Caroline Flint has criticised the Competition & Markets Authority for failing to act on the evidence of its own report and protect the majority of customers, which it states have been overcharged by at least £7.6billion over four years.
Said Caroline: “It was pressure from Labour that forced the Government into this enquiry. Yet two years later, the CMA has ducked its responsibility to customers over the lack of competition.
“Their report takes a small step by offering a lower tariff to pre-payment customers – that is one in six energy customers today. But the CMA has washed its hands of responsibility to stand up for the vast majority of customers – the 70% who are being overcharged, despite their report showing overcharging of £1.7billion a year since 2012, rising to £2.5billion in 2015.”
The CMA report states: “we estimated the detriment from excessive prices to the domestic customers of the Six Large Energy Firms to be about £1.7 billion a year on average over 2012 to 2015, the entire period for which we had data, with a marked trend upwards year on year, reaching almost £2.5 billion in 2015.” (1)
Said Ms Flint: “The CMA found that over third of customers would never even considering switching. That reflects a lack of trust in energy companies altogether, which has allowed energy companies to overcharge customers who are going nowhere. The CMA could have introduced a default tariff to cut the bills of the majority of customers.
“Their own report shows consistent overcharging of between 10% and 18% across all energy types and methods of payment.
Yet the CMA still failed to grasp that nettle and ensure that this market delivers fair prices.” (2)
The CMA notes at the end of its report “One panel member, Martin Cave, felt that the provisional retail remedy package was unlikely to succeed in reducing, in a timely way, the significant level of detriment identified. In his current view, a short-term price cap covering a substantially larger number of customers, is required to reset the market.”
Said Ms Flint “At least one member of CMA panel recognised that the only people who could protect the majority of consumers from overcharging was the CMA, and the obvious means to do so was to introduce a lower standard tariff and move customers onto it.”
Para 59 – a conservative estimate of the total overcharging is £7.6billion
Table in para 60