CMA Sees Issues in Energy Retail Distribution Market But Wholesale Works Well

By Ian Walker

LONDON--The U.K. Competition and Markets Authority Tuesday highlighted a number of issues in the energy retail distribution market that need attention, but said overall the wholesale market works well.

The CMA said a lack of transparency in the retail market and plans designed to simplify prices aren't having the desired effect. Duel-fuel customers could save an average of 160 pounds ($252.34) a year by switching to a cheaper deal, it said.

"Lack of awareness of what deals are available, confusing and inaccurate bills and the real and perceived difficulties of changing suppliers all deter switching - and the higher price levels reflect that suppliers can charge higher prices to these disengaged customers," the authority said.

The CMA report, which follows a year-long investigation into the market, points to a lack of transparency that is hampering trust in the sector. "Wider availability of financial information, and more effective communication of the impact of decisions on bills, alongside a clear and transparent demarcation of responsibilities between DECC and Ofgem - and a clearer, independent role for Ofgem - would assist in making sure that policy is efficient, effective and targeted at the right areas," it said.

The U.K. energy regulator asked for a full competition investigation focused on the country's six biggest utilities, following months of political wrangling over rising household energy bills, last June.

The move comes as governments across Europe seek to damp down public outrage over rising energy prices amid green-energy subsidies and measures that have in some places added to bills. The U.K. has been struggling with a declining supply of domestically produced natural gas.

Britain's six biggest utilities--Centrica PLC (CNA.LN), SSE PLC (SSE.LN) and U.K. subsidiaries of RWE AG (RWEOY), E.ON AG (EOAN.XE), Iberdrola SA (IBE.MC) and Electricite de France SA (EDF.FR)--have come under fire for rising bills for gas and electricity.

(Selina Williams contributed to this article)

-Write to Ian Walker at [e-mail]; @IanWalk40289749

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