Utility Week

UTILITY WEEK | 29TH MARCH - 4TH APRIL 2019 | 23 Customers nesses, vulnerable to being locked into poor value contracts. "Some brokers charge significant upli on the supplier rates for little more than agreeing on a contract with the supplier. Yorkshire Energy for Business feels that Ofgem should consider bringing brokers/ TPIs under its remit to ensure they are held to the same high standards as everyone else in the industry." Musa says the energy needs of the busi- ness market, compared with domestic cus- tomers, and in particular the variety of meter types, makes pricing more complex. "A blan- ket price cap could lead to mis-selling and extra pass-through costs for consumers. One alternative could be an upli/commission cap that brokers are allowed to charge, and suppliers are allowed to pay." According to a spokesman from Ener- gylinx for Business: "Right now the TPI mar- ket is failing businesses. For the market to evolve there needs to be more transparency. "Brokers are not transparent with com- missions or who they are working with. If they only work with one sup- plier then it is unlikely that one supplier is always the best deal for the end user. "Better regulation is needed. In the domestic market Ofgem runs the Confidence Code and regularly ensures that its members meets its requirements. There is no-one regu- lating the broker market in the same way. "Ultimately better regulation forcing bro- kers to be more transparent will be better for businesses looking at their energy options." Michael Rossman, a co-founder of busi- ness energy switching and comparison ser- vice EnergyBillKill, says he does not believe the non-domestic energy switching market is working for customers, but that innovation and market forces could solve many chal- lenges in the sector. "We should have 90 per cent-plus of businesses switching regularly and painlessly. The problem is the way busi- ness energy is sold – mainly through cold calling brokers with hidden and oen out- rageous broker commissions. The switching process is oen manual, the cold calling is annoying and the pricing is not transparent. "What has been lacking in the market is excellent switching technology combined with user experiences, speed, transparency, and low/minimal broker costs. Why should it be more difficult to switch business energy than booking a flight?" says Rossman. Many businesses have no idea they pay more for their energy because broker com- missions are included in their gas and elec- tricity charges and can make up to 20 per cent of the bill. Technology is oen used as a lead generator, meaning some websites have what look like price comparison engines but in reality oen divert customers to brokers aer collecting the data, Rossman warns. Robust regulation is always a good idea, he adds. "I would strongly urge that there is more public policy outreach to encourage businesses to switch energy and to bring transparency to the broker fees so that busi- nesses always know how much they are pay- ing for the switching service. I would also urge more regulation around cold calling." Business group the Federation of Small Businesses [FSB] says its members continue to have very mixed experiences with energy brokers – ranging from the unscrupulous to the excellent. It is calling for a transparent, regulated TPI industry that builds trust by promoting the good – and excluding the bad – but warns that improvements to the way the TPI industry operates must come in the wider context of other improvements that are urgently required in the energy market. Mike Cherry, national chairman at the FSB, tells Utility Week: "TPIs can play an important role in helping businesses secure the best energy deals. With energy bills start- ing to include costs associated with addi- tional products and services, like energy efficiency advice, renewable sourced energy and smart technology, the role of a TPI will become even more important. "Data is key. The national rollout of smart meters across the UK, and the associated move to a smarter and more dynamic mar- ket, provides the greatest opportunity for customers to take control of their energy and reduce their consumption." However, in the case of smart meters, sim- ply installing the new technology won't auto- matically provide any benefits, Cherry warns. "Cost savings will come with the behaviour change that this technology empowers and the energy savings that come with this. "Business customers must be empowered to understand and choose what services they pay for, where they can find the best deal, where they can save energy, and where and how their energy is generated. It's absolutely critical that businesses and consumers – and those operating on their behalf – have timely and secure access to consumption and usage data," says Cherry. We asked the regulator to update us on its activities policing TPIs. Is the microbusiness review the first thing to have happened in this area since 2014? We have introduced principles around back- billing microbusiness customers, where suppliers are unable to bill microbusinesses for energy used more than 12 months prior. This took effect in November 2018. Do you have any statistics about complaints to Ofgem about mis-selling or other issues in the business energy switching market? We collect complaints data under the category of "sales and marketing – sales directly between supplier and customer" and "sales and marketing – sales including via a third party", for which suppliers have to make different submissions: for domestic customers, and for microbusinesses (if they supply them). Our guide document explains exactly what these categories include and lists examples. The first mentioned category includes any issues related with selling and marketing activities carried out by the supplier or directly outsourced via a supplier's subcontractor. The second covers issues related with selling and marketing activities carried out through third party intermediaries. What recourse do business customers currently have if they feel they haven't been treated appropriately by a TPI? Businesses could potentially complain to an energy supplier if it is a TPI that is acting as a representative of one, given there are supply licence conditions that require suppliers as well as their representatives to adhere to certain things. We can and we will hold suppliers accountable and responsible for their representatives' actions. There may be other actions businesses can take considering they are protected in relation to TPIs under general consumer protection law. For example, a TPI is prohibited by the Business Protection from Misleading Marketing Regulations (BPMMRs) from carrying out misleading advertising activities and should therefore always identify itself and be clear about the purpose of its call. In November 2013, Ofgem acquired powers to apply to courts for an injunction to prevent breaches of the BPMMRs. Q&A Ofgem "One bad experience with an unregulated broker could permanently dissuade them from engaging." STEVE KIRKWOOD, POLICY MANAGER, ENERGY UK

• Cover