CMA: give energy companies access to 'database' of customers on default tariffs

The new database, which would be operated and controlled by energy market regulator Ofgem, is one of the central recommendations by the Competition and Markets Authority (CMA) in its final report on the UK energy market. Customers would be able to opt out at any time, and Ofgem would be required to control access to the database and oversee the "frequency and form" of any marketing communications sent, according to the report.

According to the CMA, 70% of domestic customers of the six largest UK energy suppliers are on a default tariff, and could potentially save over £300 by switching to a cheaper deal. Around four million households who pay for their energy supplies through prepayment meters pay even more, and will benefit from a "transitional" price cap, its report said.

"Competition is working well for some customers in this market – but nowhere near enough of them," said Roger Witcomb of the CMA, who chaired its investigation.

"Customers … will be alerted to the better value deals that are our there and it will be easier for them to identify a good deal and switch to it. Those that can help with this process, like price comparison websites, will be given the ability to play a more active role," he said.

The CMA has ruled out a wider price cap beyond the one that it intends to impose on prepayment tariffs, which it has said would "remain in place until the introduction of smart meters removes the limitations on such customers accessing better deals". This was not a unanimous decision, with one member of the CMA's panel suggesting that a "short-term price cap covering a substantially larger number of customers" would "reset the market".

The watchdog has made more than 30 recommendations in total, which include a mixture of consumer-facing remedies and "technical and regulatory changes". These include proposals to reform "outdated systems for measuring and charging energy that distort competition between suppliers" and reduce the cost of energy transmission, and more powers for Ofgem to influence the industry codes that underpin the market and scrutinise market performance.

Recent changes limiting energy suppliers to no more than four core tariffs should be reversed, and price comparison websites (PCWs) given "a more active role" in finding the best offers for consumers. PCWs should also be able to access customers' meter data, to make it easier for them to search for the best deals for them, according to the report. The CMA has also made some recommendations to the government's Department of Energy and Climate Change (DECC), designed to improve the competitiveness of the contracts for difference auction process for low carbon energy projects.

The CMA intends to publish a timetable shortly setting out how it will implement its remedies over the next six months. The process will consist of a combination of CMA Orders and recommendations to Ofgem and the government, it said.