Government response |
The Government welcomes the Business and Enterprise
Select Committee's Eleventh report: Energy prices, fuel poverty
and Ofgem. The Committee's Report constitutes a constructive
assessment of the complex factors at work in UK and wider international
The Government maintains and, as necessary, develops
the overarching regulatory framework for UK energy markets. Within
this framework Ofgem is responsible for monitoring and promoting
competition in the GB energy markets, and it is primarily for
Ofgem to take the initiative in any market investigation under
the Enterprise Act 2002.
While many of the Committee's recommendations are
addressed primarily to Ofgem, given the Government's ultimate
responsibility for the health of the overall framework, we have
in places added additional comment from the Government's point
Like the Committee, the Government has welcomed Ofgem's
announcement of an inquiry into the energy supply markets for
households and small businesses. We look forward to seeing the
initial results when these are published in the near future.
The Committee's specific conclusions and recommendations
are reproduced in bold below. Each is followed by the Government
response. We note where recommendations are in the first instance
The UK gas market
6. We are troubled by the apparent discrepancy
between the figures cited by our various witnesses on the extent
to which gas is delivered to the UK via off-market contracts,
as opposed to the visible market. The absence of consensus on
such a basic characteristic of the market makes it difficult to
reach secure public policy conclusions about desirable interventions.
The Government agrees the importance of reaching
policy decisions based on evidence. It may be helpful to note
some factors which can complicate analysis of gas markets and
contracts. Commercial confidentiality can be an obstacle to obtaining
data on trading and contract activity. A lack of shared terminology,
and the complexity of many gas contracts (which, in addition to
specifying the term, price and volume conditions may include several
other parameters) can also make accurate summary difficult. It
is possible that these factors could contribute to different market
participants and commentators providing information that seems
For example, it may not be possible to meaningfully
define what percentage of the UK gas is traded on exchanges, on
the over-the-counter market, or via bilateral contracts. This
is because, as the Committee has noted, much more than 100% of
the gas ultimately delivered to customers is traded in the years
and months that precede the delivery date. Moreover, individual
companies' strategies may well diverge quite substantially from
It is not the Government's understanding that particular
forms of gas sales and trading are more advantageous for public
policy purposes than others. Rather, we believe that producers,
traders and customers need a number of ways in which they can
transact in the gas market, such that the instruments and markets
available meet their commercial needs.
What is critical is that we can be confident that
the markets that do exist and represent large proportions of gas
supplied in the UK, and act as price benchmarks, are working effectively.
Clearly, transparent and well-understood market information is
a key element of well-functioning markets, and we value the efforts
that the industry, National Grid and Ofgem have made to increase
transparency of the gas market. For example, National Grid's website
now provides near-real-time flow information on gas being landed
in the UK, disaggregated by sub-terminal. It also provides considerable
forward-looking information which should provide a basis on which
gas market participants can develop informed views about the future
supply/demand balance, and hence prices.
7. While the UK has one of the most liquid spot
markets for gas in the world, industrial consumers and Energywatch
have significant concerns about the lack of liquidity in the forward
gas marketan issue our predecessor Committee raised in
2005. Given the apparent impact on the prices major users pay
in comparison to their competitors on the Continent, we recommend
that Ofgem investigates urgently why gas producers seem unwilling
to trade in the forward market. This investigation should include
the wider market effects of both the lack of price transparency
for forward contracts and the risk premiums attached to them.
If Ofgem is unable to reach firm conclusions or suggest appropriate
remedies, it should consider a referral of this aspect of the
wholesale gas market to the Competition Commission.
It is indeed for Ofgem to decide whether to initiate
an investigation of this kind.
In as much as higher liquidity helps the operation
of the market, the Government shares the Committee's interest
in liquidity in the gas forward markets. DTI commissioned a comprehensive
report (published in March 2005 and available at http://www.berr.gov.uk/files/file33153.pdf)
from consultants Global Insight to investigate aspects of the
forward market. This report made several conclusions about the
market at that time. It reported that there were then natural
reasons for many producers not to want to sell forward, and that
these reasons were not anti-competitive. It further concluded
that the "risk premia" that were being demanded in the
forward market were not disproportionate compared to the risks
sellers to the forward market were facing. The report also concluded
that the forward market at that time was not subject to abuse
of market power and was functionally liquid, although it was not
as liquid or mature as other global commodity markets, which did
result in some limitations.
Increasing gas dependency
8. The implication of the UK's growing gas import
dependency is that it must increasingly compete in European and
global markets. This means the UK gas price is influenced by changes
in supply and demand in other countries. Also, where market distortions
exist in other countries, such as the oil-gas price link in Europe,
which we discuss later, this too will affect the UK gas price.
The existence of import capacity does not necessarily guarantee
the flow of gas to the UK. Rather, this is determined by market
attractiveness and willingness to pay.
We share the Committee's analysis: import infrastructure
is a necessary requirement for ensuring the UK's security of gas
supply, but it cannot deliver this key objective on its own. The
price UK suppliers pay for wholesale gas is influenced by demand
and supply in other countries. However there are measures we can
take to influence producers' market decisions.
We are taking steps to improve the attractiveness
of the UK as a destination for producers. We are facilitating
increased storage and import infrastructure investment. We continue
strongly to support reform of the EU energy market to ensure that
prices across Europe are set in competitive markets and that everyone
has access to gas at a price determined by demand and supply fundamentals.
Beyond the EU we are working to achieve further development of
the international gas market, including LNG, and to ensure the
attractiveness of the UK market to importers.
Closer to home, we are strongly encouraging economic
recovery of oil and gas from UKCS.
Wholesale gas market concentration
9. Whilst the overall level of gas market concentration
is relatively low, current figures provide only a snapshot of
a rapidly evolving market. Market concentration in the supply
sources on which the UK will become more dependent in the next
few years are much higher than that for the UK Continental Shelf.
Ofgem must monitor this situation closely, particularly if the
marginal source of supply to meet UK demand increasingly comes
from these highly concentrated markets.
We agree that Ofgem will continue to have a crucial
role in overseeing sector competition.
Some major supplier countries have national monopolies.
This makes it all the more important to develop and maintain a
diversity of supply sources. Developing import infrastructure
increases our capacity to take advantage of such diversity in
sources and routes, giving us the opportunity to import from a
wide range of countries including from the Middle East, North
Africa, Trinidad and Tobago, as well as sources closer to home
such as Norway and the Netherlands.
10. Ofgem states that in examining the competitiveness
of the gas supply market it is worth noting that "at certain
price levels a demand side response occurs" and that this
can "act as an additional brake on potential market power".
The regulator should remember that this brake has a very real
social and economic cost. We cannot form public policy in a world
of energy shortages and sharply rising prices on the complacent
assumption of a "demand side response". The gas price
spikes of winter 2005/06 were cited as a key factor by the industrial
energy user groups in the loss of around 100,000 manufacturing
jobs in the months that followed.
The Government shares the Committee's recognition
of the very serious potential social and economic impacts of consumers
being compelled to make critical reductions in their energy use
for reasons of cost.
However, it should be noted that not all demand side
responses to changes in prices and available capacity have lasting
negative impacts. Planned demand side management (DSM) can have
a beneficial role to play in managing impacts within energy systems.
For example, DSM can involve reducing demand from some industrial
users at peak periods, and raising it at off-peak times, leaving
overall consumption by those users unchanged. Managing periods
and patterns of use to smooth out peaks and troughs in demand
can reduce the maximum capacity required in a system at any one
time, and so can reduce the investment required and ultimately
the costs to consumers.
DSM can also manage temporary spikes in price and/or
restrictions in supply. In this context it is useful to note that
the sector of the gas market that currently provides the greatest
demand response is the electricity generating sector, and it is
able to do so with less disruptive impacts than some other sectors.
Companies in this sector can swap between fuels/generators and
use distillate back-up at CCGTs when gas prices rise without there
necessarily being a reduction in output.
LNG import capacity
11. The Isle of Grain LNG import terminal has
seen little use this year. It is possible the regulatory framework
for the use of the facility is part of the reason why LNG cargoes
are not coming to the UK. Ofgem should investigate the situation
with a view to making any necessary changes. Moreover, if international
price competition can so easily drive cargoes elsewhere there
must be doubt about the extent to which new capacity, such as
Milford Haven, will provide the anticipated benefits in terms
of security of supply for winter 2008/09. Ofgem and the Department
should explore the possibility of such diversion of supplies to
inform other aspects of energy policy, specifically in relation
to gas storage.
As above, we fully agree that the development of
import facilities does not guarantee their use. The Government
takes into account the market conditions of LNG trading and import
when considering other energy policy and gas market issues.
We note that Ofgem's evidence to the Committee summarises
results of their inquiries in the last year into the operation
of arrangements at Isle of Grain. It will continue to be important
that the regulatory framework meets the needs of the market.
The UK has diverse sources of gas supplyUKCS,
by pipeline directly from Norway; imports from the Continent
through the Interconnector and BBL pipeline; and imports of LNG
by tanker (to the Isle of Grain, Teesside, in the future Milford
Haven and potentially elsewhere). The nature of the LNG market,
as highlighted by the Committee's report, reinforces the need
for a diversity of import infrastructure. Different LNG facilities
can operate to different usage and business models. Industry is
investing in a range of infrastructure.
There are currently a limited number of LNG tanker
cargoes which are free to sail to any destination in response
to price signals, as many are locked into long-term contracts.
However the number of flexible cargoes is expected to increase
12. The Government has not responded quickly enough
to the UK's increasing, and entirely predictable, gas import dependency
by encouraging investment in storage. This is an issue our predecessor
Committee raised in its 2002 and 2005 Reports on security of supply
and fuel prices. Significant additional storage, beyond that currently
planned, is needed to reduce volatility in the wholesale gas price,
which is otherwise likely to increase as the UK becomes increasingly
dependent on gas imports. It is now an issue of national importance
and should be a high priority in domestic energy policy.
We agree that increasing gas storage is vital to
put the UK gas market in a stronger position to deal with present
and future risks to different international supply sources.
Existing storage capacity is over 4bcm,
0.8bcm is under construction and a further 13.8bcm is proposed
which if it goes ahead could come on stream by 2015/16.
This does not include new and expanded LNG storage at LNG import
The Government is responsible for maintaining and
where appropriate developing a framework which will draw in the
necessary investment. Planning is currently a real barrier to
confident and timely decisions on the very large investments we
need in storage and other energy infrastructure, and that is why
it is so important to achieve the improvements to the planning
system set out in the Planning and Energy Bills, now before Parliament.
Offshore, several proposals for significant
new gas storage facilities are under consideration and
the introduction of a new offshore licensing scheme under the
Energy Bill will ensure that there is a fit for purpose regulatory
framework to determine applications which come forth for sub-sea
gas storage and offshore unloading of gas imports.
European-UK gas price link
13. In recent years, the European gas price has
set the floor for the UK price during the summer, when the UK
has been a net exporter and its gas has generally gone into boosting
European winter storage levels. In winter, prices have risen markedly
above European levels in order to draw gas to the UK. We are concerned
that European gas suppliers are not responding to price signals
more quickly during the winter months by selling into the UK.
We strongly support the efforts of the European Commission both
in its attempts to increase the transparency of, and to liberalise
certain contractual and legal aspects of the European gas markets.
Its task is particularly challenging, given countries have increasing
concerns over energy security. The Government must also continue
to exert strong pressure in this regard, as a political solution
to this issue would do more to improve UK market conditions than
any other domestic or international initiative. We consider these
objectives should be a high priority for the Government in negotiations
on EU policy generally, not simply within energy policy.
We fully agree with the emphasis here. A properly
functioning EU energy market is vital to the UK. We have strongly
supported and encouraged the Commission in improving the market,
and we fought hard in negotiations with other Member States to
prevent the watering down of the Commission's package of proposals
of September 2007 for further internal energy market legislation.
Political agreement was reached on this package in June 2008
and, subject to the agreement of the European Parliament, we expect
it to come into force early in 2009.
This new legislation should significantly improve
the operation of the internal energy market, with more effective
regulation, increased transparency and more effective unbundling
of vertically integrated companies to ensure non-discriminatory
third party access to networks.
Oil-gas price link
14. The contractual link between oil and gas prices
on the Continent distorts the wholesale gas market and therefore
the environment in which investment and consumption decisions
are made throughout the EU. In the absence of liberalisation in
the short to medium term, it seems unlikely that market liquidity
will increase sufficiently on European trading hubs to provide
an alternative means of indexing long-term gas contracts. The
oil price will therefore continue to have a significant influence
on UK gas prices. It is likely that European gas prices will continue
to rise in lagged response to the current increases in oil prices,
and thus will feed through to the UK market.
We agree that oil prices are influencing UK gas prices,
alongside the UK's own gas demand and supply fundamentals. Continuing
pressure to liberalise continental Europe and facilitating the
development of the international gas market, including LNG, will
put increasing pressure on the oil price linked contracts and
are expected to lead to a reduction in their dominance over time.
The Government will continue to study the influence
of oil prices on gas prices, and will push for action if this
leads to anti-competitive results.
15.Trading on London markets plays an important
role in setting the global price of oil. We fully acknowledge
the important role futures markets play in helping purchasers
of commodities to hedge against future price movements and so
assist in planning their businesses. We also note the Treasury
Committee's current interest in this subject. We consider, however,
that the Financial Services Authority would be well advised to
investigate the extent to which speculators within its jurisdiction
are currently driving up global oil prices, and to take action
The Government published its latest assessment of
the relationship between speculation on futures markets and commodity
prices, including energy prices, in Global Commodities: a long-term
vision for stable, secure and sustainable global markets on
12 June 2008.
The available evidence suggests that speculation
(i.e. the activity of financial investors), has not been a determining
factor behind the recent energy price increases. The main driver
of the recent energy price inflation reflects developments in
the underlying physical markets and views about future prospects
for supply. Although there is insufficient evidence to conclusively
rule out any impact from speculation, it is likely to be only
small and transitory relative to fundamental trends in demand
and supply for the physical commodities.
The Government continues to assess the available
evidence regarding the relationship between speculation and commodity
prices. The FSA's mandate in its financial oil markets
regulation is to ensure that markets are fair and orderly, that
investors are afforded suitable protections, and that market abuse
by market participants is prevented as far as possible and, where
it occurs, is detected and dealt with appropriately. The
Government will ensure that FSA is made aware of the Committee's
The Government looks forward to the outcome of the
Treasury Select Committee's enquiry into regulation of oil markets.
16. Clearly something is wrong with the GB wholesale
gas market if INEOS ChlorVinyls, one of the UK's biggest industrial
energy consumers, would rather ship gas from abroad under a European
contract, than engage directly with the domestic market. Not only
should Ofgem investigate why companies are behaving in this way,
in conjunction with the European Commission it should also investigate
the legality of gas suppliers offering widely different contract
terms in different jurisdictions within the European Union. We
cannot believe such behaviour is compatible with the Single Market.
If there is any incidence of restrictions on fair
access by UK companies to EU energy markets, or unfair subsidisation
of energy costs in other EU member states, the Government will
want to be informed, and will not hesitate to take action or otherwise
to support the full enforcement of competition and Single Market
rules by Ofgem and/or the European Commission.
The wholesale gas market and
17. One of our major concerns is that
Ofgem's investigation is not giving more explicit attention to
the wholesale gas market. In 2004/05 Ofgem conducted an inquiry
into the upstream sector in response to gas price spikes that
winter, but the recent price spikes have been sharper still. The
focus of Ofgem's investigation this time is on the supply to households
and small businesses. As part of this it will examine the relationship
between retail and wholesale energy prices. However, it also needs
to look again at whether the wholesale markets themselves are
The scope of the investigation is for Ofgem. We fully
agree the crucial importance of maintaining effective competition
in wholesale and retail markets.
Wholesale electricity: rising
18. It is clear that the 'Big 6' firms
and the independent generators have, to varying degrees, benefited
financially from the free allocation of permits in Phase 2 of
the EU Emissions Trading Scheme. However, the magnitude of this
windfall is not clear. Furthermore, at least some of the value
may be passed on to consumers through lower prices, via cross-subsidy
from their generating arms, while some may support much needed
investment in new capacity. We are disappointed by the superficiality
of Ofgem's current analysis. We recommend that the Government
now conducts and publishes a rigorous analysis, estimating the
value of any windfall profits which companies have gained, and
the use to which they have been put, or are planned to be put.
It is only on this basis that the Government can then decide if
there is a case for reallocating some of this windfallan
issue we return to in Chapter 5.
EU law requires the UK to allocate free of charge
90% of carbon allowances during the 2008-2013 trading period.
At the current allowance price, and at the current pound to euro
exchange rate, the free allocation to UK electricity generators
is potentially worth around £2 billion per year. The exact
benefit depends on many factors including the extent to which
companies have included the value of the allowances in the price
of electricity to end users. It is possible, as the Committee
says, that part of any benefit may have been used to mitigate
price increases for retail customers of the downstream supply
businesses. The Government has announced that from 2013, it wants
to auction 100% of carbon allowances to large electricity producers.
Wholesale electricity market concentration
19. At present, Britain has a diverse electricity
generation portfolio, owned by a number of different companies.
However, we are concerned that this may be undermined by market
consolidation, such as a takeover of British Energy or Scottish
Power. Ofgem and the Competition Commission should ensure that,
were this to happen, measures are put in place to protect current
information flows to the market, and to ensure no single generator
has excessive market power. We acknowledge the urgent need to
secure investment in new generating capacity, but that investment
must not come at the price of a less competitive or transparent
market in the long term.
Britain does have a diverse electricity generation
portfolio. BERR's "UK Energy Sector Indicators"
 listed 30 Major
Power Producers in the UK at the end of 2006. The aggregate share
in generation of the largest generating companies was around 45%
(updated statistics for 2007 will be published in autumn 2008).
We recognise the need to secure investment in new
electricity generation capacity. As set out in the 2007 Energy
White Paper it is estimated we would need 20-25 GW of new generation
capacity by 2020 for roughly the same margins of capacity to be
available as today. However, if we are at the same time to meet
our share of the EU target for renewable energy this would increase
to around 40 GW. The intermittency of renewables means that 1
GW of wind capacity cannot replace 1 GW of closing coal-fired
capacity: we would need either 5-6 GW of well-dispersed wind capacity,
or 1 GW of wind and a similar level of flexible conventional capacity,
or other combinations of renewable and conventional plant to deliver
the same level of security of supply. This represents a major
investment challenge for the electricity generating industry as
a whole, but we see no reason why this should compromise competition
Promoting competition in UK and global energy markets
is a key objective for the Government, as it is for Ofgem within
GB gas and electricity markets. In particular, it is part of
the independent regulator's role to monitor the gas and electricity
sectors to ensure that the levels of competition are maintained,
while at the same time there is adequate investment in energy
infrastructure for the future.
We strongly agree with the Committee's emphasis on
retaining a competitive market. Mergers or acquisitions in the
market will be examined by the independent competition authorities
(drawing in part on advice from Ofgem). Whether this assessment
is carried out in the UK (by the OFT and Competition Commission)
or by the European Commission would depend on the turnover and
geographical coverage of the companies involved.
New generating capacity
20. The need for investment in new
generating capacityand associated transmission infrastructurein
the coming years is huge. This investment will only be delivered
by profitable companies which see a commercial opportunity, whether
they are existing players or new entrants. While the market seems
to be providing price signals for the vertically integrated firms
to invest in new large-scale conventional capacity, there is a
question mark over whether new companies face disproportionate
barriers to entry.
As we note elsewhere, the Government recognises the
need to ensure that investors can have the confidence to make
these major investment decisions. The Government is working closely
with Ofgem and industry to address barriers to entry including
planning reform, grid access, financial support and supply chain
constraints. On infrastructure delivery we are putting in place
a regime for offshore wind connections that will allow new players
to tender to build and own new transmission assets.
There is evidence of new entry into the generation
market. Over 50 GW of conventional and non-conventional electricity
generation projects have agreed transmission access dates with
National Grid and these projects are at various stages in the
planning and development process, up to and including construction.
Those projects currently under development are being taken forward
by non-vertically integrated companies as well as by the "Big
6", although we note that there are joint ventures of various
forms in the market, so the distinction between new entrant and
established company is not always absolute.
Current examples of construction being undertaken
by companies outside the "Big 6" include Severn Power
(owned by Welsh Power) which is constructing a CCGT replacement
for their existing coal-fired Uskmouth power station, and ConocoPhillips
(a 450MW extension to their Immingham CHP plant).
We are seeing new entrants into the offshore wind
market, for example Statoil, Dong Energy and Vattenfall. Due to
the scale of investment required and risk, larger companies and
joint ventures are expected to predominate in offshore projects
in the near future, although further new entrants are expected
following the current competition for new offshore development
rights (Round 3). In onshore wind, although the Big Six have significant
presence in the market, a larger number of players are involved,
with many independent or community owned projects in the UK, for
example, Renewable Energy Systems (RES), Wind Prospect, and Amec.
21. While the 'Big 6' claim to be losing
money in domestic supply, there is evidence that they are earning
increased profits from their wholesale operations. We acknowledge
that some of these profits may be earmarked for investment in
new capacity rather than for distribution to shareholders, but
we recommend that Ofgem conducts further work to understand where
profits are being made within the energy supply chain. As part
of this, we also recommend that Ofgem investigates whether it
can require more detailed financial disclosure from the vertically
integrated companies on the performance of their wholesale and
retail operations, where they do not already provide this. Such
information should not deter new investment, but would inform
potential new entrants to the sectorboth generators and
The Secretary of State for Business has, in a recent
letter to Ofgem, requested the regulator's view on whether vertically
integrated energy utilities should be obliged to report separately
on profits from their generation and supply arms, in order to
increase transparency, including in relation to profitability.
Wholesale electricity market liquidity
22. The wholesale electricity market
suffers from a severe lack of liquidity, which contributes to
price volatility and poor price transparency. This, in turn, dulls
market signals for potential investors in new capacity, outside
of the 'Big 6'. It also reduces the ability of new energy retailers
to compete in the market. As Ofgem has already identified the
issue as a serious problem, and in the absence of tangible progress
on the Market Design Project, its market probe should propose
a solution. As a starting point, and in addition to any increase
in transparency that can be achieved as a result of our earlier
recommendation, the regulator should conduct a detailed analysis
of the risks and benefits of requiring the 'Big 6' firms to trade
a proportion of their electricity openly in the forward market.
We acknowledge that the regulator must take account of the need
to balance the effects that greater regulatory risk might have
on the investment decisions of incumbent companies. In principle,
however, creating a better functioning wholesale market should
facilitate new entry both in supply and generation.
We agree that liquidity in the traded market for
wholesale electricity, as in the traded market for gas, is important
in order to send price signals to market participants.
The latest FSA annual report on trading activity
in the wholesale energy markets in the UK states that trading
in the wholesale electricity markets saw strong growth in the
last reporting year, after a fall in the previous year (FSA will
report on trading activity on the year to 31 July 2008 in November).
According to an independent comparison of European
energy markets by a major energy price reporting agency (Argus
Media, June 2008) the UK wholesale market is liquid in comparison
with other markets,
ranking second only to Germany among those assessed. This measure
of liquidity considered wholesale markets both in terms of volumes
(GWh) traded and number of deals per day between October 2001
and June 2008. This is not to say that greater liquidity in the
UK power market would not be desirable, particularly to meet the
requirements of large industrial users.
At present the UK has limited interconnection with
other European electricity markets (as opposed to Germany for
example) which limits the interest in the UK market from international
traders. Current plans by industry participants to build further
interconnections between the UK and other markets may change this
Changes in supplier costs
23. Higher wholesale electricity and
gas prices have been the largest contributor to increasing household
energy bills, though the impact of environmental and network costs
should not be underestimated. While the 'Big 6' claim to be losing
money in their domestic supply businesses, as noted earlier, there
is evidence that they are making much greater margins on electricity
generation. We note that while the 'Big 6' have cited rising
wholesale prices as the reason for collectively increasing prices
in 2008, it required a 'naming and shaming' by Ofgem for two companies
to reduce their retail prices in early 2007, when wholesale prices
were falling. Whatever the result of their current investigation,
Ofgem must make it clear it will use such an approach in the future
if circumstances demand similar action.
Wholesale costs are a very substantial element of
retail energy suppliers' costs, and the most volatile one in terms
of price. Suppliers tend to smooth out the volatility in their
costs by making retail price adjustments infrequently, and setting
retail prices according to their purchasing strategies and expectations.
Therefore wholesale price changes in either direction do not flow
through immediately or directly to retail prices.
Previous experience suggests that competition in
the UK supply markets has pushed retail prices down again after
falls in wholesale prices more than in some less competitive EU
national supply markets, for comparison (for example in 2007).
However it is essential that the markets continue to work for
consumers, and we expect that Ofgem will continue to act on any
evidence of anti-competitive behaviour, and to promote effective
competition in this regard.
Retail market concentration
24. Despite the fact that both gas
and electricity supply are now dominated by just six firms, the
level of concentration in both markets has fallen as the firms
have competed with one another. Nevertheless, the gas and electricity
markets are likely to remain highly concentrated so long as there
are only six major players. The regulators should oppose any further
consolidation within the 'Big 6' which would diminish retail
competition, at least until one or more of the smaller suppliers
has established a significant presence in the domestic market.
The retail market in the UK remains competitive,
ranked as the most competitive in Europe by independent consultants
Oxera ("Energy Markets Competition in EU and G7", 2006).
While, together, the six major energy companies account
for the majority of retail gas and electricity markets, whether
further consolidation can be permitted is a matter for the independent
competition authorities. As noted above, whether this assessment
is carried out in the UK (by the OFT and Competition Commission)
or by the European Commission would depend on the turnover and
geographical coverage of the companies involved.
25. Whilst direct sales currently provide
the most effective means of persuading hard-to-reach consumers
to switch supplier, they must be conducted with the utmost propriety.
We welcome Ofgem's investigation into Npower's selling practices,
and we will be looking at the regulator's conclusions and recommendations
with particular care. Any further significant breach of best practice
by any supplier would inevitably lead to calls for this sales
technique to be abandoned. The industry must consider itself on
The Government shares the Committee's view as to
the need for the very highest standards of practice in direct
selling. It is open to Ofgem, in the light of current inquiries
and thereafter, to consider whether any further requirements should
be placed on suppliers in respect of direct sales.
26. By international standards and
in comparison with other sectors, there is a high level of switching
in the energy supply sector. However, around half of customers
are still with their original supplier for at least one fuel,
and 20% have not switched either fuel source, despite the fact
that incumbent suppliers consistently fail to provide the best
available offer in their home areas. Moreover, most people who
do switch fail to change to the cheapest supplier, and a significant
number actually move onto a more expensive tariff. Ofgem is considering
these issues as part of its probe. We believe its recommendations
should include new ways to engage consumers that have not switched
away from their incumbent supplier, and it should consider ways
in which customers who do switch can make more informed choices.
Ofgem should also investigate how all customers could benefit
from competition, whether they switch or not, for example by preventing
energy companies from over-charging their legacy customers.
This is a matter for Ofgem in the first instance.
Transfer of supply and payment methods are valuable
tools in reducing households' gas and electricity costs, and the
Government shares the Committee's interest in finding new ways
of engaging customers and facilitating decision-making and transfer.
The Government has just undertaken a public consultation
on draft Social and Environmental Guidance to the Gas and Electricity
Markets Authority (closed 26 September 2008). This proposes that
Ofgem acts to help ensure that there are no unnecessary barriers
27. There has been a widening gap between
companies' direct debit tariffs, and those for standard credit
and prepayment meters (PPM). Nine years after liberalisation,
this suggests a serious failing in the competitiveness of the
market. Recent debate has focused on the prices for PPM. However,
we are equally concerned about the poor deal standard credit customers
are receiving, particularly given that this is the payment method
for the vast majority of the fuel poor and the evidence suggests
they are on average being over-charged even more than those on
28. This issue is a major part of Ofgem's
probe. In a fully competitive market the tariff differences for
each payment type would not exceed their economic cost; there
would be no cross-subsidy between, for example, standard credit
and online direct debit customers. The regulator's probe must
form a robust view of the additional costs associated with standard
credit and PPM customers. If, in a year's time, the 'Big 6' have
still not narrowed the gap between the different payment types,
Ofgem should consider re-introducing some form of price control,
limiting the differentials that can be charged.
As the Committee has noted, Ofgem is currently investigating,
as part of its probe into the energy market, the reasons behind
the different tariffs charged for gas and electricity. This will
include considering whether the extent to which they vary according
to the payment method used is fair and justified. We will be looking
to Ofgem's analysis to see if it shows whether groups of customers
are being treated unfairly.
If Ofgem's analysis does show that disadvantaged
groups are facing unjustifiably high charges then we will in the
first instance expect Ofgem and the energy suppliers to provide
the solution. If sufficient progress is not made by this winter,
the Secretary of State will consult on legislation, with a view
to reducing any unjustified tariff differentials.
The Government has also asked the Financial Inclusion
Task Force to work individually with the energy suppliers, with
Ofgem and with other stakeholders to develop new ways to encourage
greater use of direct debits. The Taskforce has been asked
to report back in December with recommendations to ensure that
more people can benefit from direct debit payments and to make
bill payments easier and more affordable for vulnerable customers.
29. We believe smart meters would play
an important role in facilitating competition in the retail sector
by giving consumers better information about their electricity
usage and cost, thus encouraging greater and more informed switching.
The Chief Executive of E.ON UK told us: "we should get on
with this, because, quite frankly, we are using Stone Age technology
here; we know we can do better; we just need to agree the process
by which we roll it out". We agree, and hope the Government's
decision, due by the end of the year, includes a clear and urgent
timetable for implementation.
The Government recognises that there may be potential
for smart metering to deliver benefits to domestic consumers,
including the potential for facilitating competition. However
it is important to be clear about the costs and benefits. Impact
assessment work completed to date has identified a number of areas
for further work. An in-depth programme of work is therefore underway
to develop the evidence base before Ministers take decisions on
roll-out later this year. At that point, in the event of a decision
to proceed, the next steps on implementation will also be put
The SME Market
30. The evidence put to us by small
companies in the market for SME electricity supply is compelling
and suggests some of the 'Big 6' companies may be abusing their
market position to choke off new entrants. We are also concerned
by the role of third party intermediaries. We welcome the fact
that Ofgem is considering small business customers as part of
its probe. We believe that until now Ofgem has in the past paid
too little attention to this important part of the market. If
it finds evidence of serious anti-competitive behaviour by specific
companies, and is unable to address this situation with suitable
undertakings, it should refer the matter to the Competition Commission.
This is for Ofgem in the first instance.
Smaller supplier companies are clearly a vital element
of the UK energy market. In addition to increasing competition,
their participation encourages a diversity of approach, promotes
innovation and allows the development of niche markets. If there
are barriers to new entrants or unfair constraints on those small
companies already within the market there must be careful consideration
of how these can be removed.
The detailed evidence the Committee has collected
is important, touching not only on difficulties, such as gaining
timely access to wholesale electricity, but also allegations of
anti-competitive practices. Like the Committee, the Government
welcomes the inclusion of this essential area within Ofgem's probe
and looks forward to its analysis of the current situation as
well as any potential solutions that could improve the functioning
of the market.
Product innovation and 'green'
31. Overall, there has been a growing
level of product innovation in recent years for those customers
who are able and willing to engage in the market. However, we
have serious concerns that customers on many 'green' tariffs are
being misled about the extent to which their tariff offers an
additional environmental benefit, over and above their energy
supplier's existing legal requirement under the Renewables Obligation.
We welcome Ofgem's belated guidelines for suppliers offering green
tariffs, and hope that they will reduce the potential for customer
confusion. Once in place, Ofgem must monitor compliance with the
The Government has also welcomed Ofgem's guidelines
on green tariffs. It is essential that consumers who wish to take
these issues into account when making choices about suppliers
and tariffs are provided with appropriate information to allow
them to do so.
Off-network gas consumers
32. Many consumers whose homes are
not connected to the gas network have the frustration of knowing
gas pipelines are close by, but cannot be accessed. They are condemned
to using more expensive means of heating their homes. Ofgem should
consider whether the current incentives are strong enough to encourage
network operators to connect more households to the gas network.
It should also consider the appropriateness of the charges involved,
especially where communities could club together to pay for such
connections. The Government could also consider targeting part
of any increase in budgets to address fuel poverty towards schemes
to provide direct financial assistance to secure connections to
the network, or to assist the development of local combined heat
and power or renewable heat schemes for such communities.
Households without access to the gas network are
at increased risk of fuel poverty because they rely on fuels that
have grown more expensive in relation to mains gas. Other fuels
may be physically inconvenient for elderly or other vulnerable
customers to use. Ofgem is delivering measures to encourage Gas
Distribution Networks to provide connections to deprived communities
under the 2008-13 Gas Distribution Price Control. Such connections
can be provided in tandem with funding of gas central heating
systems under Warm Front, which is funded by the Government.
Ofgem is already able to determine the appropriateness
of charges made by distribution networks for the provision of
gas connections. The model used to provide connections is likely
to draw heavily on that developed by BERR's Design and Demonstration
Unit. The Unit's model is also being used with some flexibility
in demonstration programmes to provide renewable technologies
for households without mains gas. In May, the Government announced
that this demonstration activity would be expanded in a new pilot,
which would take the form of a fuel poverty workstream under the
Low Carbon Buildings Programme. Pilot activity will take place
in North East England, Yorkshire and Humberside, the East of England
and Wales, in partnership with Regional Development Agencies and
the Welsh Assembly.
The Government's draft Social and Environmental Guidance
to the Gas and Electricity Markets Authority proposes that Ofgem
continue to keep under review the incentives for encouraging gas
33. We are concerned that there is
not sufficient regulatory oversight of the market for domestic
fuel for households which are not connected to the gas network.
The Government should consider whether both the statutory duties
of Ofgem and the successor to Energywatch, the National Consumer
Council, should explicitly cover the market for fuels used by
The Government will continue to monitor the effectiveness
of regulation and consumer support in all energy markets.
The new consumer body Consumer Focus will not be
limited, as Energywatch has been, to working for consumers in
the mains gas and electricity markets. Consumer Focus will have
a particular remit to protect vulnerable customers.
In terms of regulation, the downstream oil industry,
including the production and supply of Liquid Petroleum Gas, is
not subject to economic regulation in the UK, as the Government
believes the market to be highly competitive, operating as it
does within a global market comprising many different refiners,
traders and suppliers. This represents a different situation
from the gas and electricity supply networks regulated by Ofgem,
as part of these networks are owned and operated by monopoly companies.
In the markets for LPG and heating oil, it is feasible for firms
to compete with market incumbents in the transportation and supply
of these fuels, because the same infrastructure restrictions do
The supply of heating oil and LPG is subject to UK
competition law under the Competition Act 1998, and the appropriate
bodies act to regulate the sector. For instance, as a result
of concerns about competition in the market for domestic bulk
LPG, the Office of Fair Trading (OFT) made a market investigation
reference to the Competition Commission (CC) in July 2004. In
June 2006 the CC published a report which stated that difficulties
in switching supplier have inhibited competition. The CC has arrived
at a package of remedies which is intended to make it easier to
switch supplier, and will provide greater transparency of pricing,
providing information on which consumers will be able to take
this decision. It is expected that the increased ability of consumers
to switch supplier will increase competition in the market and
put downward pressure on prices.
With these measures in place, the supply of LPG will
effectively be regulated by the Office of Fair Trading. The Office
of Fair Trading also has powers to investigate allegations of
anti-competitive agreements and abuse of any dominant market position
in the fuel market.
Final remarks on markets
34. Our overall conclusion on the functioning
of both the gas and electricity wholesale markets is that there
are significant questions that need to be addressed in the interests
of both retail and business consumers. We have also identified
important issues that need to be addressed in the retail market
itself. We have at this stage, however, recommended consideration
of the merits of referring only two aspects of the markets to
the Competition Commission (the forward gas market and the supply
of electricity to the SME sector), and then only if Ofgem is unable
to take sufficiently robust steps itself. We note that no witness
has suggested that there is any evidence of active collusion in
the wholesale or retail markets. It is clear, though, that in
a retail market dominated by six big players, it is easy for those
players to make informed judgements about the behaviour of their
competitors. This can distort competition, without any active
collusion occurring. The regulator therefore needs to remain very
35. We believe that there are very
real problems that need to be addressed. This can best be done
through improving market design, taking specific regulatory steps,
and by continuing to work for liberalisation of European markets.
Such an approach is more likely to bring real and lasting benefits
to consumers. It is also less likely to inhibit the investment
the UK needs so urgently if we are to "keep the lights on"
as we lose a large proportion of our generating capacity around
the middle of the next decade. It will, however, need Ofgem to
demonstrate a rather greater sense of urgency than has been made
apparent so far. In this context we look forward to reading the
conclusions of its market probe in September.
The Government agrees the importance of continuing
to improve the functioning of markets where appropriate while
providing sufficient regulatory certainty to ensure continuing
necessary investments to safeguard supply in the future. We look
forward to the results of Ofgem's investigation.
Recent developments in fuel
36. Other things being equal, with every 10% increase
in energy prices 400,000 people go into fuel poverty. The rise
in prices since 2004 means the Government is certain to miss its
target of eradicating fuel poverty for vulnerable households by
2010. We welcome Ofgem's Fuel Poverty Action Programme as a sign
that the Government is aware of mounting concern in this area.
In particular we welcome plans to enable data-sharing that will
help energy suppliers identify pensioners most in need, although
such information will need to be handled with the utmost propriety.
We hope the Government will implement similar plans for other
vulnerable groups. However, in the context of sharply rising prices
and reductions in funds for the Warm Front programme, discussed
below, the additional money pledged by the energy companies, while
welcome, will make very little difference to the overall number
of fuel poor households. We believe the Government must now consider
a fundamental re-think of its approach to tackling fuel poverty.
The Government is deeply concerned about the effects
of energy price rises on UK households, and particularly on vulnerable
people. We have now launched a number of new initiatives to respond
directly to the challenge of rising energy bills and improve the
effectiveness of the fuel poverty strategy. These initiatives
involve working closely with the energy suppliers to see how best
they can help their most vulnerable consumers, and how the Government
can help them identify those who are mostly in need of help. As
a result, suppliers have agreed voluntarily to spend more on their
social programmes, rising to £150 million by 2011; this
represents a substantial form of assistance through social tariffs,
rebates, debt advice, trust funds and benefits entitlement checks.
On 11 September the Government announced a £1
billion Home Energy Saving Programme to help domestic consumers
cut their energy bills permanently. Within this, we are expanding
the Carbon Emissions Reduction Target (CERT) by 20%, an obligation
on energy suppliers to install energy efficiency measures in households. This
will mean a further £560 million energy supplier investment
in GB housing; 40% of these measures have to be installed in a
priority group of low income and elderly households. The Government
also announced a further £74 million for the Warm Front Scheme,
an increase in the Cold Weather Payment for this winter from £8.50
to £25 per week, and plans to work with energy companies
and the banks to increase the number of people using direct debits
to pay their energy bills. We will continue to keep fuel poverty
policies under constant review to ensure that the Fuel Poverty
Strategy and the Government's policies, initiatives and measures
are fit for purpose to respond to new challenges.
37. In rethinking its approach to fuel
poverty the Government must decide whether companies should have
a larger, perhaps statutory role to play in delivering its social
policy objectivesthat is, to what extent energy companies
should be expected to divert their profits away from investment
and distribution to shareholders, and to what extent relatively
more affluent energy consumers, many of whom are themselves far
from rich, should, through the price they pay for their electricity,
cross-subsidise those who are less well-off. This cross-subsidy
is currently modest, but it would inevitably grow if social tariffs
were to be expanded.
38. Energy suppliers' existing social
assistance initiatives (which go well beyond specific tariffs)
do not reach the vast majority of the fuel-poor. They also vary
widely, confusing consumers and providing inconsistent coverage.
Irrespective of its broader conclusions on the role of such tariffs,
we believe the Government should define the criteria for both
the prices charged by suppliers under the banner of social tariffs,
and for identifying those customers that qualify for them. We
recognise that companies could only implement such an approach
if they have access to information provided by central and local
government. We do not accept the view that a mandatory and comprehensible
definition of what constitutes a social tariff would create a
'race to the bottom' for all suppliersrather, it would
provide a minimum level above which they can compete, not only
on tariffs, but also on other schemes to assist the fuel-poor.
The Government recognises the key role energy suppliers
have in helping us tackle fuel poverty. While some years ago suppliers
did not offer a social programme, they are all now investing substantial
amounts voluntarily to help their most vulnerable customers. Around
600,000 customers are expected to benefit from discounted bills
by the end of the year as a result of the agreement between the
Government and the companies for an additional £225 million
spending on reduced tariffs and other social programmes over the
next three years. Around three quarters of these bills will be
guaranteed not to have price increases this winter.
The Government believes that a voluntary approach
has brought considerable benefits in that it has allowed energy
companies to innovate and tailor-make their offers to suit their
customers. Mandating a single approach could risk the suppliers
offering the minimum required to comply with the Government's
requirements, when we know, through Ofgem's independent reporting
on social programmes, that suppliers offer innovative approaches
and keep refining their targeting methods to get to those who
need them the most.
In addition, in its recent guidance,
Ofgem stated that a tariff can only qualify as a social tariff
if it is the cheapest tariff offered by a supplier in the customer's
region. This will clarify the uncertainly regarding what constitutes
a social tariff and will give confidence to those who are eligible
that they are receiving the best tariff available to them.
39. The Winter Fuel Payment is targeted at pensioners
rather than the fuel-poor. The political reality is that either
removing it from any existing recipients, or taxing it, to release
funds for the genuinely fuel-poor, would be courageous decisions.
However, we believe that any additional funds to help households
cope with rising energy prices should be better targeted on the
fuel-poornot only pensioners, but also disabled people
and other vulnerable consumers.
The Government notes the proposal to extend Winter
Fuel Payments to other groups. Winter Fuel Payment are made to
people aged 60 or over, because older people are particularly
vulnerable to the effects of cold weather in winter months. Increases
in death rates in winter are greatest among the elderly. In the
winter of 2006/07 there were 22,300 more deaths among those aged
65 and over compared to levels in the non-winter period. In contrast,
there were fewer than 2,000 more deaths among those under the
age of 65. In addition,
of all people with limiting long standing illnesses,
impairments or disabilities are aged 60 or over.
Winter Fuel Payments give reassurance to older people
that they can afford to turn up their heating in the winter months
without worrying about the cost. In keeping with the Government
policy of support for all and more for those who need it most,
it was decided that the payment should not be based on income
but rather should be available to all pensioner households by
way of a simple qualifying rule. Targeting the Winter Fuel Payment
only on those on low income would exclude a large proportion of
the pensioner population who are likely to be on fixed incomes
and who may find it difficult to budget for winter bills.
Help is available for low income households through
other benefits and payments such as Income Support and income-based
Jobseeker's Allowance. For disabled people under 60, help is available
through disability benefits and the disability premium in income-related
benefits. These benefits and premiums are in recognition of the
extra costsincluding heatingwhich coping with a
disability may incur. Around 60% of people who receive Disability
Living Allowance or Attendance Allowance are aged 60 or over and
automatically receive a Winter Fuel Payment. And, where a disability
premium is paid in an income-related benefit, such as income support
or income-based Jobseeker's allowance, a Cold Weather Payment
is payable in periods of very cold weather. Cold Weather Payments
are also made automatically to other vulnerable people on income-related
benefits, including those with responsibility for a child under
five. The Government announced, as part of its Home Energy Saving
Programme, that the level of Cold Weather Payments for the coming
winter, 2008/09, will be increased from £8.50 to £25
40. After several years of increases,
it is very disappointing that in the current three-year spending
period the Government has reduced the budget for Warm Front at
a time when the need for it is greatest. This is especially so,
given that HM Treasury has received additional income from the
auctioning of permits under Phase 2 of the EU Emissions Trading
Scheme, while electricity generators are benefiting from windfall
gains from the free allocation of the majority of permits under
the same scheme. We hope that this reduction in funding will be
corrected very quickly.
41. We recognise the claims made by
the generators about the way in which they have used the 'windfall
gains' under Phase 2 of the EU ETS, and we understand the danger
that regulatory uncertainty could delay investment plans. However,
given the apparent size of the gain (something we have already
asked Ofgem to examine more carefully), and the extreme need of
many households, we believe there is a compelling rationale for
at least a modest, one-off top-slicing of these gains to help
fund action to reduce the energy bills of vulnerable families
in the long term. However, we also note the windfall gains accruing
to HM Treasury, and believe it too must make its contribution
in these exceptional circumstances.
The Government is ensuring that increased resources
are available to provide support for energy efficiency and heating
measures in low income and vulnerable households, and it is important
to consider the range of relevant policy interventions, not solely
the Warm Front programme. Resources for vulnerable households
were to increase by £680m to £2.3 billion over 2008-11
through the combination of Warm Front and Carbon Emissions Reduction
Target Priority Group. The package of home energy saving measures
announced by the Prime Minister on 11 September 2008 provides
for substantial further activity to help the Priority Group under
CERT, and for a proposed new £350 million Community Energy
Saving Obligation. This will create partnerships including (but
not limited to) local councils and community-based organisations,
voluntary organisations and energy companies to go street-by-street
through communities offering free and discounted central heating,
energy efficiency measures and benefit checks. Areas will be
selected based around those with higher levels of deprivation,
and measures will be developed for both vulnerable households
and those in the able-to-pay sector. This programme would be funded
through a new and additional obligation on energy suppliers and
electricity generators. In addition, further funding of £74
million has been allocated to Warm Front over the next two years
as part of the package.
As a result of these various measures, the money
spent by energy companies on meeting their obligations is expected
to increase in total by £910 million. This would add to the
£2.8 billion already required of suppliers under the existing
42. Energy prices are likely to remain
high, by historic standards, and the Government is unlikely to
be able to raise incomes sufficiently rapidly to meet its fuel
poverty target, especially given the current economic downturn.
This means that in the future, government and industry efforts
need to focus on improving the housing stock of the fuel-poor,
as the most cost-effective means of reducing both their energy
bills and their carbon emissions. We believe the Government must
consider whether the Carbon Emissions Reduction Target and Warm
Front should be more precisely focused on helping the fuel-poor,
and whether synergies between the two initiatives can be more
actively exploited. If the Government remains committed to eradicating
fuel poverty it must have in place policy instruments specifically
designed to achieve this aim that do not rely on ongoing subsidy
of fuel bills. A great many households face a difficult winter;
it is imperative that the Government reviews its approach to fuel
poverty and does so urgently.
The Government agrees with the Committee that improving
the energy efficiency of the housing stock is key to tackling
fuel poverty. The energy efficiency programmes this Government
has put in place play a critical role in not only assisting households
in fuel poverty but also future proofing households from falling
into fuel poverty.
Already we have been trialling approaches. Through
our Community Energy Efficiency Fund we provided £6 million
over the last year in start-up funding for some 49 partnerships
to provide a cost effective way of delivering CERT and Warm Front
over the next three years using a targeted local approach. This
is expected to lever in over £100 million of private sector
funding. Building on this, the Government announced in April
2008 its intention to launch a new green neighbourhoods programme.
We have asked the EST to develop a community based approach which
helps up to 100 selected neighbourhoods in England reduce their
carbon footprints by 60%. The programme will make it easier, cheaper
and simpler for neighbourhoods to take whole house low-carbon
action. It will specifically aim to demonstrate what can be achieved
with older housing stock, the 'hard to treat' homes. The EST
aim to launch a competition for funding proposals by the end of
the year, with first successful projects being funded from April
The £1 billion Home Energy Saving Programme
described above aims to help domestic consumers cut their energy
bills permanently. As we have stated, we are expanding CERT by
20%, an obligation on energy suppliers to install energy efficiency
measures in households. This will mean a further £560
million energy supplier investment in GB housing. 40% of these
measures have to be installed in a priority group of low income
and elderly households.
Currently, under this scheme, the over 70s or those
on qualifying benefits can benefit from measures such as loft
insulation (where less than 60mm) and cavity wall insulation,
for free. All other households can get energy saving measures
at a substantial discount. Such measures can, in combination with
simple energy saving actions, save households over £300 per
year on their energy bills. In addition, the Government will consult
on legislation for a new £350 million obligation on energy
suppliers and electricity generators to undertake community-based
energy efficiency measures. To make sure people across the country
can take advantage of the help on offer and save as much money
as possible, a national TV, press and online social marketing
campaign will publicise what help is available.
As mentioned in the previous section, the Government
also announced a further £74 million for the Warm Front Schemethe
Governments flagship fuel poverty programme, and an increase in
the Cold Weather Payment for this winter, from £8.50 to £25
In terms of targeting, energy suppliers use a variety
of innovative methods to identify priority group customers including
setting out the priority group criteria in promotional material;
partnership arrangements with bodies like social housing providers
and charities that work with priority group consumers, as well
as work with local authorities. As part of this, the Warm Front
programme has an established history of working with energy suppliers
who are looking to achieve their CERT targets. Through these relationships
the vast majority of households receiving insulation measures
through Warm Front Scheme have their measures funded through CERT.
This provides benefits to the householder through freeing up more
of their Warm Front grant for other measures and provides a more
joined-up form of measure delivery. We are also consulting on
giving the Energy Saving Trust access to the information contained
in Energy Performance Certificates, so that they can target those
in the least energy efficient properties with advice and information
on energy supplier offers.
To make sure people across the country can take advantage
of the help on offer and save as much money as possible, a national
TV, press and online social marketing campaign now launched will
publicise what help is available.
2 October 2008
2 As noted above, Ofgem has since published its initial
For further details on the number of MPPS, market shares and estimated
HHI index see http://www.berr.gov.uk/files/file39511.pdf Back
Markets compared: UK, Germany, Czech Republic, France, Netherlands,
Spain, Belgium and Poland. Back