Price comparison sites like uSwitch & moneysupermarket that 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 anti-competitive practices.

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 profitable !

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.