The energy industry regulator Ofgem announced in a press release on the 6 October 2008 that its seven-month inquiry into Britain's energy supply markets had found no evidence of a cartel.
However, Ofgem's probe did find that some consumers were missing out on the full benefits of competition. As a result Ofgem announced that they would be giving the industry notice to end practices that were failing some customers and notice to deliver the full benefits of competition to the entire market. Ofgem warned that if companies failed to deliver they could be referred to the Competition Commission.
The Ofgem investigation started in February 2008 after a price hike by the "big six" energy suppliers and was conducted using Ofgem's formal information gathering powers under the Enterprise Act 2002. The investigation covered:
- the customer's perspective and experience of the market including access to information and barriers to switching supplier;
- suppliers' market shares, switching rates for different groups of customers (such as online, dual fuel, single fuel and pre-payment);
- the competitiveness of suppliers' pricing in the different market segments and customer movement between payment types as well as suppliers;
- the relationship between retail and wholesale energy prices; and
- the economics of new entry and the experience of companies trying to enter the energy market.
The proposals that Ofgem have announced following the investigation are measures to ban unfair price differences, the introduction of tougher rules on doorstep selling, more transparency in financial reporting and new requirements on suppliers to provide information to help consumers to get the best deal. Ofgem also wants to encourage new entrants into the markets by reducing barriers to entry.
Ofgem has published a consultation on these proposals, responses to which must be received by 1 December 2008.