Energy regulator Ofgem has referred the energy market to the Competition and Markets Authority (CMA) for a full investigation.
The investigation should ensure “once and for all” that competition works effectively, by bearing down on prices while driving improvements in customer service and innovation, Ofgem said.
It follows Ofgem’s proposal in March and the subsequent consultation.
Ofgem chief executive Dermot Nolan said the investigation would help rebuild consumer trust and confidence in the energy market.
“The energy market is also going to change rapidly over the next few years with the roll-out of smart meters, the government’s electricity market reforms, and closer integration with European energy markets. A CMA investigation should ensure there are no barriers to stop effective competition bearing down on prices and delivering the benefits of these changes to consumers,” Nolan added.
The CMA will begin its investigation immediately and is likely to publish final decisions by the end of 2015.
Rural Shops Alliance (RSA) chief executive Kenneth Parsons welcomed the referral.
“We hope this referral will result in an improved energy market which will be of benefit to our members,” he said.