Debate pack: Competition in the UK energy market

This Commons Debate Pack provides briefing on the current investigation into the energy market in Great Britain for the Westminster Hall debate on Competition in the UK energy market on Wednesday 9 March 2016.

The latest information on energy prices, fuel poverty and current policy initiatives designed to counter it is also provided.

Competition and Markets Authority (CMA) Energy Market Investigation

Ofgem originally referred the matter of energy market competition to the Competition and Markets Authority (CMA) to conduct an Energy Market Investigation in June 2014. By referring the matter to the CMA, Ofgem intended there to be a once-and-for-all investigation into whether or not there are further barriers to effective competition because the CMA has more extensive powers that can address any long-term structural barriers to competition.

Originally the CMA signalled that it intended to publish a final report by 25 December 2015. But due to the volume of evidence and comments on its original findings and provisional remedies, the CMA has extended the inquiry to 26 June 2016.

The Financial Times [subscription required] reported that the CMA is planning to publish its provisional decision on remedies on Thursday 10 March 2016 with a view to reaching and publishing its final decision by the statutory end date for the investigation on 26 June 2016.

The Commons Library briefing paper Competition in energy markets in Great Britain sets out more background.

Energy Prices

The price of domestic gas and electricity has been relatively stable over the past five years after increasing steadily through 2000-2008. There have been some price cuts over the past few years, but these have been smaller than the price rises.

The Commons Library Briefing paper Energy prices focuses on trends in the domestic market – the costs of gas, electricity and other fuels used in for heating.

Fuel Poverty

The Commons Library Briefing paper Fuel Poverty  provides an overview of how fuel poverty is defined and measured and current policy initiatives designed to counter it. The term ‘fuel poverty’ is used to refer to households which struggle to afford to keep their homes at a reasonable temperature, but the precise definition varies across the UK.

Help with energy bills

There are now a range of measures aimed at helping consumers with their energy bills including

  • Taxpayer-funded payments principally the Winter Fuel Payment and the Cold Weather Payment
  • Obligations on energy suppliers that are funded by all energy bill payers, principally to help vulnerable customers and those on low incomes with energy efficiency measures (Energy Company Obligation) and discounts on electricity bills (Warm Home Discount).
  • Energy saving and other energy advice services in England , Wales, Scotland and Northern Ireland
  • Practical measures such as switching energy suppliers, joining the Priority Service Register and making use of communal energy buying schemes
  • Sources of information and advice, for example, in the event of disputes with energy suppliers

Th Commons Library Briefing paper Help with energy bills sets out sources of financial and practical help with domestic energy bills