| LONDON, March 27
LONDON, March 27 Britain's energy suppliers
could be on track for their biggest shake up since privatisation
when regulators rule on Thursday whether the industry is
competitive enough following a public outcry over high prices.
Three regulators will say whether the whole industry needs
to be subjected to a full-blown anti-trust investigation which
could result in some of the big gas and electricity suppliers
being broken up.
A referral for a monopoly review is widely expected.
"We believe that a referral is likely," analysts at broker
Liberum said in a research note.
Public trust in the country's "big six" providers, which
control around 95 percent of the market, is at an all-time low
after years of rising energy bills and allegations they are
abusing their market position.
The issue has become a political football a year before a
parliamentary election with all parties trying to tap into the
public discontent over high energy bills, which have risen 10
percent on average over two years.
Prime Minister David Cameron ordered a review of competition
in the energy retail sector in October last year, calling the
high cost of energy unacceptable.
His request came shortly after opposition leader Ed Miliband
promised he would freeze energy prices and restructure the
energy market if his Labour party is elected in 2015.
The review has been carried out jointly by energy regulator
Ofgem, the Competition and Markets Authority (CMA) and the
Office of Fair Trading (OFT).
Energy analysts expect the review is likely to result in a
full competition investigation, not least because Ofgem wants to
be seen as acting strongly on the case.
"There is immense political pressure on Ofgem to be seen to
be taking action," Liberum analysts said.
The big six - SSE, Scottish Power, Centrica
, RWE npower, E.ON and EDF Energy
- deny any wrongdoing but have started freezing prices
and splitting supply and generation businesses in response to
"It is an opportunity to show that we have nothing to hide
and to prove to our customers that we have their best interests
at heart, so that we can earn and retain their trust," EDF
Energy chief executive Vincent de Rivaz said this week.
Britain's Secretary of State for Energy, Ed Davey, urged
Ofgem in a letter written in February to look at above-average
gas prices charged by the country's biggest supplier British
Gas, owned by Centrica.
"Clearly you will wish to consider whether ... it merits a
market investigation reference," Davey said in the letter.
British Gas owner Centrica said it had fully supported the
market review every step of the way and that it thought
Britain's energy supply market was highly competitive.
Consumer products body Which? and the Federation of Small
Businesses said a survey they had carried out showed that nine
in ten energy consumers want to see a full investigation of the
"We need to clear the air. Even if there is nothing wrong,
we won't be satisfied until someone independent can tell us once
and for all that nothing is broken in the market," Audrey
Gallacher, director of energy at UK consumer lobby group
Consumer Futures, said.
Depending on the outcome of the investigation, the CMA,
which is replacing the Competition Commission and the OFT from
next month, can go as far as ordering a break up of the
companies it says are breaching competition rules.
An example of such a break-up was British Airports
Authority, which was forced to sell some of its airport assets
to dilute its monopoly position in the market.
(Editing by Kate Holton. Editing by Jane Merriman)