The independent report into the energy market concluded that the “big six” suppliers — British Gas, EDF Energy, E.ON, npower, Scottish Power and SSE — have been overcharging customers. It recommended a price cap that would help slash bills for almost 20 million homes.
The Times reports that within hours of the year-long investigation publishing its findings, Mr Cameron’s official spokeswoman appeared to rubbish its central proposal. “The prime minister’s view on a price cap hasn’t changed; he doesn’t think that price regulation across the market is the right approach,” she said.
However, No 10 later appeared to backtrack, saying that the prime minister was opposed to price controls across the whole market. It did not endorse the report’s findings but said that Mr Cameron would consider a temporary cap on expensive bills.
“The prime minister would be prepared to consider it,” the spokeswoman said. “The prime minister was very clear in the last parliament that we need to be investigating what was going on, and looking at how we make sure we are getting the best deal for consumers. These findings are a contribution to that and we will consider them carefully.”
The report by the Competition and Markets Authority recommended a maximum price for the 70 per cent of households languishing on standard tariffs.
The Tories pledged in their manifesto to implement the watchdog’s recommendations. The report was commissioned after Ed Miliband promised to freeze energy bills if Labour was elected.
The lukewarm reaction from Downing Street appeared to rankle the competitions watchdog. A spokesman said: “We have put a proposal out that everyone is welcome to comment upon but we would remind people that we are an independent competition authority.” The report said that the lack of competition had cost customers £6 billion over the past five years, the equivalent of about £300 per household. Small businesses overpaid by £2.5 billion.
Suppliers exploited the lack of customer engagement, it said. It found that more than a third of households had never considered switching despite average savings of £160 a year.
The report found no evidence of collusion between suppliers and concluded that there was no point dismantling the big six suppliers into separate power generation and supply companies.
Roger Witcomb, chairman of the investigation, blamed confusing and inaccurate bills and unhelpful regulation. “The confusing way energy is measured and billed can make comparing deals daunting. The result is that some suppliers know they don’t have to work hard to keep customers.”
The report found that the poorest customers were the most likely to be paying too much. The watchdog recommended that households with expensive prepayment meters should be the first to be switched to smart meters, which make changing supplier and saving energy easier.
However, the most radical proposal was the temporary price cap. The recommendation will now go to consultation before a final report in December. The CMA has the power to enforce a price cap without legislation.
