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In 2008, ten years after the start of the competitive energy market, the Office of Gas and Electricity Markets (Ofgem), explored the operations of the gas and electricity markets related to how well they have adapted to the competitive market and the level of customer service now in place.  Given the surge in energy prices lately, this investigation was of particular interest.

The switch to a competitive market from an energy monopoly has been quite productive, with customers receiving quality service, decreased fuel prices, and more variety as far as energy package plans.  The gas and electricity markets have done a remarkable job thus far, but several aspects of their operations still need concentrated effort if the competitive market is to continue on a positive path.

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 competitive energy market allows small business and residential customers to change their gas and electricity suppliers.  Almost 100% of gas and electricity customers reported that they knew there was an opportunity to switch energy suppliers, and 77% of customers that decided to exercise this option rated their experience as being satisfactory.  Even though the vast majority of customers are aware of their option to switch energy suppliers, a mere 17% of these customers actually decide to switch.  

Reasons for not electing to exercise this right include being uncertain of the outcome and not feeling confident in selecting the best plan.  Since some customers do not have Internet access, they are not equipped to analyze the offered energy plans and make a decision to switch.  These points indicate that a better system of conveying information to customers and an easier process for switching energy suppliers are needed.

Customers typically choose their gas and electricity suppliers because of the competitive prices offered by the suppliers.  Some of the incentives available to small business and domestic customers are green energy packages, energy service deals, dual fuel packages, and price tariffs that are fixed or limited.  Customers that are not on the gas main are not able to reap the benefits of dual fuel packages and usually pay higher prices for their energy.  Low-price deals are enticing to customers, but only last a short time, and many customers do not understand that their energy prices will eventually increase.

Tal Potishman, editor of Heating Central, writes articles about commercial boilers, central heating, Glasgow plumbers, underfloor heating and solar thermal. He specializes in helping save money by advising on efficient heating.

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