Groups demand energy market probe

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File photo dated 18/01/12 of a gas hob as more than half of UK adults say they will have to cut their spending to cope with rising household bills over the next year, Citizens Advice has warned. PRESS ASSOCIATION Photo. Issue date: Monday January 27, 2014. Three in five people (58%) are worried about the effect that higher bills will have on their finances and 53% - or 27 million - will have to cut spending to cope, according to a study by the consumer body. It is launching the Big Energy Saving Week today, backed by Government, charities and the energy industry, to help consumers take practical steps to make cuts to their bills. A survey found that of those who plan on cutting their spending, 59% say they will have to reduce the amount they spend on food, 37% will look for ways to reduce their energy bills, 8% will consider moving to a cheaper home and 66% say they will have less to spend on time out with family and friends. See PA story CONSUMER Bills. Photo credit should read: Yui Mok/PA Wire

Regulators are being urged to launch an investigation into the energy market amid fresh claims that it is "broken".

Consumer group Which? and the Federation of Small Business (FSB) have written a joint letter to the Office of Fair Trading, Ofgem and the Competition and Markets Authority, saying that competition needed to be increased.

The groups said nine in 10 consumers believed the energy market should be referred for further investigation, while seven in 10 are worried about energy prices and only one in five trusted energy companies.

The big six gas and electricity suppliers are expected to hear soon, possibly later this week, whether there is to be a full competition inquiry into the energy industry.

The financial, energy and consumer regulators have been reviewing the working of the market for the past three months and are expected to publish a final report within days.

There is speculation that the report could trigger a full competition inquiry.

Which? and the FSB said in their letter that ever rising energy bills were a "major concern" for small businesses.

"It is clear that the energy market is broken and urgently needs fixing. Top of our concerns is the need to increase competition and to make trading transparent.

"For too long the lack of competition in the energy market has not been addressed. It is now time for radical changes that deliver an effective, competitive market that works for everyone, before
the scale of this crisis worsens.

"We all want to see a transparent market where consumers and businesses alike can understand their bills, compare prices and switch easily.

"We want to see the presence of strong competition right across the industry drive affordable pricing that gives everyone the confidence they are paying a fair price for their energy," said the letter.

Caroline Flint, shadow energy and climate change secretary, said: "Rising energy bills are causing a cost-of-living crisis.

"Consumers need to be confident that the energy market works for them and the prices they pay are fair. Anything which can help shine a light on the workings of the energy market is welcome.

"But consumers will be rightly disappointed if the Government uses this review as an excuse to kick the problem of rip-off energy bills into the long grass. We have hardly been short of reviews of the energy market in recent years - but what has been missing is decisive action to protect consumers.

"The next Labour government will undertake the biggest overhaul of our energy market since privatisation.

"Our plans will break up the big energy companies, put an end to their secret deals and make tariffs simpler and fairer. And until these reforms kick in, we will put a stop to unfair price rises by freezing energy bills until 2017, saving the average household £120."

A spokesman for Energy UK said: "The energy industry supports competition. The increasing number of companies looking to supply energy, allied to the numbers of customers switching and choosing smaller suppliers, shows that the market is active and working in the interests of customers."

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