Industry NewsA sharp increase in estimated profit margins has prompted UK energy regulator, Ofgem, to launch a probe into the domestic energy market. A similar probe in 2008 found no evidence of a cartel or anti-competitive behaviour, but did prompt some measures to improve price transparency. The new probe will look to see if the situation has changed and if new measures are required. The results of the investigation are expected in March 2011.
The last review of the retail energy markets led to Ofgem publishing regular reports into movements in energy prices and estimated net profit margins. The latest of these reviews has just been published and have suggested that these margins have escalated nearly 40 per cent since September. The scale of the increase has shocked the regulator and it is now looking into „effectiveness of the retail market?. The changes made as a result of the last review mean that the new probe will be able to look deeper and harder at the nature of the market and the cost related to supply.
Ofgem's Chief Executive, Alistair Buchanan, "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." He added, "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."