Utility Week

Policy & Regulation UTILITY WEEK | 24TH - 30TH NOVEMBER 2017 | 7 Energy customer engagement is growing Government must be careful that its interventions don't hurt competition, and thereby damage the very mechanism that will deliver for customers. Chief executive's view Lawrence Slade, Energy UK C ompetitive markets are driven by active consum- ers. The challenge for the energy industry is how to get more people engaged and switching while also protect- ing customers in vulnerable circumstances. Our data shows that more than 600,000 consumers switched electricity supplier in October alone. This takes the total number of customers changing supplier so far this year to more than four-and-a- half million. Ofgem's own fig- ures estimate around double that number switch their tariff but stay with the same supplier. That's in excess of 10 million households actively choosing their energy deal each year. This market is transforming – as evidenced by the figures. The ever-growing number of small and mid-tier suppliers has now captured nearly one-fih of the market, up from a mere 2 per cent five years ago. There are now nearly 60 suppliers out there – triple the number there were in 2012. So it's not just about the num- ber changing supplier but how the credible threat of losing cus- tomers can drive companies to do more to keep hold of them. With the number of standard variable/default tariffs falling by one million in six months and some suppliers pledging to phase them out altogether, change is starting to happen – but it needs to continue. We have to work harder to limit the number of custom- ers who lose out by not partici- pating. Most immediately, this means protecting vulnerable customers who are less able to engage in the market, which is why we support Ofgem's plans to extend the existing prepay- ment price cap to one million customers in receipt of the Warm Home Discount this winter – and its plans to extend protection to a further two million house- holds. In the longer term we need energy efficiency to be a national infrastructure priority so that we eradicate fuel poverty, reduce carbon emissions and prevent people spending money on energy that is wasted through inefficient homes. Suppliers are doing more than ever to help vulnerable custom- ers. Part of the challenge is rec- ognising that vulnerability isn't always just a financial issue or limited to one group of people. At Energy UK we established the Safety Net for Vulnerable Con- sumers, which sets out meas- ures under which suppliers can define and support vulnerable households through debt man- agement, improved contact with the agencies and charities who can help them – and a pledge never to knowingly disconnect a vulnerable consumer. Energy UK launched a new vulnerability group in January 2017 and that group has already commissioned and launched work on energy and mental health guidance. We anticipate a big year for our vul- nerability group in 2018 as we work even harder to get things right for vulnerable customers. Suppliers are working to improve engagement with all customers, and developments like the Energy Switch Guar- antee (a voluntary industry initiative launched last year whereby suppliers make a series of commitments ensuring that customer switches are simple, speedy and safe) are starting to bear fruit. The smart meter roll- out could spark further changes in customer behaviour and engagement. While the government's planned price cap could mean a one-off reduction for some cus- tomers, over the longer term the enduring benefits of the energy market will come from ensuring competition continues to grow, and from making every cus- tomer's home and business as energy efficient as possible – and for that you need active, engaged customers. The numbers show that more and more people are switching on to the benefits of engaging with the energy market. And while we need to protect the most vulnerable customers, we also need to make sure that the unintended consequences of government intervention don't switch people off.

• Cover