The UK energy retail market compares favourably with similar jurisdictions, according to an interesting report recently released by the Department of Energy & Climate Change (DECC).
The analysis suggests that the UK performs comparatively strongly on issues such as energy prices, profit margins, market competition, and consumer experience, when viewed against comparable jurisdictions (such as the EU-15, Australia, New Zealand, and various states within the USA).
While the peer-reviewed report attracted little media coverage, it is an interesting and important study as it puts key UK energy market trends and indicators into an objective, international context. Some of the findings might surprise you.
Price
The UK has consistently tracked below the EU-15 average for residential and industrial energy prices for nearly 30 years, as illustrated by the chart below.
Profit
The report also found that the UK had the fourth lowest average margins (that is, the percentage of revenue attributable to profit) of 45 countries and states. The chart below features the UK near the bottom, with only Germany, Norway, and Italy showing lower energy company retail margins over the last ten years.
Competition
The chart below shows that the UK has had the highest number of major suppliers (defined as having a market share of >5%) for the past decade, higher than the EU-15 or the US average. SSE has contributed to the UK’s market liquidity, committing to auction all of its electricity supply on the ‘day ahead’ market and offering bespoke deals for smaller players in the market.
Consumer Experience
In terms of consumer experience, however, disappointingly the UK ranked close to the average in terms of consumer trust levels, and towards the higher end of the number of complaints made by customers. SSE is proud to lead the industry in this area, and has been voted ‘Best for Customer Service’ by uSwitch seven years in a row, as well as being the only supplier to achieve a 5-star rating in the Consumer Focus league tables for complaints handling. But the report makes it clear that we need to keep working hard to drive up standards for customers if we are to exceed standards of customer experience in other countries.