Ofgem has published its state of the market report 2019
The UK continues to be a global leader in cutting greenhouse gas emissions, according to Ofgem’s annual State of the Market report, but progress is slowing.
- Greenhouse gases fell last year by 2.5%, the smallest reduction since 2012 - more targeted investment and policy intervention required to hit net zero target
- Medium and small suppliers now supply around 30% of consumers
- Switching rates increase to 20% and hit a record high
Greenhouse gas emissions have fallen by 42% since 1990, more than any other large advanced economy, due largely to the decarbonisation of electricity generation. This has been driven by Government policies, such as the carbon price which penalises coal plants in particular, and the huge growth in wind and solar power. In fact, renewables generated a record 33% of our electricity last year.
Progress is slowing however, with last year seeing the smallest reduction in emissions since 2012 (2.5% this year, down from a 3% fall the previous year).
Transport continued to be the largest single source of carbon emissions, although emissions fell slightly last year (3%), partly down to an increase in the number of alternative fuel vehicles, which now account for 2% of the licenced cars on the road in GB.
In June, the Government passed legislation requiring the UK to reduce carbon emissions to net zero by 2050 following calls from the Committee on Climate Change (CCC). To meet this target, significant investment is required, particularly in renewables, as well as policies aiding the roll-out of new low carbon technologies and supporting innovation to decarbonise how we heat our homes and businesses.
A priority of Ofgem’s new corporate strategy is helping decarbonise the economy at the lowest cost to consumers. Ofgem will set out more details on this early next year.
Separately, competition in Great Britain’s retail energy market continued to develop in 2018-19. Medium suppliers benefitted the most from record switching rates (just over 20% in June 2019, up from 19% the previous year), which swelled their market share by 7 percentage points in electricity and 5 percentage points in gas to over 20% of consumers overall.
They also gained customers who were transferred to them under Ofgem’s safety net after a number of smaller suppliers failed and exited the market.
At the same time, the market dominance of the six larger suppliers continued to weaken as they lost 1.3 million customers and saw market share fall to around 70% of consumers, compared to around 75% the year before. Small suppliers for the first time saw their market share fall to 9% of consumers, down from 10% the year before.
During this period, when shopping around for new deals, more consumers turned to price comparison websites (49%), ‘auto-scanning’ notifications (8%) and auto-switching (2%).
Meanwhile, the number of consumers who said they’d never switched fell to 29% - down from 34% in 2018.
In January Ofgem implemented a cap on the price of default tariffs to protect consumers from overpaying for their energy.
The majority of customers on these deals are with the six larger suppliers who charged at the upper limit of the cap. In contrast, medium and small suppliers priced at £43 and £78 below the cap (January – June 2019).
Price transparency has improved in general for business customers. However microbusinesses still lose out and pay on average twice as much for gas and 30% more for electricity than the average across all business customer segments, often because they are on expensive default tariffs.
Energy prices have a direct impact on the welfare of consumers, leading to rationing and even self-disconnection of energy by customers who cannot afford to pay their bills. Ofgem is publishing its updated Consumer Vulnerability Strategy this Autumn.
Latest News from
Bulb to pay £1.76 million for compliance issues14/08/2020 13:15:00
Bulb failed to comply with Ofgem’s rules in three separate areas between 2017 and 2020, which affected around 61,000 customers.
Savings on energy bills this winter as price cap falls10/08/2020 13:15:00
The price cap will fall by £84 from £1,126 to £1,042 per year for the winter period (October-March). This is the lowest level of the cap since it was introduced on January 1 2019.
Ofgem publishes price cap decisions ahead of update05/08/2020 10:15:00
Ofgem has today published three decisions relating to the price protection provided to default tariff and prepayment customers following its statutory consultations published in May.
Ofgem proposals to ‘turn your street green’, transforming local electricity networks31/07/2020 10:33:00
Ofgem yesterday set out its proposals to rewire Britain at a local level to deliver a greener and fairer energy system for British consumers.
Fairer energy deals for microbusinesses30/07/2020 13:15:00
Ofgem has unveiled plans to tackle unscrupulous energy brokers so millions of microbusinesses can get a better deal.
Ofgem investigates United Gas and Power Ltd’s billing and communications activities16/07/2020 13:15:00
Ofgem is launching an investigation into whether United Gas and Power breached rules around billing, meter reading and communications.
Ofgem proposes £25 billion to transform Great Britain’s energy networks09/07/2020 14:48:00
Ofgem has unveiled proposals for a five-year investment programme of around £25 bn to transform Britain's energy networks to deliver emissions-free green energy for GB along with world-class service and reliability.
More help for prepayment customers and those struggling with bills30/06/2020 13:15:00
Ofgem is consulting on plans to standardise and strengthen support for prepayment customers and for all customers who are struggling to pay their energy bills.
Ofgem publishes final proposals on raising standards for existing suppliers26/06/2020 13:15:00
Ofgem has published its final proposals for new ongoing requirements for suppliers to drive up customer service standards, reduce the risk of supplier failure and strengthen the safety net for consumers if a supplier fails.