Utility Week

Customers 28 | 4TH - 10TH MAY 2018 | UTILITY WEEK Consumers are paying over the odds for energy networks, with their exposure to excess charges determined by a "postcode lottery", Citizens Advice has claimed in a report. Following Ofgem's pledge to rein in profits in future price controls, the charity has urged the regulator to "hold its nerve" against "strong and sustained" resistance from network operators. ELECTRICITY Report: consumers overpaying for networks in 'postcode lottery' Analysis published by Citi- zens Advice last year concluded network companies are set to receive £7.5 billion of "unjusti- fied profits" over the current RIIO price controls – an average of £285 per household. However, further research has highlighted regional dis- parities in consumers' contribu- tions towards these "missing billions". A new report by the charity has found households in South West England will bear the greatest burden (£315), while those in the south of Scotland will be least affected (£225). The report says these dis- parities are the result of regional differences in network charging, which are present because "it costs more to build energy infra- structure and transport energy This week Suppliers could enter energy 'in thousands' Chief executive also says objectives for Ofgem are 'difficult to achieve' but not 'impossible' The next decade could see hundreds and even thousands of suppliers enter the energy market, Dermot Nolan has predicted. Responding to questions at a conference on energy market priorities in London last week, the Ofgem chief executive said the number of energy suppliers would not remain fixed. He said: "I suspect there won't be 70 entrants in five to ten years. We may have a shake- out in the industry and a reduction in the number of suppliers. "If there is more radical change we may have hun- dreds if not thousands, but maybe not with the same formal supply licence structure around them." Nolan also said the objectives set out for Ofgem in the government's energy price legislation are "difficult to achieve" but not "inherently impossible". He denied that the four objectives, which include promoting competition while capping the amount suppliers can charge for standard variable tariffs, are "contradictory". He said: "I believe they are clearly dif- ficult to achieve. I don't think it's inherently impossible. It is doable and we will do our best." And the Ofgem chief executive warned electricity companies that they faced a "rude awakening" if they tried to hike tariffs in the run-up to the price cap's intro- duction. He said: "If a company is choosing to increase its price in an unreasonable manner at this point, they will get a rude awakening when they face a price cap. "Regardless of what prices are, we will assess as much data and regulatory judgement as possible to make what we think is an accurate decision on what a price cap should be." DB ENERGY Eon: cap risks supply choice for vulnerable The impending energy price cap risks putting off suppliers from serving poorer and more vulner- able customers, Eon has warned. Sara Vaughan, political and regulatory affairs director at Eon UK, told delegates at an energy market conference in London last week that the price cap must include sufficient leeway to reflect the additional costs of serving vulnerable customers. Pointing to figures show- ing that such customers are disproportionately concentrated among the big six suppliers, she said: "We don't want a situation where customers in vulnerable situations become less attrac- tive to supply because they cost more and potentially more than is covered under the price cap. If you are hard-nosed, it makes sense to only have those custom- ers that are cheapest to serve: the savvy, agile, well off, well- educated customers that give you the lowest cost base." Vaughan also called for the scrapping of exemptions for smaller suppliers from the Energy Company Obligation (Eco) and Warm Home discount schemes. ENERGY Council picks British Gas over own energy Bristol City Council has taken away a contract to supply itself with energy from its own com- pany and given it to British Gas. The council founded Bristol Energy in 2016 and has invested more than £15 million in the business. But last year Bristol Energy revised its original business plan in response to a slower than anticipated customer take-up. It then said it would become prof- itable in 2021 – two years later than was initially forecast. A council spokesman told Utility Week it had no choice but to follow strict procurement rules, and Bristol Energy manag- ing director Peter Haigh said the company had been "margin- ally undercut on the council contract" by British Gas. He added: "It's important that the council goes through a process when choosing suppli- ers, including where its energy comes from." GAS Flogas Britain rebrands mains arm Flogas Britain has relaunched its mains gas business division under the name Flogas Energy, alongside revamping its bills and launching a new website. The company, which sup- plies liquid petroleum gas and liquefied natural gas to a wide range of business and domestic consumers across Britain, says the move is aimed at enhancing its customer service – making it easier for both new and exist- ing customers to manage their supplies, contact their account manager and find out more about what is on offer. Nolan: objectives not 'inherently impossible' in some parts of the country than others". "This is a regional inequality that we could fix without any cost to the overall economic efficiency of energy networks." Citizens Advice chief execu- tive Gillian Guy said: "Ofgem must hold its nerve and make sure that the next price control delivers much better value for consumers."

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