Six weeks before Ofgem, the Office of Fair Trading (OFT) and the Competition and Markets Authority (CMA) are due to publish their assessment of the matter, the energy secretary wrote to suggest some areas to “focus on”.
While saying it was “vital” the regulators’ work be independent, Davey urged them to consider referring the matter to the CMA for a full market investigation. That would take 18 months, reporting after the next general election, and could lead to the break-up of companies found to have too much market power.
Several industry figures, including Eon UK boss Tony Cocker last autumn, have said they would welcome a full investigation to clear the air.
Experts said Davey’s move ramped up the chances of a competition referral. Stuart Cook, head of utility strategy at PwC, said: “Whilst the decision is with Ofgem and the OFT, a full investigation by the CMA has never looked more likely.”
Davey singled out British Gas for attention, noting that it has the largest share of the household gas supply market and charged some of the highest prices in the last three years.
British Gas managing director Chris Weston defended its profits and said Britain has “one of the most competitive energy markets in the world”.
Owner Centrica, the only big six energy company to have substantial upstream gas interests, “does more than any other organisation to secure gas and power for British customers,” said Weston.