London: Britain’s largest energy suppliers face a price cap after a competition watchdog found they overcharged households by around £1.2 billion (Dh6.84 billion) each year between 2009 and 2013.
Britons have seen energy bills double in the last decade to 1,200 pounds a year, leading to allegations that utilities were cheating them. The utilities have denied this.
Suppliers were acting within the law and not making excessive profits but consumers who failed to switch energy provider were charged too much money, the Competition and Markets Authority (CMA) said on Tuesday in provisional findings from a sector-wide inquiry.
“We are proposing a transitional price cap which would actually protect those who are disengaged and indeed those who are most disadvantaged,” Roger Witcomb, non-executive director of the CMA, told BBC radio.
Britain’s biggest energy supplier, Centrica which owns British Gas, said it had “concerns” about some of the proposals, including the price cap. Its shares traded down 0.9 per cent at 0841 GMT, while rival energy supplier SSE saw its stock fall 1 per cent.
The CMA launched an investigation a year ago into whether Britain’s six largest suppliers, which hold around 90 per cent of the market, were abusing their dominant market position.
The companies are SSE, Scottish Power, Centrica, RWE npower, E.ON and EDF Energy.
The CMA found these large suppliers’ lowest-priced deals were on average higher than those offered by their smaller competitors. Britain’s independent energy providers include Good Energy, Ovo Energy or Frist Utility.
PRICE CAP Good Energy Chief Executive Juliet Davenport called for more action to encourage consumers to break with suppliers.
“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,” said Davenport.
A price cap is intended to address these issues and to prevent customers who don’t switch supplier regularly from being automatically moved on to higher-priced tariffs.
The CMA said it was now seeking views on the level and duration of the price cap.
Consumer groups said the findings showed the energy market was failing consumers and that more needed to be done to protect them.
“We won’t hesitate to take further action where the market is not delivering a fair deal for consumers,” said Britain’s Energy Secretary Amber Rudd.
Prime Minister David Cameron has said he would implement changes to the energy market in line with the findings of the CMA investigation.
The utilities escaped the worst-case outcome of the competition probe that could have led to their break-up, a scenario that has weighed on their share price since the start of the investigation, analysts said.
“The CMA’s findings will provide positive clarification that will be helpful to the companies,” said Whitman Howard utilities analyst Angelos Anastasiou.
The CMA is obliged to publish its final findings by December 25.
