Independent companies challenging Britain’s big six energy suppliers warned the government to stop meddling in gas and electricity markets as ministers consider whether more action is needed to drive down household bills.
Executives said “blunt instruments” such as price caps risked reducing competition and deterring investment — the opposite of what the government says it wants to achieve.
Bill Bullen, chief executive of Utilita, one of the largest independent energy suppliers, told ministers: “Just get out the way. You are more a problem than a solution.”
His comments, to the Financial Times, were echoed by Juliet Davenport, chief executive of Good Energy, another big independent supplier. “It is time for the government to step back,” she said. “More intervention will create more uncertainty.”
Such warnings are commonplace from the dominant big six suppliers — British Gas, Eon, Npower, EDF, Scottish Power and SSE — which have been the main target of government efforts to increase competition in the energy market.
They are more surprising coming from independent suppliers and highlight the weariness felt across the industry about political interference. “We just want to get on and compete in a settled policy environment,” said an executive at a third independent supplier.
Companies had hoped for an end to regulatory uncertainty after the Competition and Markets Authority ended a two-year investigation last June with a series of recommendations to promote competition and protect vulnerable consumers.
But Theresa May, prime minister, hinted at further action to come when she told the Conservative party conference in October that it was “not right” that so many gas and electricity customers were “stuck on the most expensive tariffs”.
Philip Hammond, chancellor, said last month that the government would “look carefully” at the energy sector as part of a green paper planned for next spring on competition in consumer markets.
Ms Davenport, who has built Good Energy into one of the biggest independent suppliers of renewable power, said the government should “let the CMA proposals play out” rather than introducing a raft of additional interventions.
The CMA found that British households overpaid £1.4bn a year between 2012 and 2015 because of uncompetitive standard variable tariffs which about two-thirds of consumers are signed up to.
In response, the competition watchdog proposed a price cap on pre-payment meters — typically used by poorer households — and measures to raise awareness among consumers of the existence of cheaper deals.
Even before the CMA remedies have been fully implemented speculation is now focused on what further measures might be proposed by Mrs May’s administration.
The big six suppliers are trying to head off punitive action by persuading government they will do more on a voluntary basis to help customers shop around.
Some independent suppliers believe further regulation is required. Darren Braham, founder and chief financial officer of First Utility, said there was a case for automatically switching customers who had been on a standard tariff for five years.
Over 40 companies have entered the UK consumer energy market in the past few years, making it the most competitive in Europe. However, the benefits of this competition are heavily concentrated among the roughly one-third of customers who are in the habit of shopping around, while two-thirds overpay on standard tariffs.
Independent suppliers have faced scrutiny of their financial health since the collapse of GB Energy, a new entrant with 160,000 customers, in November because of rising wholesale costs. Mr Bullen said some new entrants had taken “huge risks” by not hedging against rising energy prices and he expected more to fail.