Utility Week

Utility Week 18th October 2013

Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government

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Customers This week CMA inquiry might be the only way to prove to the public that energy prices are above board Energy bosses call for competition inquiry Eon chief executive Tony Cocker and other speakers at the Utility Week Congress have called for a Competition and Markets Authority (formerly Competition Commission) inquiry into the energy market. Speaking at the Congress in London on Tuesday, Cocker Cocker: Eon has nothing to hide said: "Eon has worked very hard in the past two years to improve our transparency and rebuild trust but at the same time, it is clear we are not fully succeeding. "We have absolutely nothing to hide and we are transparent as we can be, but it would be helpful to have a group of experts look in from the outside, who don't have a vested interest in the industry." When pushed, Cocker added that Eon might consider referring the sector to the CMA itself. Earlier in the day, EDF director of corporate affairs and strategy Paul Spence said: "It might be time for the CMA to investigate the electricity and gas markets. We have to demonstrate we are acting fairly." Cocker also said that Labour leader Ed Miliband's proposal to freeze energy prices would "not be great for customers". He said it would make it challenging to retail energy and customer service was bound to suffer. He said his company had to look at the proposals as a "serious risk", with talks of a wholesale freeze in prices bound to "spook investors". However, he would not be drawn on whether Eon would increase bills, following SSE's announcement of an 8.2 per cent rise in domestic energy bills last week. Water Ofwat proposes changes to SIM Water companies should focus on customer service for households that "have no choice", according to Ofwat's consultation on changes to the service incentive mechanism (SIM) for PR14. Introduced in 2010, the SIM rewards or penalises water companies on their levels of customer satisfaction, but Ofwat said changes were needed during 2015-20 due to the introduction of retail competition for business customers in 2017. According to the regulator, the SIM needs to evolve because in 2017 service incentives will no longer be relevant to those who can choose their supplier. Ofwat said: "The current SIM has worked well. At a sector level, customer complaints have reduced and customer satisfaction has increased. This suggests that the incentive is working. But as we update to focus on household customers, there is an opportunity to review the balance of all the measures to ensure the SIM remains fit for purpose." Each company is scored out of 100 for its customer service, with metrics including the number of calls abandoned or engaged, unwanted phone contacts and written complaints. The maximum reward for highly performing companies is capped at 0.5 per cent of revenue of the appointed company's integrated business, whereas the maximum penalty is capped at 1 per cent. However, these percentages are up for debate, with the regulator asking for views on whether it should scrap the upside potential entirely or conversely increase it to 1 per cent. ENERGY £9m boost for Scots energy efficiency The Home Energy Efficiency Programme for Scotland (Heeps) was this week allocated an additional £9 million by the Scottish Government. Scottish housing minister Margaret Burgess said Heeps would receive the extra funds on top of the £46 million allocated in July. The money will be used for area-based schemes to target fuel-poor households, and for installing energy efficiency measures such as cavity wall and solid wall insulation. Burgess said: "Basic energy efficiency can make a huge difference to Scottish families struggling to make ends meet, allowing them to heat their homes more cost-efficiently." She added: "To help tackle fuel poverty we are actively working with councils and energy companies." I am the customer Mervyn Kohler Let's face it: the Green Deal has got off to a really awful start. Some of the systems were not in place when it launched. The launch itself was rather low-key. Some assessments have been done, and some work has flowed from these, but the Green Deal as a financial mechanism has not proved popular. Householders have not embraced the 'Golden Rule' or the payment approach through future energy bills. The scheme is a clever idea. It is the right direction of travel, "We need to start with the objective of the Green Deal" but it is over-engineered, clunky and poorly understood and undersold. For the protection of householders, the accreditation and formal process points are important, but the end result is a cost and repayment scheme that feels unsupportable. We can't go backwards, but we do need an urgent rethink about how we 26 | 18th - 24th October 2013 | UTILITY WEEK present the Green Deal, how we incentivise people to adopt it, and how it is marketed. Presentation is about explaining the repayment process, and describing the Golden Rule. Incentives are about the add-ons, such as stamp duty reductions on houses sold with a Green Deal scheme in place. Marketing is about using the messaging opportunities of say the tariff reform process, or the Winter Fuel Payment advisory letters, to give information. The Green Deal is for everybody. But we need to start with selling the objective – reducing energy bills – rather than selling the programme. 'How can I reduce my energy bills, and still keep properly warm?' is the question people want answers to. Mervyn Kohler, special adviser, Age UK

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