By being able to switch suppliers, customers have put competitive pressures on telecom, electricity, gas, and postal providers following the removal of pricing controls. Around half of energy and fixed line telecoms customers have switched supplier and 90 per cent of people doing so found it easy. There have been problems, however, particularly for more vulnerable customers, owing to factors such as complex tariffs.
Between 2002 and 2006, Ofcom, Ofgem and Postcomm removed retail price controls in markets that had previously been dominated by a few big suppliers. These controls had been imposed on these suppliers to protect consumers while competition was weak. Ofcom, Ofgem and Postcomm removed the price controls because they considered that growing competition meant that the controls were no longer needed.
The processes used by Ofgem, Ofcom and Postcomm for removing retail price controls were consistent with their statutory duties of protecting consumer interests through the promotion of competition. The conditions for competition have developed in the relevant parts of all three markets, and the regulators have taken action to help consumers take advantage of competition.
However, problems such as complex tariffs and a lack of information mean that some consumers, particularly those classified as vulnerable, are still unable to take full advantage of the competitive market. In addition, the suppliers that in the past had monopolies continue to have a strong position in their original markets (46 per cent of revenue in gas, just under 50 per cent of revenue in electricity, and 48 per cent by volume in telecoms).
There remains a need, therefore, for all three regulators to continue to use their competition and consumer protection powers to ensure that markets still protect the consumer. And, in February 2008, Ofgem announced a probe into the electricity and gas markets using these powers in response to recent concern following price rises.