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Open letter to Prime Minister calling for an independent review into the energy market

by Press Officer on 17 October, 2012

Warm words alone are not enough to keep consumers from the cold this winter: Which? calls for an independent review into the energy market

Dear Prime Minister,
Today marks the anniversary of the Energy Summit you held that promised action to help people to keep their energy bills down.

One year on, and with winter fast approaching, more than 20 million households are facing inflation-busting price rises as four of the UK’s largest energy companies put their prices up yet again.

With the average energy bill already rising 13% since last year, it is no wonder consumers tell us that energy prices are one of their top financial concerns.

After the Energy Summit, you said ‘we are making energy companies be competitive’ but there is little evidence of this. Seventy five per cent of consumers are on the most expensive tariffs and the level of switching continues to decline.

It’s time to face facts: the energy market is broken.
People are questioning whether they are paying a fair price for their gas and electricity. The energy companies blame wholesale price increases but even the regulator has found that prices don’t fall when the wholesale price drops. The sector is dominated by a handful of big and powerful players who are seemingly unaffected by the normal competitive pressure of price and customer service.

They also blame the cost of implementing your Government’s environmental and social policies for the price rises. Yet, as your own Energy Department has said, there is no hard evidence to back this claim up.

Claim and counter claim are played out in the media but consumers deserve the truth.
Ofgem’s proposals to change the retail energy market, expected shortly, are necessary but not enough.
So today we are calling on you to launch an urgent, expert, independent review into the rising cost of domestic energy bills and whether competition among energy suppliers can be made to work more effectively in the consumer interest.

We want an independent review to look at whether the reasons given for the recent price increases are justified.
We also believe a review must identify what reporting measures should be required of energy companies, relating to both the wholesale and retail markets and the costs of social and environmental policies, to increase transparency and give consumers confidence that everything possible is being done to keep energy prices in check.

The review must also consider whether the regulator should now be required to better protect the majority of consumers on expensive ‘standard’ tariffs by introducing a fair cap on ‘standard’ prices.

Until we see greater transparency and prices presented clearly, consumers will continue to distrust the energy market and remain unable to drive genuine competition through moving to the cheapest tariffs.

The time for action is now. Warm words alone are not enough to keep consumers from the cold this winter.

Yours sincerely,

Richard Lloyd
Executive Director
Which?

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