In a move that will surprise nobody but which will delight many, Ofgem have today formally referred the UK energy market for a full competition investigation.
Following on from their proposal in March and the subsequent consultation Ofgem have asked the Competitions and Markets Authority to investigate the market.
Announcing the final decision, Dermot Nolan, Ofgem Chief Executive, said:
“Now is the right time to refer the energy market to the CMA for the benefit of consumers.”
“There is near-unanimous support for a referral and the CMA investigation offers an important opportunity to clear the air.”
“This will help rebuild consumer trust and confidence in the energy market as well as provide the certainty investors have called for.”
“The energy market is also going to change rapidly over the next few years with the roll-out of smart meters, the government’s electricity market reforms, and closer integration with European energy markets.”
“A CMA investigation should ensure there are no barriers to stop effective competition bearing down on prices and delivering the benefits of these changes to consumers.”
Whilst this news will be met with glad tidings by many, any findings, outcomes or resolutions will be a long time coming.
Ofgem currently estimate that the CMA investigation will be in a position to publish its final decisions by the end of 2015, however an 18 month investigation is at the more optimistic end of timescales and inevitably any actual change will take many months, if not years to be implemented after any final publication date.
As a result, and given scoping of the investigation is still in process, the UK energy market will likely remain in status quo for the foreseeable future.
Crucially however the impact of the investigation both ongoing and in conclusion will have very different focuses for the domestic market and the non-domestic business market.
The fundamental differences between the two markets means that much of the concerns underpinning the calling of the investigation are less of an issue or a non-existent problem in the business energy market.
As a result, and quite naturally, the major focus for the CMA will be the domestic market and business energy will continue to operate as the more competitive of the two and in many ways be held up as the example to follow.
For instance the suspicion of retail price collusion and wholesale price decreases not filtering through to customers quickly enough is a big concern in the domestic market. Happily however, the structure and pricing mechanism in the business market is entirely different and does not lend it to such issues.
To find out more about the differences between the business and domestic energy markets visit our Domestic vs Business Energy Guide
If you’d like to take advantage of the more open and transparent nature of the business energy market right now then we’d love to hear from you. Simply give us a call on 0800 051 5770 to discuss how your business can benefit.