Page last updated at 10:36 GMT, Thursday, 13 November 2008

Consumers 'can't find best deals'

Plug and socket
A quarter of electricity "switchers" had a worse deal

Consumers do not have enough good quality information to find the best deals on energy, post and telecoms services, says a committee of MPs.

Regulators should investigate the extent of the problem and deal with price "discrimination", a report by the Commons public accounts committee says.

It said the removal of price controls had not delivered the competition expected that would benefit consumers.

It said poorer and older customers were least likely to switch suppliers.


Retail price controls were removed by the regulators in the three industries - Ofgem, Ofcom and Postcomm - between 2002 and 2006.

It is the poorer and older citizens who are least able and yet would benefit most from switching to a cheaper supplier
Edward Leigh MP

The committee found that prices had risen by 60% in energy, but fallen in communications since the changes.

Consumers were given the opportunity to switch suppliers when price controls were lifted, forcing suppliers to compete on price and quality of service.

But the committee suggested that customers were not getting the full benefit.

A National Audit Office survey suggested that a quarter of electricity customers who had switched ended up with a worse deal, and the committee said one in six telecoms customers found it tough to discover what companies were offering.

It called for regulators to investigate the obstacles to consumers getting a better deal by switching.

It also called for a fresh look at the prices charged by utility companies to pre-payment meter customers, describing it as "apparent discrimination".

The committee found that vulnerable customers had difficulty finding their way around the switching system.

"It is the poorer and older citizens who are least able and yet would benefit most from switching to a cheaper supplier," said committee chairman Edward Leigh.

"They have been exposed to huge increases in gas and electricity prices, far greater than in many other countries."

The committee also criticised Postcomm for failing to provide "full and frank" answers to the committee's hearing.

'Price cap'

Meanwhile, the UK's biggest trade union has called for price capping to be introduced on energy bills, to halt "rampant" fuel poverty.

Unite wants a windfall tax on the utility companies and an overhaul of the energy market.

"Galloping price rises and light touch regulation have hit hard-pressed consumers with a double whammy - they are forced to pay sky-high prices for an essential commodity and a toothless regulator that fails to bite back in their favour," said joint leader Tony Woodley.

The comments come in a submission to regulator Ofgem's review of the domestic energy market.

In October, Ofgem's initial findings said the energy market worked well for most customers, but said power companies needed to deliver the benefits of competition to every consumer, irrespective of the way their paid their bills.

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