Utility Week

Policy & Regulation UTILITY WEEK | 1ST - 7TH JULY 2016 | 11 " " "Ofgem urges the industry to get behind the entire package of remedies and to work with us to deliver an energy market that works for both active and disengaged customers as quickly and effectively as possible." Dermot Nolan, chief executive, Ofgem "After two years of investigation, [the] announcements on remedies are a small victory for consumers and mark an important step to make the market fairer for all." Lewis Shand Smith, chief ombudsman, Ombudsman Services "They're being quite tepid about it. There are many areas where we [ECCC] will want to raise questions." Angus MacNeil, chair, Energy and Climate Change Select Committee "The CMA investigation has been a waste of taxpayers' money and is unlikely to re- establish consumer trust in the energy industry." Doug Stewart, chief executive, Green Energy "It is a tough set of measures, but we recognise where it will help drive the en- ergy market forward to better deliver for customers. We've come a long way since the in- vestigation commenced in 2014 and we will continue to engage constructively as we undertake the substantial implementation work in the months ahead." Alistair Phillips-Davies, chief executive, SSE 2 years length of the investigation £5m the cost of the investigation 70% the number of domestic customers still on big six SVTs £300 the amount that could be saved on average by switching £1.4bn the amount consumers have been paying more than they would have in a fully competitive market STORY IN NUMBERS The CMA has set out its reforms to the energy industry following the conclusion of its two-year investigation. Here, Utility Week looks at the key points, and how the industry has reacted to them. A possible name change for standard variable tariffs. Temporary price control for pre-payment meter cus- tomers until the end of the smart meter rollout (2020). An Ofgem-controlled cloud database for customers' information to be accessed by suppliers. Removal of the four-tariff rule under the Retail Market Reform. Greater independence for Ofgem and a "reset" of the relationship between the regulator, the Department of Energy and Climate Change and the industry. More data for price comparison websites and intermediaries. Approximately 700,000 households on non-economy 7 restricted meters are allowed to switch to cheaper single-rate tariffs without requiring a replacement meter. Ensuring the costs of green subsidies are transparent to consumers on their bill. Reforms to the electricity and gas settlement processes to lower costs to consumers. Removing barriers such as personal debt issues to allow customers to switch. KEY POINTS July-October 2015 – Consideration of responses to provisional findings and consultation on remedies including response hearings 17 March 2016 – CMA published provisional decision on remedies April 2016 – Deadline for responses to the provisional decision on remedies Late April 2016 – Final deadline for all parties' responses before final report 17 May 2016 – Ofgem chief executive warns energy companies to embrace CMA remedies or face full price regulation 24 June 2016 – Publish final report 25 June 2016 – Statutory deadline week brandishing banners that accused it of pandering to the big six. Meanwhile, Energy and Climate Change Committee chair Angus MacNeil labelled the remedies "tepid", and First Utility chief financial officer Darren Braham said the CMA has "completely missed the mark" and that there is a "real danger of being back where we started 10 years ago". The CMA has defended its final rem- edies, saying that its 30-plus measures included "significant technical and regula- tory changes which will help modernise the whole market", and "it doesn't warrant" the description of a damp squib simply because draconian measures have not been imposed. Whatever the sector's thoughts, however, there will now be pressure from Ofgem for the remedies to be quickly adopted. The reg- ulator's chief executive, Dermot Nolan, made this plain in May when he warned that resist- ance would lead to heavy-handed interven- tion and potentially even price regulation. Suppliers must therefore now initiate plans to adapt business processes and poli- cies to accommodate the remedies – a pro- cess that is expected to be costly in financial, time and resource terms. ? × × ✔ ? × ? ✔ ✔ ✔

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