Energy prices have been a subject of controversy for quite some time, entangled in wider concerns about living costs, and featuring prominently in the political debate in the run up to the May general election. The combination of rising gas and electricity prices, deterioration in the standards of service, and news of soaring profits in parts of the industry have stretched public trust in the market to breaking point. Last year, the Gas and Electricity Markets Authority (Ofgem) made a reference to the Competition and Markets Authority (CMA) for a full investigation into the energy market in Great Britain, “to clear the air” by considering “once and for all whether there are further barriers to effective competition”. This week the CMA published the provisional findings from this investigation. The results revealed a highly dysfunctional market, serious flaws in regulation and government policy, and damaging tensions between the two. It is not all about profits Contrary to popular belief, the increase in energy prices is not mainly related to increases in industry profits. CMA’s analysis indicated that, between 2009 and 2013, the main drivers of domestic price increases for electricity were the costs of social and environmental obligations and network costs. […]

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