Big Six to be investigated
Regulator Ofgem has announced that a review will be carried out to determine whether certain energy firms stifle competition.
It will target the Big Six suppliers in the UK, which include British Gas, Scottish Power, SEE, nPower, EDF and E.ON.
The announcement, which has been expected for some time, comes just a day after SEE announced a price freeze on gas and electricity.
Ofgem expects the review to be completed within 18 months and it will be led by the Competitions and Market Authority (CMA).
Sam Laidlaw, chief executive at Centrica, criticised the decision to investigate, claiming it would delay necessary investments within the industry.
He added that this could lead to an increased chance of blackouts in the UK, as more than £100 million was required for infrastructure.
However, energy secretary Ed Davey denied these claims: "He is absolutely, totally wrong and I can prove it. We have 14 contracts for power generation [in the pipeline] over the next 15 years.
"What we are seeing in Britain is a big investment in energy.
"It is true that companies like Centrica are not investing as much as we might like them to, but we are seeing independent energy generation firms like Siemens coming in in their place."
Ofgem feels the review is necessary after finding that there was a possibility firms were co-ordinating price rises - although it didn't go as far as to make a flat-out accusation on the matter.
The report also found it curious that market shares had pretty much stayed the same, while very few people chose to switch providers.
Approximately 95 per cent of the UK's energy market is shared between the Big Six companies, all of which have welcomed the regulator's decision to place the CMA in charge of the review.
Ofgem's report also argued that consumers in the UK have lost trust in the energy firms due to a rise in profits and prices.
Posted by Rachel Jenkins