In the latest in our series analysing the responses of key players to the CMA investigation into the UK energy market we focus on Which? and their proposals for the energy market.
Which? the consumer group turned price comparison website have contributed their thoughts to the CMA investigation into the energy market by calling for a future regulator to “implement a guideline price for retail energy suppliers”.
Which? believe that such an innovation would “drive competition between suppliers in a bid to reduce consumer bills”
We’re far from sure.
The move that Which? are calling for whilst not full price regulation, something that could not work in a non-nationalised industry, would be intended to allow consumers to see what a ‘fair’ energy price is through the publishing of a ‘price to beat’ benchmark.
This makes no sense whatsoever.
The concept that a ‘price to beat’ would fall to the lowest common denominator is as wishful as it is errant.
More helpfully however Which? have also revealed that just 18% of customers surveyed trusted their energy suppliers to offer a ‘fair’ price and that more than half found it a challenge to compare energy prices.
Richard Lloyd executive director of Which? whose palatial offices on Marylebone Road in London border Regents Park said:
“Big reforms are needed to restore confidence in the industry and to guarantee fairer energy prices for consumers.
“The Competition and Markets Authority should now investigate how the independent regulator could establish a price people can trust that will spur suppliers to compete and reassure worried consumers that they’re not being ripped off.
“Meanwhile, energy companies should use simple pricing to increase confidence in the industry and boost competition by encouraging switching”
Whilst we fundamentally question the economics behind Lloyd’s benchmark idea the latter point on simplified pricing and suppliers being the turkey voting for Christmas to encourage switching are also well wide of the mark.
Simplified pricing will reduce the opportunity for customers to strike great deals, particularly in the business market, as pricing becomes homogenised and competition sucked out. The key is transparency of pricing. Not simplified, and naturally higher pricing.
Which? should know this.