Utility Week

UTILITY WEEK | 5TH - 11TH JULY 2019 | 27 Customers Big six supplier British Gas has been granted an extension to a temporary derogation from aspects of its supply licences, allowing it to leave customers on a "dead" standard variable tariff (SVT). British Gas owner Centrica announced the supplier would be scrapping its SVT in a bid to increase consumer engagement in November 2017. ENERGY British Gas granted extension to leave customers on 'dead' tariff The derogation means British Gas can stop new customers from moving onto its SVT without ending it for those who are already signed up. Ofgem says it has decided to approve the derogation for several reasons, including the fact that the regulator is commit- ted to providing suppliers with the flexibility to "deliver better outcomes" for customers, which includes supporting initiatives that may increase consumer engagement. Furthermore, Ofgem said it does not consider the proposal by British Gas goes against the objectives of the regulator's retail market policies, which are focused on "protecting customers' interests and stimulating competition". The directions from Ofgem This week Energy consumers facing price hikes 400,000+ customers could see rise of an average £262 per household over the next three months More than 400,000 customers could see their energy bills rise by an average of £262 per house- hold over the next three months, according to new research. Analysis by the website comparethemarket.com claims more than 413,000 households could be automatically switched onto more expensive standard variable tariffs (SVTs) in the third quarter of 2019 if they do not switch when their current deal comes to an end. According to the research, 227 fixed energy tariffs are coming to an end between July and September and household bills could rocket by an average of £262 if customers go straight onto SVTs. September could see the greatest number of custom- ers affected, with 199,000 households expected to be moved onto SVTs if they do not switch, at a combined cost of more than £53 million. The research comes a™er Look A™er My Bills claimed more than 100 energy tariffs came to an end in June alone, with customers facing an average price hike of about £168 if they were rolled onto an SVT. Meanwhile, the number of customers that have switched suppliers is 2,606,747 – up 14 per cent on the same time last year, according to Energy UK. A total of 487,231 energy customers switched supplier in May this year, down 1.4 per cent compared with May last year. Peter Earl, head of energy at comparethemarket.com, said it "rarely pays" to be loyal to an energy company. "Once the terms of a fixed-rate tariff come to an end, customers could be automatically rolled onto an uncom- petitive standard or default tariff, the shocking cost of which could see energy companies rake in an additional £109 million over the next three months," he said. JH ENERGY SoLR customers moved onto SVTs More than a quarter of a million energy customers were moved onto standard variable tariffs (SVTs) following the supplier of last resort (SoLR) process in the past 18 months, research from Which? has found. According to findings pub- lished on 1 July, some customers were hit with "overnight price hikes" of hundreds of pounds. Out of 925,000 customers whose supplier failed, 283,000 were shi™ed onto SVTs, prompt- ing Which? to accuse the system of being a "lottery" which "fails customers". For example, Brilliant Energy and Northumbria Energy's 17,000 customers were moved onto SSE's SVT, which at £1,253 a year was £1 less than the maxi- mum permitted by the price cap. An SSE spokesperson said: "We regularly encourage custom- ers to check whether another tar- iff might better suit their needs." Following the demise of Economy Energy in January, 235,000 customers were moved onto SVTs via the SoLR process with Ovo Energy. Customers placed onto the SVT by default have the option of switching to a cheaper fixed tariff with Ovo or switching to another supplier. Similarly, 31,000 customers of failed energy company Our Power went onto Utilita's Smart Energy variable deal, where appropriate, at £1,240, which is £2 less per year than the prepayment meter price cap. Not all customers who go through the SoLR process are placed onto SVTs however, with some companies such as Octo- pus Energy moving customers onto their cheapest tariffs. Responding to the research, an Ofgem spokesperson said: "Around half of the customers from failed suppliers in the last 18 months have been transferred by their new supplier onto tariffs cheaper than their standard variable rate." ENERGY Cap eroding support for vulnerable The price cap is having a "devastating effect" on the energy sector and is impacting on charities supporting vulner- able customers, according to the director of a major supplier. Centrica's Steve Crabb warned at Utility Week's Con- sumer Vulnerability Conference on 27 June that the default tariff cap, implemented at the start of the year, risked undermining many of the positive steps made by the sector to support those customers most in need. Speaking in a personal capacity, the company's director of consumer vulnerability said: "The anecdotal evidence I am getting is that the price cap is having a devastating effect. Many charities that work in part- nership with energy suppliers are saying that their funding is drying up. It's causing real strain on energy suppliers." In the dark: customers switched to SVTs came into effect on 1 July and will be in force until 31 October 2020, unless revoked or varied in writing. British Gas must provide Ofgem with further evidence by 31 October this year to demon- strate the extent to which the derogation has achieved its stated objective of improving customer engagement for those on the dead tariff.

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