CMA vs Ofgem: Competition watchdog to report findings from energy market review

The Competition watchdog will publish the provisional findings of its energy market investigation tomorrow, in which it is expected to slam rival regulator Ofgem over a failure to promote competition in the market.

 

The Competition and Markets Authority (CMA) began looking at the UK energy market in June last year, after a referral by Ofgem, which was concerned that competition was “not working as well as it should for consumers”. 

 

The CMA is set to ignore calls for a break up of the Big Six energy firms, and analysts at Jefferies said last week that they expect the watchdog to “reiterate that the wholesale electricity market is competitive”. 

 

In particular, the analysts said, the CMA is likely to state that vertical integration, where firms own both power stations and retail operations, “is not in itself a barrier to  competition”.

 

The competition regulator is instead expected to put the spotlight on a general lack of customers switching energy providers, and on Ofgem policies that do not promote competition. 

 

In an update to the market in February, the group said it had found that customers were unlikely to switch from their established provider.

 

Market experts said the CMA’s preliminary findings will likely focus on potential remedies and measures aimed at increasing customer engagement in the energy market, and to promote further competition within the sticky group of customers.

 

Tomorrow’s report is also expected to single out the “four tariffs” rule that Ofgem imposes on energy firms, allowing them to offer no more than four core tariffs each for gas and electricity, as having a detrimental effect on competition. 

 

As City A.M. reported last week, energy analysts and consumer groups expect the CMA to call for this rule to be overturned.

 

The CMA declined to comment  yesterday.