Energy giant Centrica has hit back at an official report that says millions of people are paying over the odds on their fuel bills.
The company has rejected key findings in the probe by the The Competition and Markets Authority (CMA) which outlined moves to encourage customers to switch to lower-cost energy providers.
The CMA said it uncovered “widespread consumer disengagement” with around 70% of customers on default standard variable rate tariffs despite better deals available. More than 34% of 7,000 people polled for an extensive survey have never considered switching, according to the CMA.
It found dual fuel customers could save an average of £160 a year by switching to a cheaper tariff but often failed to do so because of a lack of awareness of which deals are available, “confusing and inaccurate” bills and worries over the difficulty of changing supplier.
Centrica – the parent of British Gas, one of the big six UK energy providers – said the British retail markets were competitive characterised by significant new supplier entry and third party activity such as price comparison websites (PCWs).
It also rejected the CMA’s analysis that large supplier’s margins have increased over time stating that average
profit on a dual fuel bill has actually fallen from £54 (2009) to £42 (2014).
The company added: “We do not see evidence of unengaged or dissatisfied customers – the CMA’s own survey confirms that 89% of customers know they can switch supplier and nearly half of all customers have either switched or considered switching in the past three years.
Moreover, 73% of customers are satisfied with their current supplier and of those who know it is possible to switch supplier or change payment method, 70% are confident that they are on the right deal for them.”
Iain Conn, Chief Executive of Centrica plc said: “We welcome the possibility that this review will have a constructive and positive influence on competition in the energy market. While we have questions and concerns about some of the proposals we look forward to engaging with the CMA in the next phase of this process.”
The CMA probe, which was launched in the wake of a pledge by Labour in 2013 to freeze prices if it won this year’s general election, has not recommended that the so-called big six – British Gas, SSE, EDF Energy, RWE npower, E.ON and Scottish Power – should be dismantled to separate power generation and supply.
The CMA said it plans to scrap recently introduced rules restricting suppliers to offering just four tariffs, saying they have in fact been restricting competition. Instead, in its provisional findings, the CMA said it would look at measures to prompt customers to shop around, such as by using smart meters.
Roger Witcomb, chairman of the energy market investigation said: “There are millions of customers paying too much for their energy bills – but they don’t have to.”
“The confusing way energy is measured and billed can make comparing deals understandably daunting. The result is that some energy suppliers know they don’t have to work hard to keep these customers.”
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