Efficient Energy Markets Call for Change

Ofgem, the Office of Gas and Electricity Markets, examined the operations of the gas and electricity markets for eight months beginning in February 2008 for the purpose of determining the effectiveness of the energy suppliers ten-year-old competitive market and the level of service energy customers are receiving.  Energy suppliers are under more scrutiny than usual because of todays extraordinarily high fuel prices.

For the most part, the transition to a competitive market has seen positive changes in the areas of lower energy costs, a larger selection of fuel programmes, and improved service to customers.  Even though the measures taken thus far by the gas and electricity markets have appeared to gain favourable results, there are some areas of improvement that need to be accelerated in order to ensure the effectiveness of the competitive market and protect customers.

The Big 6 dominates the domestic gas and electricity markets in Great Britain.  These six energy businesses have not been found to engage in unlawful practices such as price fixing, but their overpowering presence tends to restrict the emergence of new gas and electricity companies.  Since the beginning of the competitive energy market in 1998, energy businesses other than The Big 6 have entered the market, but the majority of them have exited, leaving only .03 percent of customers receiving service from these new businesses.

Domestic and small business customers have the flexibility to switch gas and electricity services.  Ninety-six percent of gas and electricity customers are aware of the option to change energy suppliers, and 77% of customers that have switched suppliers were satisfied with the process.  While almost all customers understand they can switch suppliers, only 17% follow through with making a change.   

Most customers stated that they are fearful of the consequences of making a change and do not believe they have adequate information to make the best selection.  Lack of Internet access restricts some customers because they do not have the means to review all the plans and programmes.  Actions in the areas of increased customer awareness and an improved switching process are required to address these concerns.

Gas and electricity suppliers use competitive prices to interest potential customers in their services.  There are many energy plan deals available to domestic and small business customers, including dual fuel packages, stable or capped price tariffs, packages for green energy, and energy service deals.  One of the problems with the dual fuel packages is that they are not available to customers who are not on the gas grid, and these customers typically pay more for their energy than other customers do.  Another area of concern is that customers that choose a low price introductory plan do not understand that the low price is in effective for a limited time.

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This page has been written with contributions from experienced plumbers from Essex and experienced heating engineers from Mill Hill. Several of the company's qualified plumbers from Middlesex have worked on similar issues as well as some of our plumbing and heating engineers from Wood-Green and our Kingston Upon Thames heating engineers.

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