Select Committee on Business and Enterprise Eleventh Report

4  The retail gas and electricity markets

64. Imperfections in the wholesale gas and electricity markets will feed through to the supply markets for domestic consumers and SMEs. Concern about rising prices in the retail sector first prompted our inquiry. In this Chapter we consider the factors behind higher retail prices for consumers and the different indicators of the level of competitiveness in the UK market.

Historic prices

65. In real terms, household gas and electricity bills have been rising since 2004 across all payment types, as shown in Figures 7 and 8 below. The available data runs only to the end of 2007, so does not include the increases seen at the start of this year, which will have pushed total gas and electricity bills, in real terms, even higher.

Figure 7: Average UK annual domestic standard electricity bills in real terms (2000 prices)

Figure 8: Average GB annual domestic gas bills in real terms (2000 prices)

Source for both figures: BERR, Quarterly Energy Prices, June 2008

66. Elsewhere in Europe consumers have also experienced rising prices. We received a range of data on the competitiveness of the UK's retail prices relative to other countries. Depending on the consumption of the household; the data source; the countries compared against; and whether one takes account of taxation; it appears possible to tell almost any story. Energywatch told us prices in Great Britain are "systematically rising much more quickly than in Europe", and that our electricity bills are now the fourth highest and our gas prices the tenth highest.[131] BERR's own data for median consumers, which runs up to June 2008, shows that UK electricity prices, excluding taxes, are now the sixth highest in the EU 15, and 7.4% above the median price. By contrast, average domestic gas prices were the lowest in the EU 15, and less than half the median price.[132] Given the different market structures of the various European energy markets; the extent to which they have liberalised; and the varying fuel mix for electricity and heating between countries; one cannot rely on international comparisons of retail prices when reaching detailed conclusions about market structure. Rather, we should assess the competitiveness of the UK market, and the prices it delivers to customers, on their own merits.

Changes in supplier costs

67. The Minister for Energy told us: "We have at least three factors driving prices: the markets, infrastructure requirements and climate change".[133] Table 2 below shows Ofgem's estimate of the increase in costs that gas and electricity suppliers face in 2008.

Table 2: Estimated composition of average domestic energy bill (Ofgem)
Bill Composition 2007/08 (£) 2008/09 (£) Year on Year % Change Share of total bill 2008/09
Gas Elec GasElec Gas ElecGas Elec
Energy, supply costs and margin 404254 454283 12%11% 71%69%
Distribution 9262 11562 25%0% 18%15%
Transmission 1213 1013 -17%0% 2%3%
VAT 2818 3120 11%11% 5%5%
Environmental 916 1930 111%88% 3%7%
Meter provision 124 144.5 17%13% 2%1%
Average current bill £557 £367 £643 £412 15% 12% 100%[134] 100%

68. Environmental costs include the cost of the Renewables Obligation (RO) and the Carbon Emissions Reduction Target (CERT). The RO obliges electricity suppliers to source an increasing share of their power generation from renewable sources. This requirement rose from 7.9% to 9.1% in 2008. The CERT places an obligation on energy suppliers to achieve targets for reductions in carbon emissions in the household sector. It replaced the Energy Efficiency Commitment earlier this year. Together, the RO and the CERT will have added £24 to consumers' gas and electricity bills in 2008. Network and metering costs have also risen, adding another £23.50 to bills.

69. However, Ofgem estimate that the cost of energy and margin have made the largest contribution to rising retail prices—adding £79 on average to the annual domestic energy bill.[135] Changes in this component have the biggest impact on customers because it constitutes around 70% of gas and electricity bills. As we saw in Chapters 2 and 3 there have recently been very large increases in wholesale prices, and these will have inevitably fed through into retail prices. This view was expressed by both Ofgem and the 'Big 6' firms.[136] The extent to which the companies have been able to mitigate the effects of rising wholesale prices will have depended on their forward purchasing strategies, and the extent to which they have to buy gas and electricity on the spot market. This will have affected the timing at which the different companies felt the impact of rising input prices, but it can only provide a short-term relief if higher wholesale prices are sustained. Companies may also take a commercial decision to delay price increases to maintain or build market share, but in the absence of cross-subsidy from elsewhere, they cannot sustain such positions in the long term.

70. Ofgem's figures do not distinguish between energy costs and profit margin. However, we saw in Chapter 3 that the 'Big 6' appear to be making the majority of their profits from their wholesale operations, rather than in supply. Recently, Ofgem has found too that some of the companies have increased their supply margins by not passing on the benefit of lower wholesale prices to their customers. In 2007, it 'named and shamed' EDF Energy and Scottish Power for failing to do so—within days they announced retail price cuts for their customers.[137]

71. Higher wholesale electricity and gas prices have been the largest contributor to increasing household energy bills, though the impact of environmental and network costs should not be underestimated. While the 'Big 6' claim to be losing money in their domestic supply businesses, as noted earlier, there is evidence that they are making much greater margins on electricity generation. We note that while the 'Big 6' have cited rising wholesale prices as the reason for collectively increasing prices in 2008, it required a 'naming and shaming' by Ofgem for two companies to reduce their retail prices in early 2007, when wholesale prices were falling. Whatever the result of their current investigation, Ofgem must make it clear it will use such an approach in the future if circumstances demand similar action.

Market concentration

72. At the time of liberalisation in the late 1990s British Gas had a monopoly over the retail gas sector, while each of the 14 regional electricity supply companies held monopolies in their respective regions. As consolidation and vertical integration across the gas and electricity markets took place, the number of active players has reduced to the 'Big 6' that exist today, who share 99% of the electricity market and 100% of the gas market. There has been relatively little consolidation in the sector since E.ON's takeover of TXU in 2002.[138] However, since then the Herfindahl-Hirschman Indices for both the gas and electricity retail sectors have decreased, as shown in Figure 9 below.[139] This is because the incumbent suppliers in both markets have lost market share to their competitors. For example, British Gas's share of the market fell from 63% in 2002 to 46% at the end of last year. For electricity, in 8 out of 14 regions, the incumbent firm has less than half their original customers.[140]

Figure 9: Herfindahl-Hirschman Indices for the gas and electricity markets

Source: Ofgem

73. Notwithstanding that the level of market concentration in the retail sector has fallen in recent years, the HHIs of 2,722 for the gas sector and 3,461 for electricity indicate that both markets are still highly concentrated. Whether the HHI for both markets will continue to fall will depend on customers' propensity to switch supplier, which we discuss in the next section. That said, even with continued entry into each others' markets over time, and in the absence of new entrants outside of the 'Big 6', the market will remain at best, moderately concentrated. As noted earlier, there is a risk of further consolidation in view of speculation over a takeover of Scottish Power's parent company, Iberdrola, by one of the other big European companies which already form part of the 'Big 6'.

74. Despite the fact that both gas and electricity supply are now dominated by just six firms, the level of concentration in both markets has fallen as the firms have competed with one another. Nevertheless, the gas and electricity markets are likely to remain highly concentrated so long as there are only six major players. The regulators should oppose any further consolidation within the 'Big 6' which would diminish retail competition, at least until one or more of the smaller suppliers has established a significant presence in the domestic market.


75. Since liberalisation, competition in the gas and electricity markets has been largely driven by customers changing their suppliers. Ofgem reports that the number of people switching either their electricity or their gas supply has increased each year since 2004. In 2007, over 5.1 million customers changed electricity supplier, and just under 4 million changed gas supplier.[141] BERR estimates that by March 2008, 50% of electricity customers had switched away from their home supplier, and 53% of customers had switched for gas.[142] Many of them, however, may have taken advantage of dual fuel or other offers by either of their original suppliers. Ofgem believes around 20% of customers have not changed either supplier since liberalisation.[143]

76. The level of switching in the energy supply sector is reasonably high, both by international standards and in comparison to other sectors. In other countries, the percentage of households that have ever switched energy supply is much lower than in the UK—32% in Sweden, 12% in the Netherlands, 6% in Germany, and 1.5% in those parts of the US market that have liberalised.[144] In communications, around 38% of mobile and 34% of fixed line customers in the UK have ever switched provider.[145] In finance, Ofgem highlighted annual switching rates of 20% for mortgages, 10% for pensions and 2% for bank accounts, compared to around 20% for electricity and gas.[146]

77. Ofgem argues that customers can benefit from switching, particularly if they have not switched before. It estimates that those customers who have never changed supplier can save on average £125 per annum if they are on a prepayment meter, £93 if they are on standard credit, and £56 if they are paying by direct debit, by changing both fuels to the best available offers.[147] Further savings can be made by changing payment type, if that is possible for them. However, Energywatch and others doubted if in reality customers were able to realise such savings.[148] For example, 2 million customers cannot switch because they are in debt to their supplier.[149] Research by the University of East Anglia suggests that, although many consumers switch to reduce their bills, fewer than 20% change to the cheapest offer, and between 20% and 32% actually switch to a more expensive supplier.[150] The reason for this is attributed largely to customer confusion and decision error, although some will switch to a green tariff, or to express dissatisfaction with an aspect of their previous supplier's service.

78. According to Ofgem, pensioners, people in social group E, and those in rented accommodation are among the groups less likely to change supplier. For all of these groups, the main reason for not switching was that they claimed to be happy with the price and service they received from their current supplier. A small, but significant minority did not change because they did not see the point.[151] However, it is not possible to deduce from these responses whether non-switchers had analysed competing suppliers' offers in reaching their decisions, or if they reflected a lack of willingness or confidence to engage in the market. Even with targeted support, it can be difficult to persuade those who might benefit from switching to do so. A recent campaign by Energywatch, targeting older people and their families, succeeded in helping a number of customers to change supplier. Yet even for households where it had identified a potential annual saving of between £451 and £600 Energywatch still only achieved a 50% transfer rate.[152]

79. One of the reasons why switching may not in fact produce the benefits it should is the way in which consumers change supplier. A high proportion of switching is in response to outbound selling by the energy companies, either on the doorstep or through telemarketing.[153] This is arguably one of the best means of reaching consumers who do not have access to the Internet and price comparison sites, even though Trading Standards Institute told us 90% of consumers it had surveyed did not wish to buy on the door-step.[154] The industry currently self-regulates face-to-face marketing through a code of practice.[155] The 'Big 6' suppliers confirmed to us that they would not knowingly encourage a customer to switch to them if they could not offer a better deal.[156] That said, Ofgem is currently investigating Npower for a breach of its licence over alleged mis-selling.[157] (This is not part of its wider sector inquiry.) The regulator told us: "There is a grey area between a perfectly functioning market and mis-selling which is in breach of licence".[158] We also note and agree with the comments of the Chief Executive of E.ON UK who stated his personal dislike of direct selling, but noted that it seems to work in the UK market.[159]

80. Whilst direct sales currently provide the most effective means of persuading hard-to-reach consumers to switch supplier, they must be conducted with the utmost propriety. We welcome Ofgem's investigation into Npower's selling practices, and we will be looking at the regulator's conclusions and recommendations with particular care. Any further significant breach of best practice by any supplier would inevitably lead to calls for this sales technique to be abandoned. The industry must consider itself on notice.

81. Ofgem's Chief Executive told us a "feature one would expect from a well-functioning competitive market is that the benefit [of lower prices] is not available just to those who switch".[160] If this were the case, one would expect to see the prices charged by incumbent suppliers to their home customers roughly matching the offers made by competitors. However, Figure 10 below shows that, over time, average incumbents' prices have consistently remained above the best offer of their competitors. As National Energy Action put it: "In effect the incumbent supplier treats 'legacy' customers as a cash cow".[161]

Figure 10: Domestic gas and electricity bills in real terms (1998 - 2008)

Source: National Audit Office, 'Protecting Consumers? Removing Retail Price Controls', HC 342, March 2008

82. By international standards and in comparison with other sectors, there is a high level of switching in the energy supply sector. However, around half of customers are still with their original supplier for at least one fuel, and 20% have not switched either fuel source, despite the fact that incumbent suppliers consistently fail to provide the best available offer in their home areas. Moreover, most people who do switch fail to change to the cheapest supplier, and a significant number actually move onto a more expensive tariff. Ofgem is considering these issues as part of its probe. We believe its recommendations should include new ways to engage consumers that have not switched away from their incumbent supplier, and it should consider ways in which customers who do switch can make more informed choices. Ofgem should also investigate how all customers could benefit from competition, whether they switch or not, for example by preventing energy companies from over-charging their legacy customers.

Payment types

83. Currently, 47% of standard electricity users pay their bills by direct debit, 39% do so by standard credit (i.e. by cash or cheque), and 14% have prepayment meters (PPM). For gas, the equivalent figures are 51%, 39% and 10%.[162] Customers with PPM tend to have lower incomes, though they are not necessarily fuel poor. (Fuel poverty arises when more than 10% of household income is spent on electricity and heating.)[163] In fact, only 20% of those in fuel poverty are on PPM—the majority use standard credit.[164] PPM users include customers who are in debt to their suppliers, those in rented accommodation, and second home owners.

84. There has been mounting concern over the gap between bills for direct debit customers and those on PPM and standard credit.[165] This can be observed in Figures 7 and 8 earlier in this chapter. According to BERR's latest statistics, the average PPM bill for both fuels was 17% higher than that for direct debit customers—£144 more per year.[166] Bills for standard credit customers were on average 11% higher than for those on direct debit—£89 more. This compares with respective gaps of £72 and £37 in 2004. The Fuel Poverty Advisory Group (FPAG) noted that the difference between PPM and online direct debit prices was greater still—as much as £250.[167] There are also significant variations in the differentials between payment types set by the 'Big 6' companies. For example, until recently Npower was charging over £450 per annum more to PPM customers than those with an online direct debit.[168]

85. There is no apparent justification for the recent widening of the gap between different payment types. When challenged on this issue, many of energy companies stated that they were charging cost-reflective prices to their PPM customers, or lower.[169] Yet although suppliers incur greater costs for operating PPM through, for example, meter provision and maintenance, and the infrastructure required to support prepayment, Ofgem's best estimate of the higher economic cost for PPM over direct debit is £85. For standard credit the additional economic cost is just £20.[170] On the basis of these figures, the 'Big 6' are on average over-charging PPM customers by £59 per annum, and those on standard credit by £69. This suggests the energy companies are making sizeable profits from charging both PPM and standard credit customers higher tariffs. For PPM alone, Energywatch estimates that customers are overcharged between £300 million and £400 million a year.[171] As the FPAG put it: "either some companies are making extremely large margins on their prepayment and cash/cheque customers or they are making losses on their direct debit/online offers, or both".[172]

86. In a competitive market one would expect the price difference for PPM and standard credit to be competed away. In 2007 switching rates for PPM customers were slightly higher than for those on direct debits.[173] However, Ofgem told us it was concerned that the switching decisions of PPM customers were not always good, and that there is evidence some customers move onto a higher tariff.[174] The fact that a number of the supply companies will not let PPM customers switch using price comparison websites could be a factor behind this.[175] The regulator also expressed its concern about widely different premiums levied on PPM users in different parts of the country by the same companies.[176] The issue appears to be different for standard credit customers, as they are much less likely to switch in the first place. 13% of standard credit gas consumers switched in 2007, and 12% for electricity. This compares to 21% of customers on direct debits for both fuels.[177]

87. There has been a widening gap between companies' direct debit tariffs, and those for standard credit and prepayment meters (PPM). Nine years after liberalisation, this suggests a serious failing in the competitiveness of the market. Recent debate has focused on the prices for PPM. However, we are equally concerned about the poor deal standard credit customers are receiving, particularly given that this is the payment method for the vast majority of the fuel poor and the evidence suggests they are on average being over-charged even more than those on PPM.

88. This issue is a major part of Ofgem's probe. In a fully competitive market the tariff differences for each payment type would not exceed their economic cost; there would be no cross-subsidy between, for example, standard credit and online direct debit customers. The regulator's probe must form a robust view of the additional costs associated with standard credit and PPM customers. If, in a year's time, the 'Big 6' have still not narrowed the gap between the different payment types, Ofgem should consider re-introducing some form of price control, limiting the differentials that can be charged.

Smart metering

89. Ofgem state that: "Introducing smarter forms of metering for domestic and business electricity and gas customers could help to improve customer service, increase energy efficiency (helping to reduce greenhouse gas emissions), reduce fuel poverty and increase security of supply".[178] In the 2008 Budget the Government announced its intention to legislate for a roll-out of advanced metering to medium-sized businesses over the next five years. Following further analysis, it expects to make a decision on a roll-out of smart meters for domestic and small business consumers by the end of 2008.[179] Some of our industry witnesses expressed their concern over the Government and Ofgem's approach, which is committed to competition in the delivery of metering.[180] However, the regulator has said "continued debate over the metering market model is stalling progress on interoperability".[181] It has urged the Government to "create a stable and sound policy platform for smart meter delivery as soon as possible".[182]

90. We believe smart meters would play an important role in facilitating competition in the retail sector by giving consumers better information about their electricity usage and cost, thus encouraging greater and more informed switching.[183] The Chief Executive of E.ON UK told us: "we should get on with this, because, quite frankly, we are using Stone Age technology here; we know we can do better; we just need to agree the process by which we roll it out".[184] We agree, and hope the Government's decision, due by the end of the year, includes a clear and urgent timetable for implementation.

The SME market

91. The market for electricity supply for SMEs differs from that for households in that firms tend to sign-up for fixed-term, fixed-price contracts, whereas domestic customers can leave their supplier after 28 days.[185] Although the 'Big 6' share over 99% of the electricity supply market between them, there are a few new entrants to the sector, such as BizzEnergy, Electricity4Business and Opus Energy, which cater specifically for SMEs. Not only are these companies affected by the lack of liquidity in the wholesale market, discussed in Chapter 3, but we were told they also face potentially anti-competitive practices in the retail market.

92. First, Electricity4Business told us the large energy suppliers tend to offer much lower prices to new customers, cross-subsided by their existing customer base, the majority of which tends to be relatively static.[186] When existing customers do decide to switch supplier, once notified that they have lost a customer the incumbent provider will often offer a 'save' price to encourage them not to change.[187] Electricity4Business told us the 'Big 6' had blocked on average around 14% of its customers from switching through this practice, with one supplier preventing 36% of switchers.[188] In response to this allegation, the Chief Executive of Scottish and Southern Energy told us: "If that is their case they should produce the evidence to the regulator because they have a prima facie case for predatory pricing. They should put up or shut up".[189]

93. Second, Electricity4Business told us that some of the 'Big 6' are using delaying tactics to win back customers who have decided to switch. Examples include: informing customers wishing to change supplier that their transfer date is too early, when this is not the case; preventing moving because of outstanding debt, even when there is no debt; and claiming not to have received termination notices.[190] Third, customers are often confused by the varying cancellation requirements of the major energy suppliers. For example, BizzEnergy told us how at the end of a contract a customer may have to give written notice that they want to leave not before 120 days prior to the end of the contract, and not after 90 days before the end of the contract, otherwise they will find themselves tied in for another period.[191]

94. Around half of switching for small businesses is transacted through brokers.[192] Electricity4Business also told us how these third party intermediaries have an incentive to place customers on more expensive tariffs because the commission structure rewards brokers for signing customers up for higher value contracts. The company described this part of the industry as "completed unregulated".[193]

95. The evidence put to us by small companies in the market for SME electricity supply is compelling and suggests some of the 'Big 6' companies may be abusing their market position to choke off new entrants. We are also concerned by the role of third party intermediaries. We welcome the fact that Ofgem is considering small business customers as part of its probe. We believe that until now Ofgem has in the past paid too little attention to this important part of the market. If it finds evidence of serious anti-competitive behaviour by specific companies, and is unable to address this situation with suitable undertakings, it should refer the matter to the Competition Commission.

Product innovation and 'green' tariffs

96. Another measure of the competitiveness of the supply market is the extent to which incumbents and new entrants offer innovative new products to win or retain customers. Examples include 'green' tariffs, fixed price offers and online deals. Ofgem estimates that around 9 million electricity and gas accounts are on these kind of tariffs, with price guarantees being by far the most popular.[194]

97. However, Energywatch expressed its concern over the varying nature of 'green' tariffs currently available.[195] In some cases the supplier will guarantee to match a percentage of the electricity sold to customers with a supply of renewable electricity back into the grid. In others, the supplier will make a donation to a fund that supports the development of renewable generation, or a carbon offset project, either abroad or in the UK. The consumer watchdog noted that the information suppliers provide on their green tariffs is not always transparent. More seriously still, Energywatch considered some green tariffs were tantamount to fraud. Electricity suppliers are already legally obliged to purchase a growing proportion of their electricity from renewable sources through the Renewables Obligation. This is paid for by all consumers. Energywatch told us that some green tariffs are "simply a 'repackage' of this legal obligation" and that "there is a huge amount of fraud" taking place.[196]

98. Ofgem has only recently published its proposals for a set of guidelines to govern the marketing of green tariffs.[197] These are based on two main principles: transparency to ensure clarity of suppliers' claims, and additionality, requiring that green tariffs provide some additional benefit to the environment above that which is already legally required.

99. Overall, there has been a growing level of product innovation in recent years for those customers who are able and willing to engage in the market. However, we have serious concerns that customers on many 'green' tariffs are being misled about the extent to which their tariff offers an additional environmental benefit, over and above their energy supplier's existing legal requirement under the Renewables Obligation. We welcome Ofgem's belated guidelines for suppliers offering green tariffs, and hope that they will reduce the potential for customer confusion. Once in place, Ofgem must monitor compliance with the guidelines closely.

Off-network gas consumers

100. Around 5 million households in Great Britain are not connected to the gas network, and so are entirely dependent on electricity, domestic heating oil or liquefied petroleum gas (LPG).[198] National Energy Action told us households off the gas network typically have energy bills in the region of £1,700 per annum, compared to £1,000 for those with gas mains connections.[199] Prices have also risen steeply in recent times, following the trend of other fossil fuel commodities. Ofgem told us it is considering whether or not customers off the gas network are receiving the benefits of competition as part of its probe.[200] The regulator is particularly concerned that competition tends to focus on dual fuel customers. Off-network customers in rural areas are also harder to reach through door-to-door selling.

101. The Fuel Poverty Advisory Group (FPAG) told us there has been insufficient attention to those off the gas network in recent times.[201] Although the regulator has a role in trying to connect more consumers to the gas network, these households only come under the oversight of Ofgem and Energywatch insofar as they tend still to be electricity consumers. Ofgem told us around half the communities which are off the gas network in Britain are only 2 km from a gas main. It estimates new gas connections to these communities could reach around 220,000 fuel-poor households and, if they were previously using LPG, might reduce their fuel bills by half. The regulator's gas distribution price control for 2008 to 2013 contains incentives for the gas distribution network operators to extend their gas networks to deprived communities.

102. Many consumers whose homes are not connected to the gas network have the frustration of knowing gas pipelines are close by, but cannot be accessed. They are condemned to using more expensive means of heating their homes. Ofgem should consider whether the current incentives are strong enough to encourage network operators to connect more households to the gas network. It should also consider the appropriateness of the charges involved, especially where communities could club together to pay for such connections. The Government could also consider targeting part of any increase in budgets to address fuel poverty towards schemes to provide direct financial assistance to secure connections to the network, or to assist the development of local combined heat and power or renewable heat schemes for such communities.

103. We are concerned that there is not sufficient regulatory oversight of the market for domestic fuel for households which are not connected to the gas network. The Government should consider whether both the statutory duties of Ofgem and the successor to Energywatch, the National Consumer Council, should explicitly cover the market for fuels used by off-network households.

Final remarks on markets

104. Our overall conclusion on the functioning of both the gas and electricity wholesale markets is that there are significant questions that need to be addressed in the interests of both retail and business consumers. We have also identified important issues that need to be addressed in the retail market itself. We have at this stage, however, recommended consideration of the merits of referring only two aspects of the markets to the Competition Commission (the forward gas market and the supply of electricity to the SME sector), and then only if Ofgem is unable to take sufficiently robust steps itself. We note that no witness has suggested that there is any evidence of active collusion in the wholesale or retail markets. It is clear, though, that in a retail market dominated by six big players, it is easy for those players to make informed judgements about the behaviour of their competitors. This can distort competition, without any active collusion occurring. The regulator therefore needs to remain very watchful.

105. We believe that there are very real problems that need to be addressed. This can best be done through improving market design, taking specific regulatory steps, and by continuing to work for liberalisation of European markets. Such an approach is more likely to bring real and lasting benefits to consumers. It is also less likely to inhibit the investment the UK needs so urgently if we are to "keep the lights on" as we lose a large proportion of our generating capacity around the middle of the next decade. It will, however, need Ofgem to demonstrate a rather greater sense of urgency than has been made apparent so far. In this context we look forward to reading the conclusions of its market probe in September.

131   Q 190 (Energywatch) Back

132   BERR, Quarterly Energy Prices, pages 56 and 60, June 2008 Back

133   Q 43 (Minister for Energy) Back

134   Rounding errors account for the discrepancy Back

135   Ofgem estimate this as a residual, based on its figures for annual bills minus the known costs to suppliers. Back

136   Ev 454, para 76 (Ofgem), Ev 477, para 23 (Npower), Ev 187, para 4.4 (Centrica) and Ev 213 (EDF Energy) Back

137   Ev 461, para 103 (Ofgem) Back

138   Ev 368, para 3.1 (E.ON UK) Back

139   We explain the HHI in para 20. Back

140   Ev 441, para 24 (Ofgem) Back

141   Ev 440, Table 3 (Ofgem) Back

142   BERR, Quarterly Energy Prices, pages 13-14, June 2008 Back

143   Ev 440, para 21 (Ofgem) Back

144   Q 589 (Ofgem); Ev 260, para 3.2-4 (Energy Retail Association) Back

145   Ev 363, Figure 2 (E.ON UK) Back

146   Q 589 (Ofgem) Back

147   Ev 436, para 9 (Ofgem) Back

148   Ev 268 (Energywatch), Ev 160, para 30 (BizzEnergy), Ev 413, para 2.2 (National Energy Action) and Ev 234 (Electricity4Business) Back

149   Ev 262 (Energywatch) Back

150   Ev 510 (University of East Anglia) Back

151   Ofgem, Switching rates for vulnerable customers, March 2007 Back

152   Ev 280 (Energywatch) Back

153   Q 590 (Ofgem) Back

154   Ev 509 (Trading Standards Institute) Back

155   Ev 262, para 4.2 (Energy Retail Association) Back

156   Qq 809 (Centrica, Scottish and Southern Energy, and Scottish Power) and 871 (EDF Energy, E.ON UK and Npower) Back

157   Ofgem Press Notice, Ofgem launches formal investigation into Npower's selling activities, April 2008 Back

158   Q 594 (Ofgem) Back

159   Q 869 (E.ON UK) Back

160   Q 591 (Ofgem) Back

161   Ev 413, para 2.1 (National Energy Action) Back

162   BERR, Quarterly Energy Prices, June 2008 Back

163   Ev 277, para 12 (Energywatch) and Ev 256 (Energy Retail Association) Back

164   Q 588 (Ofgem) Back

165   Qq 200 (Energywatch), 461 (National Energy Action) and 512 (Fuel Poverty Advisory Group); Ev 424 (National Housing Federation) Back

166   BERR, Quarterly Energy Prices, June 2008 Back

167   Ev 379, para 5 (Fuel Poverty Advisory Group) Back

168   Q 201 (Energywatch) Back

169   Qq 799 (Scottish and Southern Energy), 863 (EDF Energy) and 864 (E.ON UK and Npower) Back

170   Ofgem, Domestic retail market report, June 2007 Back

171   Q 458 (National Energy Action) Back

172   Ev 379, para 6 (Fuel Poverty Advisory Group) Back

173   Ev 193, para 5 (Centrica) Back

174   Q 583 (Ofgem) Back

175   Ev 278, para 13 (Energywatch) Back

176   Q 583 (Ofgem) Back

177   Ev 193, para 5 (Centrica) Back

178   Ofgem, Response to BERR consultation on Energy Metering and Billing, October 2007 Back

179   BERR, Letter to Energy Metering and Billing Stakeholders, April 2008 Back

180   Ev 483, (Scottish and Southern Energy) and Ev 173, para 10 (British Energy) Back

181   Ofgem, Response to BERR consultation on Energy Metering and Billing, October 2007 Back

182   Ibid. Back

183   Qq 513, 514 (Fuel Poverty Advisory Group) and 237 (Energywatch) Back

184   Q 867 (E.ON UK) Back

185   Q 671 (BizzEnergy) Back

186   Q 692 (Electricity4Business) Back

187   Q 693 (Welsh Power) Back

188   Ev 234 (Electricity4Business) Back

189   Q 787 (Scottish and Southern Energy) Back

190   Ev 234 (Electricity4Business) Back

191   Q 693 (BizzEnergy) Back

192   Q 672 (Welsh Power); Ev 234 (Electricity4Business) Back

193   Ev 234 (Electricity4Business) Back

194   Ev 438, para 12-14 (Ofgem) Back

195   Ev 356 (Energywatch) Back

196   Q 225 (Energywatch); Ev 356 (Energywatch) and Ev 171 (Dr Gail Bradbrook) Back

197   Ev 472, para 8-9 (Ofgem) Back

198   Ev 471, para 2 (Ofgem) Back

199   Q 431 (National Energy Action) Back

200   Q 608 (Ofgem) Back

201   Q 507 (Fuel Poverty Advisory Group) Back

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