As the Competition and Markets Authority investigation into the energy market continues more bad news has hit the Big 6 
energy suppliers, with Citigroup forecasting British Gas, Scottish Power, SSE, EDF Energy, nPower and E.ON can look forward to losing up to a quarter of their current customer bases by the end of the decade. If that wasn’t bad enough Citigroup have predicted that the “worst performing suppliers” will exit the market altogether.
Citigroup said:
“We believe there will be a reversal of previous industry consolidation over the coming years as independent suppliers and generators take market share and less competitive players exit.
“nPower, with the highest admin costs per customer and weak customer service score, appears to us least well positioned to retain market share.
“[They will need to] restructure their supply businesses drastically to lower their costs and become price competitive, and improve their customer service experience to stem the flow of customer losses.
“We may well see some participants simply running their supply business to maximize cash flow in the short term and exit the market at some point”.
The choice, according to Citigroup’s analysis is for the Big 6 to retain high prices, supporting current profit levels whilst losing customers to cheaper more fleet of foot rivals or revising pricing levels and profit margins downwards in order to retain business, leaving current business structures and investment at risk.
Indeed Citigroup believe members of the Big 6 may simply decide to sell their customer portfolios in a new round of consolidation or simply leave the UK market altogether.
The official line from the regulator Ofgem and the CMA however is that something needs to change, not least a thorough review of the profit margins and reporting of the Big 6. Whilst no one would pretend all is well in the UK energy market, the consequence of further consolidation, less choice and lower investment are simply not the ingredients of an improving competitive landscape.