19 December 2003
The energy watchdog Ofgem should be bolder in its use of sanctions against electricity companies found to be acting anti-competitively, MPs have said.
In its review of the impact of New Electricity Trading Arrangements (Neta), published on December 16, the Public Accounts Committee urged the regulator to conduct a review of suppliers.
The PAC found that, although commercial and industrial electricity prices had fallen, domestic customers had not enjoyed a similar benefit. It noted that only 40% of customers have switched supplier since the market was opened to competition in 1998.
The MPs said Ofgem should do more to increase consumer awareness of price differences and how to switch suppliers. The watchdog should also collect information on profit margins so it can form a clearer picture of the market's competitiveness.
PAC chair Edward Leigh said the limited reductions in the price of domestic electricity had penalised customer loyalty, with potentially vulnerable groups, such as the elderly, losing out the most.
Leigh added: 'I urge Ofgem to raise customer awareness, and review whether suppliers are acting anti-competitively, and respond with fines and prices caps where necessary.'
The report also noted that the system may not be able to meet rises in electricity demand during the winter, as the margin of spare generating capacity had fallen since the introduction of Neta.
PFdec2003
