Putting customers in control
Consumers will find it easier to switch and get the best deal, forcing energy companies to compete much more actively for their custom, as part of reforms to ensure the energy market is truly competitive and working in the public interest, Energy and Climate Change Secretary Edward Davey announced when launching the government’s Annual Energy Statement at the end of October. He unveiled plans to make switching simpler and quicker, and a new probe into energy firms’ accounts, to make them more transparent on profits and prices, as well as increasing penalties for market manipulation and regularly checking that the market is working properly.
He said: ‘The energy industry needs to change to put consumers in control. That means making it easy for people to change supplier to save money, it means regular market assessments to check their behaviour, and it means tougher penalties for market manipulation and putting an end to opaque finances. We want to push energy companies to make switching quicker and easier – because consumer action can force suppliers to change their ways. Bills are being re-designed through Ofgem’s retail market reforms to give people the information they need to make switching easy – and we are taking direct action through the Big Energy Saving Network to bring first hand help to those vulnerable people who find switching difficult. Energy companies need to know that any wrongdoing will be uncovered and dealt with. That’s why the regulators are going to carry out annual competition reviews, to make sure the energy market is operating properly. We are going to consult on increasing the sanctions for manipulation of the energy markets, so that they carry criminal penalties for the first time.’
Davey set out a number of new measures aimed at giving consumers more control:
- Energy companies will be told that they must make switching suppliers faster for consumers – with an ambition to move to switching in 24 hours, rather than the current five weeks, without increasing consumer bills.
- As well as energy companies now being required to tell consumers about their cheapest tariff on the front of every bill, energy companies will be required to include a QR (Quick Response) code on energy bills, so that smartphone users can switch to the best deal through a few clicks on a mobile phone. As well as directly helping smartphone users, it will mean those giving advice on switching supplier to vulnerable people can instantly get the information needed to help them find the best deal on the market. DECC will also look at requiring energy suppliers to provide key data securely to third parties such as switching sites.
- Energy companies should be more open about how they treat credit balances in consumers’ accounts, making every effort to return money to customers with closed accounts. Where that is not possible, Davey said that energy companies should ring-fence that money to help their most vulnerable customers. Energy and Climate Change Minister Greg Barker will shortly meet energy suppliers to discuss issues around direct debits, including the level of credit balances that energy companies hold.
- Appropriate penalties for those organisations who step out of line are a crucial part of a fair market. DECC will consult on introducing criminal sanctions for those who manipulate the energy markets in the same way as manipulation of the financial markets attracts criminal penalties.
Davey also set out the steps the government is taking to increase energy security by attracting investment in new, clean generation and taking the steps to make sure the UK’s electricity supplies remain secure in the short term. Since November 2012, the government has approved seven major infrastructure applications worth around £20bn, with the capacity to generate enough electricity to power more than six million homes. This includes the recently announced investment in Hinkley Point C nuclear power plant. He also reported that renewables capacity has increased by almost 40% since 2012, with renewables now supplying a record 15% share of electricity generation – half way to the government’s 2020 renewable electricity goals. Meanwhile, in the offshore oil and gas sector, capital investment is expected to hit a record high of £13bn, with 167 new licences granted. Overall, at least £35bn has been invested in increased electricity infrastructure since the start of 2010, bringing not just better energy security but economic growth, jobs and a boost to local communities.
Detail of the Annual Energy Statement can be found at https://www.gov.uk/government/publications/annual-energy-statement-2013
News Item details
Journal title: Petroleum Review
Subjects: Policy and Governance, Retail and marketing, Electricity, Oil and gas, Metering, monitoring and targeting, Jobs, Consumer advice
