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Catalyst Commercial Services Ltd — Thu, 28 Jun 2007 08:29:06 +0000

Ten years after British energy markets were liberalised the customer is king and can put pressure on prices with a click of a computer mouse to change provider. Since Britain first prised open its gas and electricity markets to private households in 1998-1999, the market has settled down and prices are quite low, but at the expense of close supervision by market regulators. British regulators encourage consumers to change supplier to maintain competitive pressure. Before the market was opened up, British Gas enjoyed a monopoly in the gas sector, while 14, mainly American, electricity companies had a monopoly in each of the country’s 14 regions. The market opening brought another 11 competitors to the market, notably banks and supermarkets, and at the end of 1999 26 companies were distributing gas and electricity throughout Britain. Prices dropped, but so did the level of service. Salesman working on commission practised foot in the door methods, offering compact discs and airline tickets in exchange for signing on the dotted line. In response to the disorder the government created in 2000 a two-headed policing authority, the regulator Ofgem and Energywatch, charged with resolving consumers’ problems. The organisations brought order into the market, reducing the number of companies to six. They are British companies Scottish and Southern and British Gas, which still has 47 percent of market share in gas, France’s EDF Energy, Germany’s EON UK and nPower (a subsidiary of RWE), and Scottish Power, which became Spanish when it was bought by Iberdrola. Prices are low in the market. According to the last comparative study by Eurostat, on July 1 2006, Britain was 16th in the ranks of cheap energy within the then 25-nation EU. And Ofgem and Energywatch are constantly goading the operators to adjust their prices, encouraging users to switch provider with a single click of a mouse or telephone call to force down prices. It has accredited 12 internet sites to compare prices. Allan Asher, the director general of Energywatch said that while half of the clientele has never changed operators, a quarter do it regularly and five million changes are expected this year. Customers are only allowed to change once a month. Alistair Buchanan, Ofgen’s director general, said competition rests firmly on the shoulders of the consumer. However the picture is not totally black and white, with British prices being among those which most increased between 2005 and 2006. The price of gas has increased by 70 percent since 2003, and that of electricity by 52 percent despite recent decreases, Asher said.

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