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UW July 2021 HR single pages

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24 | JULY 2021 | UTILITY WEEK Customers Analysis Energy retail: a wishlist With an energy retail strategy due imminently from the government, Adam John asked three industry leaders what they would most like to see in it. I n last year's Energy White Paper, the Department for Business, Energy and Industrial Strategy (BEIS) outlined some of its plans for the energy retail sector over the next few years. The forthcoming retail strategy, believed to be imminent, will set out the govern- ment's vision for the market and how it can take customers on their net zero journey. When approached by Utility Week, a spokes- person for BEIS said it will be published "in due course". Here, Utility Week speaks to three indus- try experts and asks for their views on what they would like to see in the retail strategy. Rachel Fletcher, director of regulation and economics, Octopus Energy For Fletcher, a mix of the right technologies and lighter-touch regulation is key to ena- bling net zero. The former Ofwat chief executive also wants to see enhanced customer protections to give consumers the confidence to take up the tariffs and services that will be central to the transition. She says: "It'd be great to see government use the retail strategy document to set out a really clear vision of a zero-carbon future with smart-enabled customers sitting at the heart of the energy system, providing and being rewarded for demand-side response. "All the research shows that we will achieve net zero much more cheaply – allow- ing everyone to benefit – if we use technol- ogy to help customers use green power when it is plentiful and cheap and to enable them to turn down or provide stored power to the grid when there are network constraints or when renewable output is low. "Look at how EVs [electric vehicles] are beginning to take off and we are not far off getting electric heating rolled out at an increased pace. The scope for shi"able demand is only growing and it would be great to see government taking bold steps to tap into the potential this provides to avoid investment in network reinforcement and peak generation in our transition to net zero." Fletcher recognises that it will not just be energy retailers that will play a key role in the transition, but also those providing vari- ous services. As such, the regulatory land- scape must allow innovation and not be too restrictive. She says: "I'd like to see the BEIS retail strategy explore the key enablers to achieve that vision of a smart demand future. That might involve removing regulations that are getting in the way of innovation and chal- lenger businesses, shi"ing the regulatory focus away from today's retail agenda and on to building the conditions we need for a smart future. "We will need customer protections to give people confidence to take up smart tar- iffs and energy services. What does that suite of protection look like and who does it apply to? Clearly it's not just energy retailers but aggregators and those selling services and equipment as well, for example. "We need enablers so that the smart future is fair, and not the preserve of the middle classes. The strategy needs to con- sider the structure of subsidies so more households can afford smart low carbon technologies, and to tackle blockers like the broadband infrastructure needed to reduce the number of digitally excluded and the position of people privately renting. "Critically, I'd like to see a retail strategy for a smart future making up one part of a coherent whole-system reform. As well as enablers and protections at the retail end we need the removal of barriers to flexibility in terms of how the balancing market works, how policy costs are recovered and how net- work charges are structured." Ultimately, Fletcher's dream strategy would signal that the goal of a smart, flex- ible, green future is going to drive wider pri- orities for overall energy system reform. "Overall, I'd like to see the strategy docu- ment start us on a pathway so energy retail- ers and others can compete vigorously with each other, putting the tools in customers' hands to be part of that cheap green future with demand-side flexibility at the centre of it," she says. Alex Meagher, head of regulation and sustainability, Bulb Like Fletcher, Meagher also sees the benefits of looking to the car and home insurance sector as a good example of clamping down on the loyalty penalty. She says: "We're hoping to see proposals in the energy retail strategy that end the loy- alty tax in the energy industry for good. "The FCA recently banned the loyalty tax in the insurance industry. It's time to stamp it out in energy too. We've called for changes to stop energy companies penalising loyal customers, with millions of people paying over the odds every year. "You'd be shocked if your local coffee shop started charging you more because you're a regular – it should be no different with energy companies. Now there's a strong precedent to end the loyalty tax and make energy simpler and fairer for everyone. "We think the government should look to

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