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MPs concerned over heating costs

An investigation into the energy market by MPs has uncovered “very real problems”, but concluded companies are not colluding to fix prices.

The Business and Enterprise Select Committee accepted energy companies had to invest heavily in updating the UK’s infrastructure and improving supply security, but its report said: “We have concerns that the UK’s energy markets are not functioning as efficiently as they should, and that UK prices may be higher than those in competitor countries.”

The report said MPs had “identified important issues that need to be addressed in the retail market” and they recommended the Competition Commission should look into the forward gas market and the supply of electricity to the Small and Medium Enterprise (SME) sector if regulator Ofgem failed to act effectively.

But the report concluded: “No witness has brought forward evidence of active collusion in the wholesale or retail markets. It is clear, though, that in a retail market dominated by six major players, it is easy for those players to make informed judgements about the behaviour of their competitors. This alone can distort competition. The regulator therefore needs to remain very watchful.”

The committee’s recommendations on fuel poverty were welcomed by many campaigners.

Zoe Mcleod, Policy and Campaigns Manager at charity National Energy Action, said:  “This report is a breath of fresh air, especially at a time when energy companies are starting to increase their prices again. Its recommendations are bold but realistic and offer a real way forward to help low-income families struggling to pay their fuel bills.

“Underpinning the recommendations is a recognition that the energy market doesn’t always work in interests of low-income consumers. There is a clear understanding that heating and fuel for cooking are essential for health and wellbeing, and that therefore energy market design and regulation needs to be both robust and equitable.

“NEA has consistently argued that Government is failing its most vulnerable citizens both morally and legally. The committee maintains that the Government should rethink its entire fuel poverty strategy and we totally endorse this view.'

Recommendations included in the report included measures to tackle the high cost of prepayment meter tariff and a call for better strategies to address the problems of households facing especial hardship due to disability or long term sickness.

The committee also called for the reinstatement of the budget for the energy efficiency programme, Warm Front, which provides grants for heating and energy efficiency measures to households in receipt of certain benefits.

More checks needed for off-network energy market