Utility Week

UTILITY Week 18th November 2016

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

Issue link: https://fhpublishing.uberflip.com/i/751482

Contents of this Issue


Page 10 of 31

The Topic: Competition UTILITY WEEK | 18TH - 24TH NOVEMBER 2016 | 11 further interventions could limit innovation and would be regressive on customers. Energy UK chief executive Lawrence Slade told Utility Week: "We need to draw a bit of a breath and deliver on the remedies and get those working before we look at any other interventions." The rollout of smart meters, currently due to be complete by 2020 despite recent delays to the DCC network go-live, is seen as one way to spark competition in the sector, with 24-hour switching remaining a primary target, as set out by former energy secretary Ed Davey. What is clear is that despite the per- ceived problems, competition has changed the marketplace profoundly over the past 20 years, and it will continue to do so. SAVINGS FROM SWITCHING NUMBER OF CHANGE OF SUPPLY EVENTS MOVEMENT BETWEEN SMALL, MID-TIER AND LARGER SUPPLIERS £400 £350 £300 £250 £200 £150 £100 £50 £0 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 Apr 14 Jun 14 Aug 14 Oct 14 Dec 14 Feb 15 Apr 15 Jun 15 Aug 15 Oct 15 Dec 15 Feb 16 Apr 16 Jun 16 Aug 16 Oct 16 May 12 Sep 12 Feb 13 Jul 13 Dec 13 May 14 Oct 14 Mar 15 Aug 15 Jan 16 Jun 16 Q: Ofgem stated it would not run the data- base remedy if trials were not successful. What are your thoughts on this, and the adoption of the wider CMA remedies? A: You should not go ahead with the data- base if you can't prove it can work. That would ultimately be a waste of customers' money. The trialing of engagement is obvi- ously a vital part of this process. I think it's important everyone gets involved as quickly as we possibly can. Now is not the time for holding back on any of this. As an industry, all players need to step up to the market. Q: How do you view the state of the market? A: We've had switching-wise one of the best years for quite some time. That's been helped by falling prices and probably more suppliers in the market than anyone conceived was likely. It's a fantastic number. You've got a very vibrant background to the final remedies from the CMA. One of the issues we've got is there remain many myths in the market and we need to be in a position where customers, whoever their current supplier is, whether they've switched or not, understand that switching isn't that difficult, and if you don't like the price your current supplier is charg- ing you then switch. Hit them where it hurts. Q: The new government has stated its intention to intervene in "broken" mar- kets – and name-checked energy. Should the government look to intervene? A: We've had two years of the CMA and I think we need to draw a bit of a breath and deliver on the remedies and get those working before we look at any other inter- ventions. The best result for everyone is a market that works for everyone. Q: What does the future hold? A: Let's see where technology can take us. Let's work on the engagement front, make sure we nurture the innovation coming into the market from some of these challenger businesses. Let's see how we can move that forward so we're looking at a market where you're using technology to the best possible advantage and you're making sure you're looking aer the most vulnerable customers. Let's see how we can bring all of that together so we have this vibrant, competitive energy sector that's benefitting everyone. That's the opportunity that's there and I know there is a willingness from this indus- try to engage but we've got to work with gov- ernment and the NIC to deliver this future. member Martin Cave – have called for the price controls to be extended further. In her keynote speech during the Con- servative party conference, prime minister Theresa May said the government would intervene in failing markets, name-check- ing the energy sector. More details of the government's plans – whether to introduce backstop measures or more direct interven- tion, are expected in the coming weeks. However, the sector has hit back, call- ing for further intervention to wait until the CMA remedies have been introduced and bedded in. Which? managing director Alex Neill urged the government not to "meddle" with the energy market in the wake of the CMA's remedies, while British Gas managing director Sarwjit Sambhi said that imposing KEY CMA REMEDIES The CMA has set out its reforms to the energy industry following the conclusion of its two-year investigation. They are: •  A possible name change for standard  variable tariffs. •  Temporary price control for prepay cus- tomers until the end of the smart meter rollout (2020). •  An Ofgem-controlled database of custom- ers to be accessed by suppliers. •  Removal of the four-tariff rule under  Retail Market Review. •  Greater independence for Ofgem and a  "reset" of the relationship between the regulator, government and the industry. •  More data for price comparison websites  and intermediaries. •  Approximately 700,000 households on  non-Economy 7 restricted meters will be  allowed to switch to cheaper single-rate tariffs without requiring a new meter. •  Ensuring the costs of green subsidies are  transparent to consumers on their bill. •  Reforms to the electricity and gas set- tlement processes to lower costs to consumers. •  Removing barriers such as personal debt  issues to allow customers to switch. source: Electralink source: Electralink source: www.TheEnergyShop.com 500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 Larger to small and mid-tier suppliers Small and mid-tier to larger suppliers Larger to larger suppliers Small and mid-tier to small and mid-tier suppliers Oct 16 May 12 Sep 12 Feb 13 Jul 13 Dec 13 May 14 Oct 14 Mar 15 Aug 15 Jan 16 Jun 16 Oct 16

Articles in this issue

Links on this page

Archives of this issue

view archives of Utility Week - UTILITY Week 18th November 2016