Ofgem under fire as Big Six maintain dominance in “broken” energy market

Energy regulator Ofgem has come under fire for failing to address the dominance of the Big Six energy firms dominating the UK energy market.

According to new figures released by consumer watchdog Which? and the Federation of Small Businesses (FSB), nine out of 10 consumers think the energy market needs probing.

Which? and the FSB have written a joint letter to the Office for Fair Trading, Ofgem, and the new Competition and Markets Authority, highlighting the “broken” environment of the energy market, in which the Big Six control 95% of the UK’s gas and electricity markets.

The move comes as the Department for Energy and Climate Change (Decc) has published figures indicating that the major players’ market share in gas and electricity has remained almost static over the last five years.

The Decc figures, revealed by Caroline Flint after a written question to parliament earlier this year, show that British Gas, which holds the lion’s share of the UK gas market, has only seen a slight decrease in its share, which stood at 42% in 2007. By December 2012 it was 40%. SSE, E.ON, and RWE npower all had exactly the same market share as in 2007, holding 15%, 13% and 12% respectively.

Meanwhile the electricity market shows similarly inert movement among the Big Six over the same five year period, with British Gas increasing its market share from 22% to 25%. E.ON dropped its market share by 1%, while EDF and Scottish Power maintained theirs at 13% and 12% respectively.

Speaking to the BBC, Which? executive director Richard Lloyd said: “It’s the wholesale prices that are being passed through to consumers and small businesses, and making people struggle with their bills.

“The Big Six energy companies supply 95% of the domestic market, and 70% of UK electricity is generated by the companies.

“What we’re saying to regulators is: ‘You haven’t addressed the uncompetitive nature of the wholesale market’.” 

The joint letter from the FSB and Which? says: “Top of our concerns is the need to increase competition and make trading transparent. For too long the lack of competition in the energy market has not been addressed. It is now time for radical changes that deliver an effective, competitive market that works for everyone, before the scale of this crisis worsens.

“We want to see the presence of strong competition right across the industry drive affordable pricing that gives everyone the confidence they are paying a fair price for their energy.”

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