What role do price comparison sites play in the energy market?

Today, the chairman of Co-operative Energy accused price comparison sites of ‘misleading’ customers and, as a result, increasing energy prices. Ramsay Dunning named uSwitch, Moneysupermarket.com and Energy Helpline, and gestured for them to come forward and reveal how much they charge in commission every time a customer switched accounts.  Is this just political mud-throwing or is there some substance to the accusations?

 

At a recent conference hosted by Cornwall Energy, Dunning implied that price comparison websites had a negative impact on the energy market, and that rather than work in the best interests of consumers, they’re only looking out for themselves and the profit to be gained from helping customers switch.  It has recently been suggested that this rate of commission could be as high as £60 per account switched. Mud throwing? Maybe, but there may be more to this than meets the eye. Co-operative Energy isn’t a huge player in the energy market and, unlike the big six, they have little reason to retaliate or defend huge profit margins (SSE recently announced extraordinary profits at the expense of its customers).  It’s Dunning’s understanding that the energy companies are being squeezed by comparison sites and this is one of the key factors pushing energy prices through the roof.

 

He also pointed out that the service provided by the price comparison sites was too good to miss for Co-operative Energy, saying they gained a healthy 60,000 customers in 2013.  He couldn’t reveal how much he’d paid the comparison sites in commission as the agreements are confidential, but at the conference he called for full disclosure.  Could it be that Co-op Energy are now becoming ‘big players’ and are beginning to understand why energy companies are forced to increase their bills? Or is this merely another scapegoat such as levy burdens or wholesale costs to explain away extortionate price rises (and later incredible profits).  Where are energy regulators, Ofgem?  Surely they must step in and do their job here…

 

dunningA spokesperson for Ofgem said that price comparison sites indeed do play an important role in the energy market, but also indicated that it was unaware of how much they charged in commission.  So the main energy regulatory body in the UK doesn’t know how much price comparison sites are charging energy companies to direct business toward them? Something is certainly wrong here. The spokesperson went on to say, “Ofgem runs a code of practice for these sites and we are reviewing it to ensure that its objectives are in line with our reforms for a simpler, clearer, fairer energy market. We will be consulting on this in spring.”

 

Good. I guess we’ll have to wait until the Spring to get some insight into who is playing our energy market, how they’re playing it, and how weak and susceptible the infrastructure is to corruption and profiteering.

 

 

 

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