Energy UK response to the CMA provisional decision on remedies for the energy industry

The Competition and Markets Authority has published its provisional decision on remedies for the energy industry. 

In response, Energy UK chief executive, Lawrence Slade said:

“The energy industry recognises the need to put customers first while delivering reliable, clean and affordable energy. Industry is committed to making things simpler and fairer for all, including making it easier and quicker for customers to understand their energy usage and to switch supplier. Government has recently acknowledged even more individuals trust their energy company to offer them a fair deal. With over 30 companies now in the market competing for customers, prices have been steadily falling and there are a wide range of tariffs on offer. There are a number of deals that are over £130 cheaper than this time last year and it is positive that switching numbers are increasing However, more needs to be done and the energy industry will work with customers and other bodies to continue making this market work for everyone.”

In addition, on specific remedies, Energy UK said:

Switching:

“Almost 4 million people switched energy provider in 2015. While we need to look at the detail, Energy UK welcome measures to further improve customers’ engagement with the market.”

Customer database:

“Companies treat customers’ information with the utmost care. We agree that customers should have the information they need to make an informed choice but would like people to be able to choose if they get marketing information or not.  The implementation of this proposals will need to be carefully considered to ensure that customers’ personal data and right to privacy remains protected.”

Safeguard Tariff for PPM Customers:

“While PPMs are more complex to manage the energy industry works hard to support vulnerable customers and switching is open to everyone – even customers who owe money on their pre-payment meter can usually switch. There are a number of prepayment tariffs on offer and consumers can save up to £200 by switching to the cheapest prepayment deal. But it is important any recommendation does not have the perverse effect of preventing customers from shopping around.

Resetting relationships:

“Energy UK and its members have also been calling for a new relationship between industry, Ofgem and the government and echo the CMA findings that this is needed to make sure decisions which effect customers and the energy industry are efficient and based on facts.” [Energy UK set out its views on this in Pathways for the GB Electricity Sector to 2030 in February]

Codes’ governance:

“Energy UK supports open governance and efforts to engage the full range of industry parties in code governance. We look forward to working with the Competitions and Markets Authority as the investigation moves into its final stages.”

Removal of four tariff rule:

“Energy UK supports measures that promote competition.”

Notes to editors

1. DECC’s customer satisfaction survey can be found on the Government website.
2. The IPSOS Mori research can be read on the Energy UK website.
3. Read the Cornwall Energy domestic market snapshot on the Energy UK website.
4. For more information on Money Saving Expert’s guide to prepayment meters visit their website.

List of voluntary measures the industry has implemented:

• Quicker switching down to 17 days
• Debt Assignment Protocol - working with the regulator, Ofgem, ten energy suppliers have voluntarily taken steps to change how they operate the Debt Assignment Protocol (DAP). The changes aim to make it easier and simpler for customers who use a prepayment meter and are repaying a debt of £500 or less per fuel to switch.
• The Code of Practice for Accurate Bills - Energy UK has worked with British Gas, EDF Energy, E.ON, RWE npower and Scottish Power to develop the ‘Code of practice for accurate bills’ or ‘billing code’. The billing code only applies to domestic customers.
• Credit Balances – My Energy Credit. The UK’s major energy suppliers have launched a nationwide campaign to help reunite customers with cash owed to them by their former energy supplier. 
• 'My Energy Credit' enables energy consumers to claim credit repayments through a new 'My Energy Credit' helpline 0370 737 7770 and freepost address (see below) in addition to www.myenergycredit.com website which launched in September.  The public awareness campaign is being accompanied by a UK advertising campaign that targets energy consumers across the country.
• The Energy UK safety Net which was set up to protect vulnerable people from getting cut off. Britain’s six largest energy suppliers have signed up to Energy UK’s Safety Net for Vulnerable Customers. Under the Safety Net, signatories have pledged to never knowingly disconnect a vulnerable customer at any time of year, where for reasons of age, health, disability or severe financial insecurity, that customer is unable to safeguard their personal welfare or the personal welfare of other members of the household. Suppliers’ compliance with the Safety Net is independently audited on an annual basis by PwC.
• Warm Home Discount - Providing direct financial support to fuel poor customers via the Warm Home Discount (WHD). This winter alone suppliers have spent in excess of £200m supporting 1.4 million pensioners via the Warm Home Discount, a £140 rebate on their electricity bill. It was recently announced that WHD is set to continue until 2021.
• Trust funds - Last year (2014/15) obligated suppliers also spent in excess of £15million on direct debt assistance to help households reduce or cancel energy debts via suppliers’ trust funds.
• Energy Best Deal - Funding the delivery of bespoke energy advice via Citizens Advice’s Energy Best Deal and Energy Best Deal Extra advice sessions. This year the schemes are being funded by five suppliers who are collectively providing Citizens Advice with £1.4million.
• Ability to Pay - All electricity and gas suppliers are required by their supply licence to take into account each individual customer’s ability to pay when agreeing repayment arrangements and must follow Ofgem’s key principles of ability to pay.
• Debt Advice - Energy suppliers also have a number of bilateral funding arrangements to fund debt advice through the likes of MAT, StepChange and Citizens Advice. In many cases these arrangements will be tailored to the needs of the specific customer base following detailed analysis and supplier experience.
• Extra Help: Suppliers have links with a range of local organisations, including Citizens Advice, Local Authorities, Housing Associations, charities and advice agencies and work with these organisations to resolve customers’ difficulties.