Utility Week

UTILITY Week 26th February 2016

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6 | 19th - 25th February 2016 | utILIty WeeK People & Opinion Engagement is key There are positive signs of customer engagement in the energy industry, but switching numbers are still too low. Chief executive's view Dermot Nolan, Ofgem C onsumers oen say they can't see any difference between energy compa- nies, but over the past couple of weeks we've seen some interest- ing developments in switching and customer service which may indicate this perception is chang- ing as the market develops. Never before have there been so many suppliers in the mar- ket – now we have more than 30 energy suppliers competing for business. And we are seeing increasing evidence that more consumers are shopping around for their energy. New figures released by us this week show that 6.1 million domestic energy supply accounts were switched in 2015, a 15 per cent increase on 2014. It's also a positive sign that last year saw the highest number of switches since 2011. And with over 40 per cent of these switches going to independent suppliers, it's an encouraging time for competi- tion in the sector. Looking for a better deal I've consistently called on sup- pliers to prove the market is as competitive as they say it is by quickly passing on the sav- ings in wholesale costs to their customers. I am pleased that over the past six weeks many suppliers took steps in the right direction by cutting bills for loyal cus- tomers. However, these cuts are nothing compared with the sav- ings available to consumers by switching from a standard tariff to a fixed deal. Some consumers have ben- efitted. Falls in wholesale prices have resulted in better deals for many consumers who have moved to fixed tariffs. But for the vast majority – the 70 per cent of consumers who remain on standard tariffs – energy bills have fallen very little over the past 12 months. Those who remain on stand- ard tariffs and haven't switched for a while or have never switched, would save a consider- able amount by finding a better fixed-term deal. How to get these consumers to move is a fundamental chal- lenge for the industry and was a key focus of the Competition and Markets Authority (CMA) interim report last summer. Looking ahead Switching is already getting eas- ier. We've halved the time it now takes to switch suppliers. But we can go further and make switching even more reli- able and quicker. We are working with industry and the govern- ment to overhaul the current arrangements with the ambition of enabling next-day switching for consumers. There are also other posi- tive trends to be highlighted. The largest suppliers received 1.5 million fewer complaints in 2015 compared with the previ- ous year. However, the numbers remain too high and all suppliers must continue to strive for fur- ther improvements. And while we welcome the new switching and complaints figures, if the energy market was fully competitive, suppliers would be pressured to introduce further price cuts and improve customer service. That's why I look forward to seeing the CMA's findings into the energy market, due to be published soon. I will ensure that Ofgem works closely with them to help drive engagement, and make sure the market works for all consumers. The strongest action a con- sumer can take now is to vote with their feet and switch. With over 40 per cent of active con- sumers now moving to an inde- pendent supplier, they're clearly deciding that not all suppliers are the same. "People in the UK are less trusting of utilities than those in any other country surveyed – with the sole exception of Russia, which may not be much of a consolation." Will Collin, founding partner, Naked Communications. Read the full blog online: http://bit.ly/1Uk7evz

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