Energy companies are making in the region of £500million in excess profits from small businesses in the UK because of a lack of competition. This is the finding of a provisional report into the energy market compiled by the Competition & Markets Authority.
The rapid increase in domestic energy prices in recent years and the perception that profits and overall prices are too high have been a major source of public concern and were key drivers for the market investigation reference.
After a sustained period of real terms reductions in the years following privatisation, domestic gas and electricity prices have increased significantly over the last ten years.
The CMA calculate that, over the period Quarter 1 2012 to Quarter 2 2014, most customers of the Six Large Energy Firms could have made considerable savings from switching a combination of suppliers, tariffs and payment methods. For all the dual customers of the Six Large Energy Firms, average potential gains from switching externally to any tariff offered were equivalent to 14% of the average bill (equivalent to about £160 a year) over the period.
The gains available to specific customers depend considerably on the tariff and payment method that customers are currently on and the supplier they are currently with: for some categories of customer, the average gains from switching were equivalent to more than 20% of the bill over the period.
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