In response to increasing public concern as to the competitiveness of the UK energy markets, a full-scale inquiry into the structure of the energy market was announced by BERR House of Commons Committee on 5 February. The scope of the inquiry is extremely broad and is set to review both gas and electricity markets, at the wholesale and retail level and also, the relationship between the UK and European energy markets. Written evidence is invited on these issues by 1 April 2008.
Separately, Ofgem has made a slight u-turn in its response to the mounting criticisms and suspicions of the UK energy markets. Despite a strong defence of the industry being taken only last month, Ofgem announced on 21 February that it was launching its own market investigation into the markets for the supply of gas and electricity for households and small business customers.
Ofgem's investigation is expected to include the following areas of focus: customers' perspectives and experience of the market; switching rates for different groups of customers; suppliers' pricing in different market segments and the relationship between energy wholesale and retail prices.
Ofgem intends to publish its initial findings before the end of September 2008. Possible outcomes of the investigation include a reference to the Competition Commission, acceptance of undertakings in lieu of a such a reference and enforcement action under the Competition Act 1998.