Centrica slams CMA remedies as ‘unsound’

British Gas parent company Centrica has slammed the Competition and Markets Authority (CMA), saying its proposals to fix the energy market are based on "unsound" analysis.

In a damning response to the CMA’s proposed remedies the UK’s largest energy supplier said the CMA’s proposed safeguard regulated tariff for sticky customers is “disproportionate” to the actual level of disengagement.

Centrica claims that the remedy is based on a “selective” customer survey and the assumption that all customers on standard variable tariffs or who have never switched supplier are disengaged.

Centrica said: “We have a number of other concerns over the approach taken to the competitive assessment in the provisional findings.

“We believe that each of them is based on a fundamental misreading of the market, and results in the CMA coming to an unduly pessimistic reading of the current competitiveness of the market and an over-interventionist approach to remedies.”

In addition, Centrica says the CMA’s analysis of profitability is “not sufficiently robust” to support a conclusion that excessive profits are being earned in retail markets.

Centrica said: “We have serious concerns about the validity of some of the assumptions that drive all three of the CMA’s profitability analyses (return on capital employed (ROCE), price benchmarking, and EBIT benchmarking).

“These concerns are so serious we do not believe the analysis would stand up to rigorous peer review.”

The view is shared by other members of the big six, notably RWE Npower which also has serious concerns about the CMA’s analysis and called for further work before the final report, due in December.