The Competition and Markets Authority has extended its investigation into the energy industry by six months, in the second delay to a CMA probe this month.
The regulator said it had moved the deadline from 25 December to 25 June next year because its inquiry team needs more time to wade through the responses. The CMA said the team, numbering up to 40 people, would aim to beat the new deadline by releasing its provisional proposals in January and publishing its final decision by the end of April.
The extension of the politically charged energy investigation follows the recent announcement of another delay to a CMA report. The watchdog backtracked on a pledge to unveil the provisional findings of its inquiry into the banking sector due this month, setting October as a new publication target.
Its caseload also includes an investigation into the private healthcare market and a review of BT’s acquisition of mobile phone operator EE. This is the first time the CMA has used the six month extension allowed for its investigations.
The regulator said in July that consumers paid about £1.2bn a year too much for domestic energy from the big six providers, including British Gas and SSE. The CMA said consumers spent too much because they did not shop around and that this was particularly true of vulnerable groups who could least afford it.
The large energy providers have always denied making excessive profits and are particularly opposed to the CMA’s suggestion that there should be a temporary price cap on bills. Indicating that consumers were not taking advantage of a new breed of lower-cost providers, the CMA said millions of householders could each save up to £160 a year by switching to a new energy supplier.
Industry sources say the CMA has been wavering on the proposed price control, which was also criticised by a group of former regulators, knowing a climbdown would be interpreted as caving in to the big six energy companies.
Extending its deadline, the CMA said it needed time to sift through the many responses it had received from energy providers, consumer groups and other interested parties. Its inquiry group then needed time to gather further evidence to come up with workable policy proposals, the regulator said.
Centrica argued in its submission that a temporary price cap would thwart the CMA’s aims because it would deter consumers from shopping around. The cap would end up becoming permanent and would stifle competition, Centrica said.
Roger Witcomb, chairman of the investigation, said: “As the most comprehensive investigation into the energy market since privatisation, this is a once in a generation opportunity to shape the future of this market for the better. It’s important that we get it right.
“This is a huge programme of work and we have concluded that we could not complete it by the original statutory deadline. We have therefore decided there are special reasons for extending the reference period which will allow us some extra time to finish the job.”
The CMA investigation was driven by the former coalition energy and climate change Secretary Ed Davey, amid pressure from the Labour party and the public. The Conservatives were thought to be less keen on state interventions in the market for gas and electricity.
