Utility Week

UTILITY Week 2nd September 2016

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

Issue link: https://fhpublishing.uberflip.com/i/720954

Contents of this Issue


Page 22 of 31

Customers This week CMA 'regrets' having to resort to price caps A price cap for the prepay market goes against the grain but the case for one was 'overwhelming' The Competition and Markets Authority (CMA) has said it regrets having to resort to a price cap remedy for the energy industry. Chair of the Competition and Markets Authority energy market inquiry, Roger Witcomb, told Utility Week the panel "sort of regrets" having to recommend a price cap for the industry, but that it will have the "most obvious and measurable effect". "We sort of regret having to do it because normally we tend not to go for price caps. But in this case, the case was so overwhelming," he said. "Clearly the price cap will have the most direct, obvious and measurable effect, and that's a big deal. It is nice to be able to hit a particular part of the detriment hard, predictably and soon, in the knowledge that as smart meters come in and we move on it will fall away of its own accord." The CMA published its remedies for the industry in June this year and said a transitional price cap for prepayment meters should be implemented until the full smart meter rollout was completed. Witcomb added: "It clearly will have an impact on competition in the sector today and it would be illogical for us to claim anything else. But our view was that there wasn't much competition there anyway." He defended the CMA's recommendation that price comparison sites be allowed to show only commission- paying suppliers, saying "it wasn't a difficult decision". SJ (see Interview, p6) WATER SEW will not compete out of area South East Water has confirmed that it has not applied for a national water supply licence, which would enable it to engage in the competitive market when it opens next year. Instead, the company has applied for a national sewer- age licence, which will allow it to offer sewerage services in its area and provide a unified bill to customers. A spokesperson for the com- pany told Utility Week: "We are considering opportunities for the future but initially our focus is on ensuring our current custom- ers can receive an enhanced service from us." Separately, the company appointed former energy broker James Dubois as managing director of its business retail arm, South East Water Choice. GAS 11,000 affected by gas meter mistake On 15 August, Ofgem discovered that energy suppliers have been overcharging gas customers by making basic mistakes reading meters. As many as 11,000 custom- ers have either been charged too much or too little because of confusion with old imperial gas meters being registered as metric meters, and vice versa. Energy UK said: "A very small number of customers have been charged the wrong amount for their gas, due to the incorrect recording of imperial and metric gas meters. "Industry has signed up to a set of principles to redress those affected. Where there has been an overcharge, a refund will be issued as soon as possible." When the mistake was discovered, a spokesperson for Ofgem said: "Ofgem is aware that a very small number of gas customers are being incorrectly charged for their energy use and has taken fast action." WATER Tap water consumption drops The number of people choosing to drink tap water instead of bot- tled water has fallen, according to research by the Consumer Council for Water. Its findings reveal that tap water is most likely to be consumed at home, as was the case in the 2015. However, the proportion of respondents who said they usually drink tap water at home has dropped by around 11 per cent since 2015. Similar falls were observed for tap water consumption in the workplace (12 per cent) and in restaurants (11 per cent). The consumption of bottled still water was up 6 per cent compared with 2015. Old problem: lack of competition I am the customer Pete Moorey "Energy remedies must truly work for consumers" Following a long two-year investigation by the Competition and Markets Authority (CMA), Ofgem has now published its approach for how it will imple- ment the remedies designed to help improve competition in the energy market. Engaging consumers so more people switch is a huge challenge. The CMA found that customers of the big six overpay collectively to the tune of £1.4 billion a year for their energy, yet many people are disengaged to their plans and together with Ofgem, they need to work hard to restore trust in the industry. At Which?, we'll keep up the pressure on suppliers to ensure we have a market that works for consumers. If energy companies fail to show they can treat their customers fairly, and don't deliver better service and competitive prices, the regulator must be ready to come down on them like a ton of bricks. Pete Moorey, Which? Head of Campaigns – with 56 per cent of people never switching supplier. Although switching levels have increased slightly, it is still low so measures to improve engagement are welcome. However, they must be properly tested to ensure they work. Remedies such as the pro- posed consumer database, li- ing restrictions on the number of tariffs companies can offer, and removing the requirement on price comparison websites to display every tariff, all need be thoroughly tested. There are no short-term fixes for a market that has been bro- ken for years. Suppliers need to show that consumers are central UTILITY WEEK | 2ND - 8TH SEPTEMBER 2016 | 23

Articles in this issue

Archives of this issue

view archives of Utility Week - UTILITY Week 2nd September 2016