Price comparison sites
like uSwitch &
let you find the best deal on energy suppliers in a flash, seem heaven sent. You would imagine
that with 6 major players in the market competing heavily, that we’d all be getting fantastic
energy prices, that profits would be falling and the
suppliers would be in free-fall. And yet the opposite seems to be happening.
The irony, is that the
price comparison sites are in part to blame for the phenomenon. The energy suppliers know that when they
increase prices, only a small proportion of customers have the time and energy
to look elsewhere and move suppliers. They also know that as they each take it
in turns at different times of the year to do their price rises, that they pick
up as many as they lose because
they know that they will appear top of the price comparison charts for a period
of time. The price comparison sites are also very convenient to the suppliers
– they help them to defend accusations of
And that’s the optimistic
point of view. Wouldn’t
you like to be the one
who wanders into a central
London hotel one evening and sits down next to a group of 6 fat cats
talking about how they can work together without
anyone ever knowing to ensure that they’re all
Competition is not working
in this market. With 6 suppliers, it should be aggressive but it isn’t. The truth is that this market is not competitive at
all. One of the key aspects of a competitive market is that there are low barriers to entry
and new competitors can come in to keep the incumbents on their toes. This market is not open to new entrants and innovation because the
six retailers are also the six wholesalers who supply energy to the market.
Between them they effectively keep out new competitors.
The government need to act
on this and create a proper market before we’re going to get sensible prices
for our energy.