Last week’s approval by the Competition and Markets Authority (CMA) for the merger of SSE’s retail arm and Npower marks a landmark change in the shape of Britain’s energy market.

While far from shock news after provisional clearance was given in August, the decision augurs not only a seismic shift in the current landscape until now dominated by the “big six”, but also further upheaval ahead.

We have become accustomed to the volatility of this part of the sector, with its snowballing entrant numbers and tariffs. However, the creation of a new giant retail alliancTe is a key development.

It represents a turning point in the fundamental market dynamic, spurred on by energy competition policy and regulation – not least the price cap. Certainly, the cap will have helped make the CMA’s decision easier, with the two former rivals not major competitors for standard variable tariff (SVT) customers.

Most significantly, it shows consolidation now happening at the very highest level of the market. Until now, change has been largely confined to smaller, challenger brands being acquired or rescued by medium-sized suppliers of last resort building customer bases.

However, Ofgem’s State of the Energy Market report last week proved a stark barometer, showing the market share of the big six dropping to a “new low” and annual profits of the six largest suppliers last year falling for the first time since 2014, to £900 million.

It will be fascinating to see how retail’s big new baby fares in the months ahead.

As with any merger, there remain a raft of unknowns until the transaction finally goes through – from how the new company will differentiate its offering under chief executive Katie Bickerstaffe (a self-confessed lover of data with strong experience in the fast moving consumer goods space), to what it will mean for customer service during and after the transition, for jobs, its call centres, IT systems, company culture and its much-anticipated new name.

While the merger’s “clean team” proceeds with all this and more, other energy retail watchers will be looking for wider signs of market movement and price cap influence in a constantly emerging picture.

As one Utility Week senior industry source put it, if (as expected) the cap effectively discourages consumer switching, then the natural impact can only be to drive even more consolidation.

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