Britain's electricity and gas supply industry is a "comfortable oligopoly" that feels little need to innovate or compete, an industry watchdog told MPs yesterday. Allan Asher, chief executive of Energywatch, said that over the last decade the number of gas and electricity suppliers had fallen from 20 to six, while in some areas only two or three firms competed. "There is a myth that there is vigorous price competition between them [the suppliers]. For the main product they most actively sell - direct debit for dual fuel, gas and electricity - the price difference between the cheapest and most expensive is £30 a year; it's just a few pence a week." An interesting example of price discrimination was highlighted in that the price that companies charged consumers using pre-payment meters, who are often among the poorest. In some cases, meant they paid far more than customers paying by direct debit. Pre-payment meters should be called "the poor-pay-more meters", he said. Guardian article here.
What features make an industry such as energy supply susceptible to oligopoly?
What could the Competition Commission suggest that would make it more competitive?
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