Ofgem to review energy market

Ofgem's latest analysis of retail prices shows that the margin on a standard dual fuel tariff is now around £90, an increase of 38 per cent from September. Whilst Ofgem would expect efficient firms to make a profit, it wants clarity on behalf of consumers that the market is transparent and is working as effectively as possible.

This is why Ofgem will review the retail energy market to decide if further changes are needed to ensure the market works in the interests of consumers and to increase transparency in the energy market. As part of this review it will investigate the retail accounts, recently received by Ofgem under new licence requirements.

Ofgem's Chief Executive, Alistair Buchanan, said: "With Britain facing an investment bill of £200 billion over the next 10 years, consumers have the right to expect that the energy retail market is providing them with value for money. Our analysis published today shows an increase in company margins from £65 to £90 at a time of rising energy prices, which causes Ofgem to rightly ask if companies are playing it straight with consumers.

"The energy retail market can only be fully effective if consumers have confidence that the market is transparent and easy to take part in. So we will go beyond our usual quarterly reports on prices and do a comprehensive review of the retail market and our recent reforms from the consumers' perspective. We will also carry out a detailed investigation of the newly available retail accounts and the facts behind these numbers.

"Greater transparency in the market is good for consumers, investors and for the energy industry as a whole."

Since its Retail Market Probe in October 2008, Ofgem has secured a series of important reforms for customers to improve transparency and ensure fair play. This has secured some real benefits for consumers, including the removal of unjustified price differences, required standards of acceptable practice and improved consumer information, such as annual energy statements. As part of its review Ofgem will be looking at how effectively energy companies have implemented all of these reforms.