Utility Week

UTILITY WEEK | 1ST - 7TH DECEMBER 2017 | 25 Customers Conn describes the current arrangement for passing on environmental and social policy costs as "regressive". He also calls for social and environmental policy costs to be spread evenly across the energy supply market, saying that current rules have created a "non-level playing field" because the financial burden is handled only by larger suppliers. The national smart meter rollout was also tackled in Centrica's alternative mar- ket reform package. The company said the programme needs to become more efficient and flexible, allowing for rapid advances in technology, and suggested that one way of increasing the efficiency of a supplier-led rollout might be to alter the existing "opt-in" nature of the programme. Conn insisted at the time that these meas- ures were not published in response to the publication of dra legislation for a cap, saying that Centrica has long been vocal in expressing its opposition to the concept of price regulation as a remedy for market failures. Yet in the same briefing he went on to sing from a very similar hymn sheet to Scot- tish Power and Eon when he said: "Even the CMA has concluded that they [price caps] will probably result in 'disbenefits' for cus- tomers. So I think there's got to be the pos- sibility that if they're presented with some industry-led alternative, they might actually think that might be worth considering." As to whether this is the way the wider industry is thinking, Ryan Thomson, partner at Baringa Partners, says: "This [scrapping SVTs] could well be a sign that the industry is attempting to self-correct before any price cap can be implemented, as the move rec- ognises the desire to treat customers fairly and proactively engage with them instead of reverting to the 'default' tariff." The kicker is that in all three cases, the alternative to an SVT is another default tar- iff, albeit a newly-packaged one. None of the companies are matching the promise made by Engie last May on entering the domestic retail energy market, that it would roll cus- tomers on to its cheapest tariff. That could prove the proverbial spanner in the works of the grand plan to reform the market to the point where the price cap is deemed unnecessary. It seems the govern- ment remains sceptical of such moves by energy suppliers. Greg Clark, the business secretary, told MPs this month it was unlikely that proposals to end SVTs and replace them with something "remarkably similar" would derail the government's plans. Watching this space has never been such an interesting prospect. "Centrica's decision to put an end to poor value tariffs is an encouraging first step in help- ing to create a fairer energy market. We will not rest until we see the £1.4 billion consumer detriment identified by the CMA addressed – which is exactly why we published draft legislation to cap tariffs last month." Spokesperson, Department for Business, Energy and Indus- trial Strategy "It's good news that energy companies are taking the initiative by scrapping these expensive tariffs, but we believe consumers still need additional protections. Ofgem is rightly planning to limit energy bills for vulnerable people, while government's proposed legislation to cap all energy prices provides a wel- come opportunity to make the market work better for the 12 million people on rip-off default tariffs." Gillian Guy, chief executive, Citizens Advice "As the cold weather starts to bite, we would remind people to take matters into their own hands today and switch to a competitive fixed-rate deal to secure savings of £250 or more." Stephen Murray, energy expert, Money Supermarket "British Gas is promoting this as a radical pro-consumer move. Yet in truth this could just be smoke and mirrors. Instead of a default standard variable tariff people move to when the deal they chose ends, it will now have a default standard fixed-term tariff. That could mean anything at any price. In the past, British Gas fixed-rate deals have often been set at the same price as its standard rate. If it rolled people onto one of those, that would mean no saving at all." Martin Lewis, founder, Moneysavingexpert Seven actions from British Gas As well as withdrawing its standard variable tariff, British Gas laid out further proposals for "radical change". Unilaterally withdraw the standard variable tariff for new customers, to increase customer engagement. Engage customers already on the SVT and offer them better deals to persuade them to move them away from the SVT. British Gas says it will contact all SVT customers twice a year, and publish progress reports on how it is doing. Offer customers a choice of com- petitive fixed-term tariffs at the end of their contract. This will minimise the number who go on to a default tariff. The company says that when a customer's deal ends, it will offer them a choice of "at least two new tariffs". Introduce a new fixed-term default tariff. Legally, British Gas is required to have a default tariff for customers who do not make an active choice when a tariff ends. However, from now on the company has vowed to make this time-limited to 12 months, with no exit fees, so that switching away is easy. Provide new offers. These include an online-only tariff, and bundles combining energy with boiler servicing or Hive con- nected home products. Bring in "simple, no-nonsense bills" for all customers. British Gas says it will work with Ofgem to get the necessary permission to bring in "much simpler bills" as soon as possible. Continue improving customer service, and its own efficiency to keep customer bills down.

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