There has been a long debate about how the energy market delivers for consumers, resulting in an investigation by the Competition and Markets Authority (CMA) – the official body responsible for competition in different industries. The provisional findings and possible remedies of the energy market investigation were published last week (07/07/15).
The CBI views the investigation as a welcome opportunity to draw a line under the debate in the energy market and restore some trust in the industry. It is also an opportunity to make sure the energy market is delivering the right outcomes for consumers and the CMA’s findings identify some key areas where there is room for improvement. So what did the investigation tell us?
2. Regulation must be smart and encourage innovation
The energy market is one where there is a particularly important role for regulation, for example to help protect consumers. However, the investigation recognised that some of the rules energy companies have to follow could be stopping them from trying new things that could actually benefit consumers.
One example is that energy suppliers are only allowed to offer customers four tariffs, and cannot easily offer new and innovative products to consumers. Smarter regulation can help the industry deliver more choice and attractive products for consumers.
4. ‘Vertical integration’ does not impede competition in the energy market
A long-running debate is over energy companies that own both energy production and the supply to consumers – known as ‘vertical integration’. Some were worried that these firms have a competitive advantage over smaller suppliers, who tend not to own generation capacity.
However, the investigation’s provisional findings found that when companies own both supply and production of energy, it does not impede competition between firms. In fact, the investigation argued that it could make firms more efficient and save money that could be passed on to consumers.
So what do you think? Have you ever looked into switching energy suppliers? What would make you a more engaged customer? Let us know in the comments below or on social media via @bizdebate