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UTILITY Week 2nd September 2016

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UTILITY WEEK | 2ND - 8TH SEPTEMBER 2016 | 9 Interview I n a tiny room, within the glassy central London offices of the Competition and Markets Authority, Util- ity Week sat down to discuss the largest study of the energy market since privatisation. The probe has faced staunch criticism from all angles, for taking too long, for costing too much, for being too so on the big energy companies, and for failing to do enough to protect consumers who have been paying over the odds for their electricity and gas for years. Taking his seat, the investigation's chair Roger Wit- comb is eager to defend the work of his panel of experts, which spent two years and £5 million poring over evi- dence. The outcome was a series of recommendations, including a temporary prepayment price cap, the scrap- ping of the Ofgem's four-tariff cap, and the creation of an open database of customer details. Topping off the set of remedies is the controversial plan to remove the whole of market requirement for price comparison websites. News, in provisional reports through 2016, of the CMA's intentions to introduce these measures drew attacks from detractors. These did not disappear with the final rulings in June this year and as a lengthy pro- cess of implementation, including trialling and testing of solution, goes ahead, they are likely to well up again and again. One reason for this is that the energy sector is changing fast – so much so that energy market players unhappy with the CMA's approach say that it's slow mov- ing investigation is based on outdated evidence. Since it started work, the number of suppliers in the market has soared from 25 to more than 40, wholesale prices have fallen drastically, and Ofgem is increasingly bearing its teeth, slapping hey fines on suppliers who fail their customers. Such changes and improvements in the market did not go unnoticed by the CMA but Witcomb warns: "There is still plenty that needs sorting out". The remedy setting our plans for a database of cus- tomers who have been on a standard variable tariff (SVT) for three years or more has attracted vitriol. The plan is for suppliers to have access to it and target marketing at these customers, hopefully encouraging them to switch to a better deal. Critics claim this will lead to mass junk mailing and end up confusing these disengaged custom- ers even further. Witcomb strongly defends the plan, claiming it will prove to be a productive way to re-engage with these customers. "We discovered that if you're measuring lack of engagement, one of the main contributors is lack of internet access. If there is no internet access, a letter seems the most effective way. "Obliging suppliers to disgorge details of their most profitable customers to a competitor is quite a beefy rem- edy and we expect a certain amount of pushback." He adds that it has the bonus of being perceived as a "non-threatening way of communication" and argues that data security is "assumed" safe with Ofgem. However, Witcomb does concede that supplier num- bers have increased dramatically since the remedy was first set out, so there could be an issue with too many companies sending out letters. He places responsibility for ensuring this doesn't happen squarely with the regu- lator. "Clearly the details need to be worked out… which is why we have said this is a matter for Ofgem." Controversy has also followed the plan to remove the "whole of market" requirement from price comparison sites. Independent suppliers have slammed the move, saying they will no longer have their tariffs shown unless they pay.

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