy prices at around the same time by as much as 12%. Naturally, this prompted a public backlash and energy regulators Ofgem announced that an independent review of the energy market was to place, with talks of some of the big six companies being broken up due to a monopoly hold on the market. The Competitions and Markets Authority (CMA) were tasked with the 18 month review, and some of the results are now in... 

 

Accounting for over 92% of the UK's entire energy market, the big six have little competition to face. Ministers and energy gurus have long since been advising customers to switch to cheaper, independent suppliers in order to make things more balanced, and while more people have switched in the past year than ever before, there's still clearly a lot of work to do. The initial concern was that Npower, British Gas, SSE, Scottish Power, E.on and EDF had a stranglehold on the market. Meaning that if they raised there prices together, there was little anybody could do to stop them. If the market was deemed 'broken' and to be having a negative effect on customers, the CMA would have it in their power to dissolve the biggest energy companies in the market. 

 

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So how the review go?

Not all of the results are in yet, but a few interesting things have surfaced from the report. The most staggering find is that between 2012 and 2014, a whopping 95% of dual fuel customers could have easily saved money by switching energy comapnies and tariffs. The savings missed range from £158 to £234 every year - nothing to be sniffed at. It's claimed that one of the reasons for this is that the big six energy firms simply are transparent enough with their offerings. Some find it ludicrously difficult to find the best deal for them, with too many 'deals' and tariffs cluttering their websites. It's far too possible for a customer to go onto one of their websites or be called by a salesperson, and stumble upon a deal which sounds good, but isn't necessarily the right one for them. 

 

The head of consumer group, Which? put it quite nicely when he said, "Politicians and regulators have put too much faith in competition driving keener prices for consumers - this simply hasn't worked."

 

One of the main criticisms of the energy companies is that they're quick to raise prices when wholesale cost goes up, but very slow to reduce their prices when they come down (if they reduce them at all).  The energy minister, Ed Davey, is firmly on the side of the consumer, saying that if the CMA find that evidence that the big six are 'abusing their market power', they should be broken up entirely. 

 

"If the evidence from the CMA is strong that the next step ought to be breaking up a company, if the Competition Markets Authority recommend that, certainly I as a Liberal Democrat, talking to the voters in the next election, will make it clear, we would not flinch from taking that tough action," he told Radio 4. 

 

Don't be a 'sticky customer'

The CMA talked of 'sticky customers', those that have been 'inherited' by the big energy companies when it privatised in the 1990's, and it found that many of these customers simply never think about changing and are missing a great opportunity to save money while also doing something positive for the marketplace in general. Are you a stick customer? If so, let us know why you've stuck with your energy company - we'd love to here from you. Tweet us @electricradiatorsdirect

 

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Eco Stores Direct are here to bring you the very latest in energy news, views and opinions from across the UK. They are also suppliers of energy efficient electric heating solutions and are constantly assessing the market for the best products and the latest ground-breaking technology which they think will make a real difference to their customer's homes. Eco Stores Direct are devoted to helping you reduce your carbon footprint and bring down your energy bills and they work hard to raise awareness of energy efficient products that can make all the difference. If you're interested in wall mounted electric heaters or infrared panel heaters, call Electric Radiators Direct today on 0330 300 4444 for a free assessment. 

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