Regulator Ofgem has accused Gas and electricity suppliers of failing consumers and has proposed to sweep away “complex and unfair pricing practices”.Ofgem decided after a review of the domestic energy market, that complicated price tariffs and bad behaviour by suppliers have been stifling competition.
Alistair Buchanan Chief Executive said: “Energy companies have failed to play it straight with consumers and so Ofgem is proposing to break the stranglehold the Big Six have over the electricity market. Consumers have told us that energy suppliers’ prices are too complicated.
“It is no surprise that they are bamboozled when tariff complexity has increased from 180 to more than 300 since 2008.’
“That is why we are planning to sweep away this complexity so suppliers’ prices are fully exposed to allow easy price comparisons.”
The Big Six are British Gas, e.on Energy, EDF Energy, Scottish Power, npower and Scottish & Southern Energy.
Ofgem said that, for the first time, it had evidence that the suppliers had pushed up prices in response to rising costs more quickly than they reduced them when costs fell.
It launched its review in November after it emerged that price increases had seen suppliers’ profit margins soar by 38%.
The regulator has given them eight weeks to reform the way they operate or it will refer them to the Competition Commission.
To avoid referral, it has asked suppliers to comply with a series of proposed reforms beginning with less confusing tariffs to allow customers to compare prices more easily.
A Scottish Power spokesperson said: “We believe that our pricing is cost reflective and in accordance with Ofgem’s Guidelines, but we will of course co-operate fully with Ofgem in the investigation and in reviewing their concerns.”
Other investigations into the handling of complaints and mis-selling by other energy companies are continuing.
