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Energy Advice Line joins calls for breakup of Big Six

The Energy Advice Line has joined calls for the Big Six energy giants to be broken up to boost competition in the energy market.

Julian Morgan, managing director of the business electric supplier comparison, switching, and advice service for energy users, welcomed the push for a radical market shakeup by the Federation of Small Businesses (FSB) and the consumer watchdog Which?

The FSB, representing 20,000 small firms, has written to energy regulators in a joint letter with Which? demanding a full-scale competition enquiry into the UK energy market. They have written to OFGEM, the Office of Fair Trading and the new Competition and Markets Authority (CMA). “We agree that business energy users have been suffering for too long due to lack of competition in the energy market,” Mr Morgan said. “Business energy consumers have really been left to fend for themselves and as a result have suffered badly.”

“Bad practice, excessive prices, poor customer service and the use of unscrupulous brokers to sell business energy contracts have all cost UK businesses dearly. There is no point tinkering with reform when the market’s fundamental problem is lack of competition. The Big Six are both producers and suppliers and have a stranglehold on the market. The market needs a fundamental shakeup so that businesses can feel the true benefits of a competitive market.”

The regulator, along with the Office of Fair Trading and the CMA, are currently examining the large market shares of the big six energy companies as well as “vertical integration” where companies own power stations as well as distribution systems. In a bid to head off any competition enquiry, the energy industry is arguing that the energy market is working well, with more operators in the market than at any time in the past 15 years.

Industry analysts say a full competition enquiry is likely to take as long as 2 years, which means it will not be completed until after the next election. This would present Labour leader Ed Milliband with a dilemma as he has promised to freeze energy prices for 20 months if he becomes Prime Minister.

“With the price of energy rising faster than ever before, the time is right to completely review the way the market is operating,” Mr Morgan said. “Energy suppliers won’t like it of course, but their argument that competition is working well really doesn’t bear close scrutiny.”