• 4 million customers have no access to best offers
• Prepayment meters cost £118 more than direct debit
  
• Quarterly cash or cheque payments cost £80 more than direct debit

Announcing the findings of a seven-month investigation into Britain’s energy market, the energy industry regulator, Ofgem, has found no evidence of a ‘cartel’ amongst the big six suppliers, but it warns gas and electricity suppliers to stop charging customers different prices for paying by direct debit or pre-payment meters.

The report highlighted 4 million households that were £55 a year worse off because they couldn’t take advantage of the most competitive offers; households using pre-payment meters being charged an average of £118 more than direct debit customers; and households paying quarterly by cash or cheque being charged an average of £80 more than those who used direct debit.

According to Ofgem, although it found that the market works well for most consumers, many of the most vulnerable customers, including pensioners and low income households, were less likely to be able to make informed choices about tariffs under the current system. Customers not connected to the mains gas grid were losing out too.

The regulator proposes wide-ranging reforms which include a requirement for companies to help all consumers access the best deals and more transparency to show the link between the wholesale price of energy and the price charged to customers. It also wants to stimulate new competition by making it easier and more attractive for smaller suppliers to break into the market, currently dominated by six companies – British Gas, ScottishPower, Scottish & Southern Energy, EDF Energy, Eon and Npower.

Consumers have already been hit by two hefty price hikes this year and energy suppliers continue to blame soaring prices in the global wholesale gas and electricity markets. The recent Which? report on energy suppliers also reveals widespread dissatisfaction amongst customers, the lowest of all industries.

The Ofgem report is therefore likely to receive a luke-warm reception as many will feel disappointed that it doesn’t go far enough to impose its recommendations.

Mini-Post by Alan Potts