Utility Week

UTILITY WEEK | 10TH - 16TH JANUARY 2020 | 19 Policy & Regulation in 2023. The government can opt to scrap it early if market conditions are considered suitable for this course of action to be recom- mended to the energy secretary. Specifically, the framework will assess whether the conditions are in place for "effective competition" in domestic supply contracts. Ofgem says it expects effective competi- tion to deliver fair outcomes for consumers, including them not being overcharged, them receiving a good quality of service, and them having access to a range of energy products and services. Yet this poses a dilemma as Alan White- head, who served as Labour's shadow min- ister for energy and climate change, has previously pointed out to Utility Week. What Ofgem may think is a resumption of a fair market may be influenced by how it per- ceives its own work. Several amendments providing detail on how Ofgem can assess the market were pro- posed at committee level during the passage of the energy price cap bill through parlia- ment. All but one were rejected. Another factor that should not be under- estimated is Boris Johnson's emphatic gen- eral election victory, which ends several years of political uncertainty. The Conservatives have promised to keep the existing price cap and even intro- duce new measures to lower bills. Certainly the key question for the new government is whether or not it will make the cap perma- nent, or at the least extend it beyond 2023. As Baringa Partners' Price points out, the removal of the cap is a very politically weighted decision. "Aside from the cap itself, structurally there haven't yet been significant changes to how the market operates, or in engaging customers who are still not yet participating in the market," he says. It's clear the cap is not the silver bullet some hoped it would be. That said, it is here to stay for now, but as to what happens next, both the gov- ernment and industry have much work to do to engage hard-to-reach customers. While it is not exactly clear what needs to be done to tackle the issue of protect- ing the vulnerable, it is important we try to understand the price cap's effect on the mar- ket. Doing so will enable both the govern- ment and regulator to make better informed choices. Adam John, reporter, Utility Week 75% 6% 19% 80% 5% 15%% Unaware Aware and don't understand Aware and understand Q4 2018 Q1 2019 27 38 24 48 29 20 38 27 43 42 39 25 SVT Fixed Mixed tariff Yes No Unsure Total Tariff type Source: Energy UK "Aside from the cap itself, structurally there hasn't yet been significant changes to how the market operates." MARTIN PRICE, BARINGA PARTNERS THE STATE OF THE MARKET TOTAL NUMBER OF SWITCHES INFORMED AWARENESS OF PRICE CAP PERCEIVED RELEVANCE OF THE PRICE CAP Source: Consumer perceptions survey Q1 2019, commissioned by Ofgem and Citizens Advice Source: Consumer perceptions survey Q1 2019, commissioned by Ofgem and Citizens Advice 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 Nov 1 Jan 18 Mar 18 May 18 Jul 18 Sep 18 Nov 18 Jan 19 Mar 19 Jul 19 Sep 19 Nov 19

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