Ofgem, the Office of Gas and Electricity Markets, examined the operations of the gas and electricity markets for eight months beginning in February 2008 for the purpose of determining the effectiveness of the energy suppliers ten-year-old competitive market and the level of service energy customers are receiving. Energy suppliers are under more scrutiny than usual because of todays extraordinarily high fuel prices.

Ofgem, the Office of Gas and Electricity Markets, examined the operations of the gas and electricity markets for eight months beginning in February 2008 for the purpose of determining the effectiveness of the energy suppliers ten-year-old competitive market and the level of service energy customers are receiving. Energy suppliers are under more scrutiny than usual because of todays extraordinarily high fuel prices.

Some of the positive changes brought about by the competitive market are a greater variety of available fuel programmes, diminishing fuel costs, and enhanced customer service. The changes instituted by the energy markets during the past ten years have resulted in huge benefits to the public, but there are still some concerns that need further attention for an effective competitive market and high quality customer service.

The Big 6 dominates the domestic gas and electricity markets in Great Britain. These six energy businesses have not been found to engage in unlawful practices such as price fixing, but their overpowering presence tends to restrict the emergence of new gas and electricity companies. Since the beginning of the competitive energy market in 1998, energy businesses other than The Big 6 have entered the market, but the majority of them have exited, leaving only .03 percent of customers receiving service from these new businesses.

The ability to switch between gas and electricity services is one of the benefits domestic and small businesses have with the competitive energy market. Information about changing energy services is obviously available to customers, because 96% of current gas and electricity customers have heard of the option, and of the customers that have decided to switch, more than three-fourths of them reported a satisfactory experience. Even though 96% of customers are aware of their option to switch energy suppliers, only 17% of these customers have actually acted on this option. 

The majority of customers are wary of making a decision to switch or do not believe they have the knowledge to choose the best deal. Some customers do not have Internet access and are unable to successfully compare the available deals and make well-informed decisions.  Detailed customer awareness programmes and a simplified switching process are necessary to improve this area of concern.

Suppliers of gas and electricity offer competitive prices in order to draw customers to their businesses. Domestic and small business customers have their choice of incentive and reward deals, dual fuel packages, fixed and capped price tariffs, and green energy and energy service deals. In the case of dual fuel offers, customers that are not a part of the gas grid cannot benefit from this special pricing and are consequently charged higher prices for their energy consumption. Some of the lower-priced deals are in effect for limited periods, and customers are sometimes unaware of the pending rate increases.