Utility Week

UTILITY Week 17th March 2017

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Page 13 of 31

Insight for leadership 3 | UTILITY WEEK INTELLIGENCE | DECEMBER 2016 Utility Week Intelligence report: CMA Energy Markets Investigation: 2014 to 2016 The CMA strikes a balance The Competition and Markets Authority's proposed actions to improve competition in the UK energy market have struck a fine balance between challenging the big six to become more competitive, and broad-reaching price controls. Apart from a recommendation on customer data sharing designed to energise competition for variable rate customers, the big six energy suppliers have generally welcomed the content of the final report. Meanwhile, smaller suppliers have questioned the proposals on price comparison websites, and Citizens Advice is dissatisfied by the CMA's proposed actions on prepayment meter customers. Utility Week, 10 November 2016 Energy industry has 'regressed since CMA' The energy retail industry has gone backwards in terms of the way it treats and works for its customers, according to First Utility. Speaking at Energy UK's annual conference, First Utility UK managing director Ed Kamm told delegates that since the CMA published its recommendations to improve engagement and com- petitiveness in the energy market, things have actually got worse for consumers. He said: "For me this is not an industry which, from a consumer perspective, has progressed. It has actually regressed since the CMA remedies." Kamm's comments came aƒer a straw poll at the conference, where 45 per cent of the audience stated that active switchers would benefit most from the CMA's remedies, whereas only 11 per cent thought non-switching customers on standard variable tariffs (SVTs) would benefit the most. Kamm added: "That's exactly the opposite of what we want to happen. It is not an energy market that works in the best interests of all consumers." He also attacked the view of British Gas managing director Mark Hodges, who told delegates that the CMA's remedies should be given a chance to bed in and make a difference. Kamm said: "I'm disappointed in my fellow panel member, who basically said let's give the CMA and the remedies a chance, because that to me says they know it's not going to work. "I'm sorry, but when the people who make the rules in the indus- try and have all the customers in the industry says let's give it a chance, that means one thing to me." Hodges replied: "It's a nice easy pot shot. I'm up for SVT custom- ers being part of that competitive mix. When I said I believe in mar- kets and I will give the CMA a chance, that's not because I'm hiding, but because I genuinely believe that will happen." Utility Week, 3 November 2016 Energy companies in 'last chance saloon', warns Which? Suppliers are still not engaging with energy customers about switch- ing from expensive tariffs, despite a two-year investigation by the Competition and Markets Authority (CMA) into the energy market. Which? has found that 74 per cent of customers have not been contacted by their supplier about changing their tariff. The CMA probe showed that 58 per cent of energy customers are stuck on Standard Variable Tariffs (SVT), usually the most expen- sive, and collectively, consumers are overspending on energy by £1.4 billion per year. Which? has called on suppliers to show how they are engaging with their SVT customers stuck on expensive deals, and challenged them to evidence their plans for engaging with these customers by 31 January 2017. The Fair Energy Prices campaign will be publishing a scorecard to track the responses, and Which? says that the government and regulator must be ready to act if companies fail to deliver on these plans. Which? managing director of home and legal services Alex Neill said: "This is the last chance saloon for the energy industry. Aƒer a two-year inquiry, the energy companies must prove that they are acting to genuinely engage with their customers stuck on the worst deals. The government and the regulator must be ready to act if energy companies fail to deliver." The consumer group says that 86 per cent of people think it is energy suppliers' responsibility to help customers understand their energy usage, and 89 per cent say that suppliers ought to ensure that customers can understand their bills. Ofgem commented on the campaign: "Ofgem is working to implement the CMA's remedies as quickly and effectively as possible as part of our wider reforms to deliver a fairer, more competitive and smarter energy market. We want suppliers to engage more actively with customers, particularly those on standard variable tariffs, to help them get a better deal. This month for example we began a consultation on requiring suppliers to take part in trials to test the most effective ways of doing this." Utility Week, 20 October 2016 CMA refines micro business measures The Competition and Markets Authority (CMA) is consulting on a measure to stop energy suppliers using high exit fees to lock micro businesses into contracts. The consultation will also discuss forcing suppliers to publish their prices so that micro business customers can get a better idea of their options and pricing. The measures form part of the final recommendations made by the CMA following its two-year investigation into the energy mar- ket, which found that in total, micro businesses pay £180 million a year more than they would in a more functionally competitive mar- ket. Around 45 per cent of micro business customers are currently pegged on an expensive default tariff. The CMA is already consulting on another measure which will require suppliers to provide Ofgem with data about both domestic and micro business customers who have been on a default tariff for more than three years, including data on levels of energy usage. 1 News Join today at www.utilityweek.co.uk/membership The CMA Energy Markets Investigation 2014-16 The latest intelligence report available now to Utility Week Premium members 11 | UTILITY WEEK INTELLIGENCE | DECEMBER 2016 Utility Week Intelligence report: CMA Energy Markets Investigation: 2014 to 2016 Features After final report, implementation is the focus The final recommendations made by the Competition and Markets Authority following its two-year investigation into the energy markets were welcomed by some and branded a whitewash by others. Outgoing CMA energy panel chair Roger Witcomb has strongly defended the work, and the focus now is on ensuring quick and effective implementation. Utility Week 2 September 2016 Interview: Roger Witcomb, energy panel chair, CMA In a tiny room, within the glassy central London offices of the Com- petition and Markets Authority, Utility 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 Witcomb is eager to defend the work of his panel of experts, which spent two years and £5 million poring over evidence. The outcome was a series of recommendations, including a temporary prepayment price cap, the scrapping of 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 inten- tions to introduce these measures drew attacks from detractors. These did not disappear with the final rulings in June this year and as a lengthy process of implementation, including trialling and test- ing 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 moving investigation is based on out- dated 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, slap- ping he•y fines on suppliers who fail their customers. Such changes and improvements in the market did not go unno- ticed by the CMA but Witcomb warns: "There is still plenty that needs sorting out". The remedy setting our plans for a database of customers 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 mail- ing and end up confusing these disengaged customers 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 con- tributors 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 remedy 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 numbers 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 regulator. "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 sup- pliers have slammed the move, saying they will no longer have their tariffs shown unless they pay. Witcomb hits back: "It is entirely understandable that the people who were getting free access to price comparison sites don't much like it. They are not a public service, people need to realise they are retailers." "It was something that we felt very strongly about. It wasn't a dif- ficult decision." The obligation on price comparison websites to show the whole of the market came as part of Ofgem's package of retail market reforms alongside the four-tariff rule. Leaning forward in his seat, Witcomb says that over the past few years, "a lot of restrictions had unintended and unfortunate consequences, and that was one of them". Neither does the chair buy the argument that removing the four- tariff cap will increase complexity. He says Ofgem agrees with him "Obliging suppliers to disgorge details of their most profitable customers to a competitor is quite a beefy remedy and we expect a certain amount of pushback." ROGER WITCOMB, ENERGY PANEL CHAIR, CMA 2 1 | UTILITY WEEK INTELLIGENCE | DECEMBER 2016 Utility Week Intelligence report: CMA Energy Markets Investigation: 2014 to 2016 CMA Energy Markets Investigation: 2014 to 2016 Questions remain over energy market competitiveness

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