Industry taking steps to build consumer confidence
Inevitably, when we head toward winter, people pay more attention to energy issues. Central heating is turned on, people become aware of the extra energy used and the need for good value. Of course, for many it becomes a time of anxiety and difficult choices. It also brings a greater degree of scrutiny of the energy industry.
With that in mind it is important to reflect on some of the ways in which the energy market continues to change, bringing better value and service for customers.
- Consumers can choose between 43 competing suppliers of different shape, size, focus and character offering more competitive prices and innovative services;
- Suppliers representing 70% of the market have signed up to the Energy Switch Guarantee ensuring faster switching for consumers engaged with the market;
- All of the largest energy suppliers have signed up to our Billing Code which means millions of customers benefiting from better standards and more accurate bills;
- The largest suppliers are part of the industry Safety Net that protects vulnerable consumers from disconnection and 10 suppliers have agreed to change how they operate the Debt Assignment Protocol 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.
These are practical steps so consumers can be more confident about engaging with the energy market. It does not mean that switching supplier will be as exciting as upgrading a smart phone. It does mean more people will search the market, talk to their supplier about best deals, switch to competitors, complain if something goes wrong and take greater control over their energy use.
From January to June this year there were 3.8m switches; a 30% increase on the same period last year. Those numbers don't include customers switching tariffs with their current supplier. People are increasingly confident that switching will be a quick and hassle-free experience. The Government’s own consumer survey is recording the highest ever levels of confidence in the energy market.
The industry needs to do more to keep that trend growing and in particular to build the confidence of those who are least engaged with the market. The completion of the Competition and Markets Authority review of the energy market means many other reforms will be introduced to increase consumer engagement still further. Hopefully the industry will now have a period of time when we can focus on implementing the CMA reforms and driving voluntary initiatives to increase consumer confidence.
But, even if people are confident about engaging in the market, they may still be sceptical about the cost of energy. It’s easy to understand why. For a long time there has been claim and counter claim from all quarters about why energy costs go up or down. That has eroded trust among consumers.
Partly the confusion is because the composition of an energy bill has changed significantly in recent years. To help people understand energy costs more Energy UK have produced some simple graphics to explain how the average energy bill is made up, where the pressures on costs are and which elements are within the control of energy suppliers and which are not.
Getting to a situation where people can trust what they are told about energy costs will require industry, regulator, governments, consumer groups and the media to share a common perspective on what might push prices up or down. That will take a commitment to a new dialogue on energy costs. It means replacing heat with light when we discuss energy costs. It’s one of the things that the industry cannot do alone. But it could help many more people engage with the market.