Timing of UK energy report icing on cake for ‘Big Six’ suppliers

Claim energy providers overcharged customers by £1.7bn a year will likely be dropped

Two years ago, when the inquiry was launched amid widespread public anger over energy charges, MPs from all sides welcomed the probe. Photograph:  Gareth Fuller/PA Wire

Two years ago, when the inquiry was launched amid widespread public anger over energy charges, MPs from all sides welcomed the probe. Photograph: Gareth Fuller/PA Wire

 

As the nation digests the result of the European referendum from the early hours of the morning, Friday will be a good day to bury bad news.

It’s the day Britain’s competition authority has chosen to publish the results of its two-year investigation into the “Big Six” energy companies – and its findings are unlikely to please the consumer groups that have long complained the utility companies are ripping off customers.

The Competition and Markets Authority is widely expected to drop its earlier accusation that the large energy providers overcharged customers by £1.7 billion a year. That was the authority’s key claim when it released its interim report last year but now it seems it will instead suggest that this is the figure customers could have saved had they switched suppliers.

Public anger

Two years ago, when the inquiry was launched amid widespread public anger over energy charges, MPs from all sides welcomed the probe. With the opposition Labour Party promising to freeze bills if it came to power, Tory energy secretary Ed Davey billed the wide-ranging investigation as “the right way to restore people’s trust” in the industry. There was even talk that the Big Six – British Gas, SSE, E.On, npower, ScottishPower and EDF – might be broken up.

The CMA has already made it clear that a break-up is off the agenda, however, leaving the much-heralded shake-up of the industry resembling more of a gentle pat-down.

Proposals to cap prices for those with pre-payment meters, who tend to be the more vulnerable customers, are expected on Friday, but this is a watering down of the original idea of a cap for conventional meters too.

Households have long been encouraged by the regulator to shop around for the cheapest supplier but too many are staying put through inertia. In a move that might well backfire, the CMA is expected to recommend the creation of a new database of customers who have stayed with the same supplier for three years. The idea is that rival suppliers would then target them with new deals.

Consumer groups have already dubbed this a “spammer’s charter” saying that customers will be flooded with junk mail from other energy companies, making those who are reluctant to switch even less inclined to do so.

Utility companies have recently been required by the industry regulator to inform customers if cheaper tariffs are available, and also to simplify their deals structure to make it easier for customers to see the cheapest option. But the CMA is expected to reverse the requirement that suppliers offer only four tariffs.

It may also row back on the rule that suppliers must allow all their tariffs to be displayed on utility switching websites, rather than the deals the suppliers pay to promote. This is likely to hit the smaller energy suppliers that are attempting to increase their foothold in the market. They have already warned the CMA’s findings are more likely to stifle competition than encourage it.

Watered down

The major energy suppliers lobbied hard to get the competition authority to redraw the findings of its two-year investigation and look in large part to have succeeded. The fact that the watered down report is being released when everyone’s attention will be elsewhere is the icing on the cake for the Big Six.

*****

Our enthusiasm for getting the groceries in at odd hours of the night is waning, according to Tesco, which is to axe 24-hour shopping at another 20 of its larger stores.

The move is not driven by cost saving, the supermarket group says, more by changing customer demand and a drive to improve service. In January the retailer halted round- the-clock trading at almost 80 of its stores, although just over 300 branches still trade through the night.

Despite the switch away from all-night shopping, Britain’s biggest retailer looks to be winning back customers during daylight hours. On Thursday chief executive Dave Lewis will unveil figures that are expected to show the group has managed to clock up two consecutive quarters of sales growth for the first time in five years.

Retail analysts are forecasting an increase of 0.2 per cent or 0.3 per cent in like-for-like sales at the core UK grocery business, after a jump of 0.9 per cent the previous quarter.

Lewis, who has been in the Tesco hot seat for two years now, is expected to say the group’s recovery remains on track despite the continued price war in the sector and the challenge of the discounters.

Fiona Walsh is business editor of theguardian.com

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