Ofgem outlines approach to CMA energy investigation remedies package

Ofgem outlines approach to CMA energy investigation remedies package

Ofgem, Britain’s energy regulator, has today set out its approach to the proposed package of reforms recommended by the Competition and Market Authority (CMA) following its two-year investigation into the sector. The CMA, which published its final report June 2016, concluded that the British energy sector was performing well in several respects. However, it also found that 70% of domestic customers of the six largest energy firms remained on a ‘default’ standard variable tariff, and that these customers could potentially save money by switching to an alternative deal.

Reforms proposed by the CMA included:

  • introducing an interim price for customers on prepayment meters – this price cap will be in place for a ‘transitional’ period between 2017 and 2020;
  • creating an Ofgem-controlled database service, designed to allow rival suppliers to identify and contact customers who have been on their existing supplier’s default tariff for at least three years;
    removing regulatory measures that the CMA concluded have limited the ability of suppliers to innovate and compete for customer business;
  • taking measures to strengthen the ability of price comparison websites and other intermediaries to help customers find the best deals; and
  • removing restrictions on how suppliers can compete for customers on prepayment meters and certain restricted meters.
  • Ofgem has committed to working with the industry and consumer bodies to act on these recommendations quickly and effectively – recognising that it will be able to take immediate action in some areas, while other remedies will need more time to take effect.

Frontier advised SSE during the course of the CMA’s investigation.

For further information, please contact media@frontier-economics.com or call +44 (0) 20 7031 7000.