Developments in the energy retail sector in the UK

The regulator for Britain's Gas and Electricity industries, Ofgem, has published its annual Domestic Competitive Market Review (DCMR). The DCMR reviews the current state of competition in domestic energy supply in Great Britain. Ofgem commissioned Frontier to work on three issues relating to the DCMR: Analysis of data about the domestic gas and electricity sectors in order to gain a better understanding of the key determinants of customer switching behaviour; development of an economic model of competition that is driven by market structure, relative prices, brand value, supplier strategies and switching costs; and analysis of the responsiveness of retail prices to changes in wholesale prices. In a major modelling exercise, Frontier (London) used both household and time series data to analyse the importance of price and non-pricefactors in the customer switching decision. Frontier is currently taking this work forward for Ofgem, with a particular focus on the behaviour of suppliers. See also the Ofgem press release R29. The full text of the DCMR can be found here.