Ofgem has announced a full investigation into the energy market to ensure there are no barriers to effective competition.
The watchdog is referring the market to the Competition and Markets Authority (CMA) following its proposal in March and the consultation, which showed increasing distrust of energy suppliers.
The areas it expects the CMA to look into includes the relationship between the supply businesses and generation arms of the Big Six as well as their profits, barriers to entry and the “trend of suppliers consistently setting higher prices”.
Ofgem hopes the move will improve consumer trust and provide the confidence needed for investment in the energy sector.
Dermot Nolan, Ofgem Chief Executive said: “There is near-unanimous support for a referral and the CMA investigation offers an important opportunity to clear the air. This will help rebuild consumer trust and confidence in the energy market as well as provide the certainty investors have called for.”
The CMA will begin the investigation immediately and is likely to publish final decisions by the end of next year.
The trade body for the energy industry welcomed the news, suggesting it would “give an opportunity to clear the air”.
CEO Angela Knight said: “The competition inquiry will allow us to put to bed the toxic debate and shine a light on the progress the industry has already made. There are now more companies than ever in the market, switching is on the up especially to smaller suppliers and the industry is making it easier than ever for customers to engage with their company.”