Energy market review: Ed Davey vows to speed up supplier-switching


Ed Davey: "24-hour switching is my ambition"

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Energy Secretary Ed Davey has promised to cut the time it takes to switch energy supplier to improve competition and drive down prices.

He told MPs his "ambition" was to reduce it from the current five weeks to 24 hours, but added that the change would not "happen overnight".

Mr Davey also promised "criminal sanctions" for companies found to have manipulated the energy market.

Labour accused the government of being "too weak" to stand up to energy firms.


Energy prices have become a real political headache for the coalition for three reasons:

First they have come to symbolise the general debate over living standards and how to address the gap between the speed at which prices are rising compared to wages.

Second, Labour believes it has hit on a simple and effective idea to freeze prices for 20 months - and ministers have struggled to articulate a powerful enough critique of that proposition.

And third, the companies themselves (or at least four of them so far) have put up their prices on average by 9% - seemingly inured to public outrage and political frustration.

Today saw the first concrete step in the government's answer to the issue.

More teeth for the regulator plus criminal sanctions for the firms if they fix the market will all resonate to some extent.

But today was just a warm up for the main event - next month's autumn statement - when ministers will have to say how they plan to make good on their promise to roll-back green taxes in order to reduce people's bills.

If that doesn't put some cash back in people's pockets, the government will risk looking impotent in the face of the "big six".

The secretary of state was announcing a new annual review of the energy market in a Commons statement.

The government has been under pressure to help people facing higher gas and electricity bills, with Labour calling for a price freeze.

The coalition's answer has been to encourage households to switch suppliers - but Mr Davey has accused the "big six" energy companies of anti-competitive practices by "trying to make it more difficult" to do that.

He told MPs: "I am challenging the industry to deliver faster switching.

"If you can change your broadband provider with a few clicks of the mouse why shouldn't you be able to do the same with your gas or electric?

"It shouldn't take five weeks for the change to take effect - 24-hour switching is my ambition."

He praised First Utility for making progress towards the 24-hour target and said other suppliers, including E.On, SSC and smaller independent firms had agreed to talks on speeding up switching.

He conceded that the reforms would not "happen overnight", but said the government was prepared to "compel those who drag their heels".

Ministers will also launch a consultation on "increasing the sanctions for manipulation of the energy markets, so that they carry criminal penalties for the first time", the Lib Dem MP added.

The review he has announced will be led by the regulator Ofgem, together with the Office of Fair Trading (OFT) and the Competition and Markets Authority (CMA), and is expected to report annually from spring 2014 on the state of the energy market.

It will examine the barriers encountered by new suppliers entering the market, scrutinise prices and profitability, and evaluate how easy customers are finding it to switch suppliers.

Fuel bill breakdown

But Labour's shadow energy secretary Caroline Flint said: "We don't need another review, we need action - action to freeze people's energy bills and fix this broken market.

"Breaking up the big six by ring-fencing their generation from supply, put an end to secret deals and requiring all electricity to bought and sold via an open exchange and a tough new watchdog with the power to force these companies to cut their prices when wholesale costs fall."

She ridiculed the government's advice to consumers to shop around for the best deal, telling MPs: "Even the cheapest tariff in a rigged market will still not be a good deal."

Mr Davey said if his shadow Caroline Flint had "secret information" of cartel activity then she must confirm the competition regulator is aware of it so it can investigate.

Caroline Flint: "We have heard...excuses for why people's bills are going up"

Ofgem's Chief Executive Andrew Wright said the regulator's reforms, which include limiting each supplier's number of available tariffs to four and requiring them to display their cheapest deals on bills, were delivering a "simpler, clearer and fairer market for consumers".

But Which? executive director Richard Lloyd said Mr Davey's proposals were "too little too late".

Speaking on BBC Radio 4's World at One programme, he said: "Frankly, asking regulators - the competition authorities and Ofgem - to do a review to see if this market is working competitively is a bit of a joke: it's asking the regulators to do their day job."

Four of the UK's six main energy companies have recently announced price rises, with an average increase of 9.1%, and the other two are expected to follow suit soon.

The firms say the rises are largely due to increasing wholesale prices, but Ofgem says these have risen by only 1.7% in the past year.

Wholesale costs - the price at which energy companies buy the gas and electricity they provide to customers - make up just under half of the energy bills paid by most customers.

Energy firms dispute Ofgem's figures and say wholesale prices have risen between 4% and 8% in the past 12 months.


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  • rate this

    Comment number 93.

    I was ambushed at the door for a man from Utilita, thought it was essential to switch to them to get the new smart meters. When i heard horror stories about switching from them, i went to switch from them and they said that i was contracted for a year and i'm stuck with them.

  • rate this

    Comment number 92.

    You will have to excuse the ignorance of a grumpy old man but I seem to remember in my youth that the gas board brought you gas and the electricity brought you electricity. This occured without the need for a middle man and the product was supplied at the lower rate, i.e. half of what it now costs. What was wrong with this system and could we go back to it?

  • rate this

    Comment number 91.

    So we can switch from one part of the cartel that is robbing us to another part of the cartel that is robbing us?

    What a great idea!

  • rate this

    Comment number 90.

    Energy market review: Ed Davey vows to speed up supplier-switching

    Well there's a clear message to the energy suppliers, keep on putting up prices.

  • rate this

    Comment number 89.

    Know what, I'm sick and tired of Labours sideline sniping, do they realise how crass they look, half the reason were up the creek on energy is because of them (energy companies at fault as well),and no I'm not a Lib or Tory supporter.

  • rate this

    Comment number 88.

    Honestly is that all they got to offer switching tariffs. Is that it nothing else, just make it easier to switch. Please dont tackle the thieving sharks, just switch to another one. There supposed to help us not patronise us.At least labour are trying to tackle them not bend over for them. We cannot afford it you blithering idiots, roll on 2015 get these baffoons out of power they lost the plot !

  • rate this

    Comment number 87.

    44 Rich
    3 Day week, power cuts, miners' strike and the lies on joining the Common Market and its price inflation, the legacy of Edward Heath, surely the worst Prime Minister The UK ever had!

  • rate this

    Comment number 86.

    Davey isn't, unfortunately, one of the great minds of British politics, so don't expect anything to happen before the end of this winter. Worse still for this country is the fact that Cameron is no more able than Davey.

  • rate this

    Comment number 85.

    let see how can we please the publc . i know lets tell them to switch compaines . what you want lower bills . i carnt tell the compaines that .

  • rate this

    Comment number 84.

    So people want a 5% cut in their energy bills at the cost of having a monopoly supplier, strikes, lack of investment and public subsidy? At the end of the day, it may seem that we have to pay a lot for energy, but in relation to other European countries they are not extortionate, and it's not as if they would be much cheaper if there was no profit made anyway.

  • rate this

    Comment number 83.

    Last time I switched I received a massive bill for over £200 from my old supplier. Even though I paid direct debit at an amount they kept changing at least once a year for the previous 5 years. What made it worse was I never wanted to switch anyway. First thing I knew about it was when the bill dropped on my mat. That was over 7 years ago though, I'm sure these companies are squeaky clean now.

  • rate this

    Comment number 82.

    Had enough of this 'choice' and 'competition' spin doctoring from the Tories. We want fair prices for essential services not to be ripped off by privatised industries that should never have been privatised in the first place.
    Renationalise now rather than syphon off massive profits to fat cats offshore bank accounts.

  • rate this

    Comment number 81.

    Great, I can switch from one ridiculously expensive, profiteering, cartel working supplier to another, even faster!!!!!

  • rate this

    Comment number 80.

    I really don't think anyone should be allowed to be a politician until they have spent a year living as a pensioner.

  • rate this

    Comment number 79.

    Implement SLIDING SCALE ENERGY PRICING (the more you use the more you pay per unit). This step solves many problems:

    1. Affordability for the aged and low paid

    2. Encourages efficiency

    3. Discourages wasteful users

    4. Preserves the supply

    5. Cuts carbon and pollution emissions

    6. Abolishes standing charge (£180 for some)

    7. SAVES government £2 Billion (no need for fuel allowance)

  • rate this

    Comment number 78.

    Maybe power should be in the hands of non-governmental not for profit organisations with strict terms and conditions regarding executive pay. There are very talented people on much lower pay than the fat cats who actually do the work for the said fat cats but are not credited for it.

    Power must be free of both political interference on the one hand and profit greed on the other.

  • rate this

    Comment number 77.

    I am surprised to read, since clearly anyone posting on here is internet savvy, that the highest rated post so far accuses 'all suppliers of being in a cartel' and 'all put their prices up by 9 to 10%'.


    The Cooperative Energy has just put it's prices up by 4.5% for new customers and has held this price rise back until 2014 for existing customers.

    So they haven't 'all' followed suit.

  • rate this

    Comment number 76.

    is this man not listening?? the utilities must be laughing all the way to the Bahamas. we want lower prices. and not just by switching green levies. that just benefits the utilities. is he too thick to understand this??

  • rate this

    Comment number 75.

    Maybe we should turn off for a month. Plenty of tree's have been cut down due to ash die back. Or did they go the way of the deer that were culled and never reached the shops? Wine shortage before Christmas? They never grow tired of fleecing us. Bills up now it has turned cold and had no need for heating due to warmer/later summer lol. Never pay direct, read your meter. Arm these shields boys ;-)

  • rate this

    Comment number 74.

    Mr Cameron & colleagues, less talk and dithering, more action, HARD WORK (your favourite term) and save lives (yes it really is as bad as that) please. Thats if you know what the word 'action' means

    Cartels, should be outlawed. Not sure if my house is warmer than my fridge, ah well....


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