The Competition and Markets Authority has announced an inquiry into the tariffs of big energy companies after it found that millions of customers pay too much for their energy bills.
An initial investigation by the regulator found a lack of competition in the market, partly due to the fact that customers do not consider switching providers.
In a response to the findings, the CMA has announced that it might impose a transitional price cap on highest tariff, until a more long term solution to the issues in the market has been found. The regulator has also put forward a series of possible measures to ease the process of switching providers to help the customer take advantage of the competition.
Chairman of the investigation, Roger Witcomb, stated: "Whilst competition is delivering benefits to increasing numbers of customers, mainly through the growth of smaller suppliers with cheaper fixed-price deals, the majority of us are still on more expensive default tariffs."
"Many customers do not shop around to see if there's a better deal out there – let alone switch. The confusing way energy is measured and billed can make comparing deals understandably daunting," he added.
The CMA found that the average customer spends approximately £1,200 (€1,695, $1,868) a year on energy and the calculation of tariffs is confusing for many customers, which prevents them from effectively comparing the energy firms.
The investigation was launched after the Big Six energy firms (EDF, British Gas, SSE, Scottish Power, Npower and E.On) were accused of abusing the market, but the CMA cleared them of these accusations and said that the problems in the energy market were due to complicated prices and a lack of clarity towards the customer.
Witcomb said: "There is an issue with trust in this market, and one of the most effective ways of restoring that is through transparency in all parts of the market, be it in the implementation of policy, in regulation or in energy company accounts."