CMA energy report: the industry reacts

After more than a year's waiting with bated breath, the energy sector has finally learned the initial findings of the Competition and Markets Authority (CMA) investigation into the market, and has offered a mixed reaction.

The CMA has today published its provisional findings as part of its investigation into the energy market, laying out its proposed remedies for an anti-competitive market in which customers are rapidly losing trust.

The suggested reforms, including a ‘safeguard tariff’ with a fixed maximum price, have received a mixed reception, with some arguing the CMA has not gone far enough. “They’ve been studying this for more than a year and they still have many open questions,” said First Utility founder Braham.

Independent suppliers have taken the opportunity to get their claws into both the big six and Ofgem. “The regulation which was intended to make things easier and fairer… has… made things worse and actually got in the way of competition,” said Good Energy chief executive Juliet Davenport.

“The CMA has shown that big six market power over disengaged customers has allowed them to exploit this position through their pricing,” Braham added.

Energy distribution companies also came under fire with Ecotricity founder Dale Vince slamming Ofgem for “allowing monopoly distribution companies to continue for years”, making up to 30 per cent profit margins. “As a result I would have expected the CMA to have analysed the role of the regulator itself in their report – we need proper regulation in the industry to stop these kind of abuses,” he said.

Here’s how industry reacted to the CMA’s provisional findings and proposed remedies as part of its energy market investigation:

Energy UK chief executive Lawrence Slade

“The industry will now fully consider the report. These are not the final results and our members will continue to work closely with the Competitions and Markets Authority, government and the regulator to ensure the best outcome for all customers.”

CBI deputy director-general Katja Hall

“Consumers must lie at the heart of competitive markets. This thorough investigation is a good opportunity to restore public confidence in the energy market. These early findings demonstrate that every effort must be made to ensure people have the information they need and can more easily shop around for the best deal.”

Centrica chief executive Iain Conn

“We welcome the CMA’s wide-ranging review, which recognises the realities and difficulties of implementing policy, pricing and regulation into what is already a complex marketplace. From the summary we have seen, this looks to be a comprehensive and thorough assessment… While we have questions and concerns about some of the proposals we look forward to engaging with the CMA in the next phase of this process.”

SSE chief executive Alistair Phillips-Davies

“We will… continue to work constructively with the CMA as this process continues to help ensure that the opportunity presented by this investigation is fully grasped, and that the final result is an enduring outcome that gives customers confidence, allows regulators to regulate, and encourages investors to invest in the Great Britain energy market.”

RWE Npower spokesman

“Today’s CMA report dispels myths about the energy industry and proposes important areas of potential change for both household and small business customers… We will continue to work with the CMA to ensure that we understand the full impact on customers and the market so that unintended consequences are avoided, and the very best outcome for customers is achieved.”

EDF Energy spokesman

“EDF Energy will carefully review the proposals and looks forward to working with the CMA to make the market work better for customers. EDF… believes that digital innovation can be used to put customers in control, helping them save energy, have simple bills and choose tariffs more easily.

“EDF will continue to work with the CMA team as they develop their final conclusions and is determined to be part of the solution in creating the thriving low-carbon economy the country needs.”

Eon UK spokesman

“The publication of the provisional findings, together with the notice of possible remedies, is a major milestone of the CMA’s investigation and as is right, we will now review the material in advance of responding in detail… we will continue to provide all necessary and relevant information as we move towards the final report in December.”

Scottish Power chief executive of Retail and Generation Neil Clitheroe

“The CMA backs competition and dispels the myths that wholesale energy markets or vertically integrated companies are not working in the interests of consumers. But more needs to be done to improve competition so that the retail market works better for consumers, including addressing the CMA’s concerns about potential higher prices due to weak consumer engagement.”

First Utility founder and chief financial officer Darren Braham

“For too long, customers have been ripped off by the big six. The CMA has shown that big six market power over disengaged customers has allowed them to exploit this position through their pricing.”

Good Energy chief executive Juliet Davenport

“It’s great that the CMA has recognised that the customer isn’t always getting the best deal. What we need now is next steps from the CMA that will enable us to ‘unstick the stickies’, and light touch regulation which helps the consumer.”

Ecotricity founder Dale Vince

“The industry is fundamentally dysfunctional. Proper regulation is at the root of the solution, but simplifying switching will make a big difference, too – it just needs to be brutally simple. 

“There is no mention of the non-energy part of the industry, which makes up for around half of a customer’s bill. Distribution companies, for example, are… a monopoly, making up to 30 per cent profit margins… Ofgem has allowed these monopolies to continue for years and as a result I would have expected the CMA to have analysed the role of the regulator itself in their report – we need proper regulation in the industry to stop these kind of abuses.”

uSwitch.com director of consumer policy Ann Robinson

“Many of today’s proposals, if implemented, won’t be in place by next winter or even the winter after that. Consumers need help now so that they don’t endure another winter of rationing the heating just to make ends meet. Given wholesale costs are at their lowest rates for five years, there can be no more excuses from the big six suppliers who refuse to pass on double-digit price cuts to standard tariff customers.”

Institute of Directors senior infrastructure adviser Dan Lewis

“Bigger questions clearly have to be asked about how energy markets are regulated in the UK. Both the Energy and Climate Change Committee and now the CMA have criticised the regulator, Ofgem, claiming it has not done a good enough job to keep network costs in check. It will be interesting to see if this leads to the emergence of a more creative, critical and competitive tension between the regulators, as they cast an eye over each other’s work.”

MoneySuperMarket energy expert Stephen Murray

“The investigation by the CMA hasn’t unearthed any significant new revelations of serious failings in the UK energy market but has highlighted that millions of consumers are paying over the odds due to lack of competition in the sector.”