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Centrica argue against CMA energy market proposals

centrica logoEnergy giant and owner of British Gas, Centrica have blasted the Competition and Markets Authority (CMA) for its recommendations towards the energy market. Centrica claim the proposals are based on “unsound” analysis.

Centrica claimed that the proposed safeguard regulated tariff for sticky customers is “disproportionate” to the actual level of disengagement and questions the pool of customers that were surveyed.

In addition they state that it is unfair to assume that all customers on standard variable tariffs or who have never switched supplier are disengaged.

Centrica said:

“We have a number of other concerns over the approach taken to the competitive assessment in the provisional findings.

We believe that each of them is based on a fundamental misreading of the market, and results in the CMA coming to an unduly pessimistic reading of the current competitiveness of the market and an over-interventionist approach to remedies.”

Centrica took particular offence at the CMA’s suggestion that all households were being overcharged by £50 each and suggested their profitability analysis was under par and “not sufficiently robust” to support a conclusion that excessive profits were being earned in the energy sector.

“We have serious concerns about the validity of some of the assumptions that drive all three of the CMA’s profitability analyses (return on capital employed (ROCE), price benchmarking, and EBIT benchmarking).

These concerns are so serious we do not believe the analysis would stand up to rigorous peer review.”

Centrica aren’t alone in their outrage, with Npower also showing concern over the CMA findings and calling for further work before the final report.

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