June 24, 2016
Today, the Competition and Markets Authority (CMA) issued their final report in to what has been a two-year long investigation in to the energy industry.
The Office of Gas and Electricity Markets (OFGEM) first referred the energy market to the CMA in 2014, a decision made at the height of concerns about the energy sector and after years of mounting fears. The main reason the decision to refer the market was made was (likely) due to the continuously rising cost of household energy bills. There had been a rapid increase in retail energy prices between 2004 and 2014: average annual domestic gas prices rose by around 125% in real terms over the period, and domestic electricity prices by around 75%.
Confirming provisional findings announced earlier this year, the CMA said that energy suppliers should be ordered to hand details of customers who have been on a default tariff for more than three years to OFGEM.
These details will then be used to build a database to allow rival suppliers to approach these customers, although it is intended that customers can opt out of this database at any time.
It is hoped that the database remedy will tackle the issue of low customer engagement in the energy market. The CMA's research discovered that large numbers of domestic customers do not engage in retail energy markets by shopping around or switching supplier. In a survey conducted of 7,000 domestic customers, 34% of respondents said they had never considered switching supplier and 56% said they had never switched supplier, did not know if it was possible or did not know if they had done so.
Reflecting this widespread lack of engagement, around 70% of the customers of the Six Large Energy Firms currently pay the Standard Variable Tariff (SVT), which is the default tariff (ie the tariff customers pay if they have not made an active choice), despite the fact that SVTs are much more expensive than alternative tariffs. For example, the dual fuel SVT customers of the Six Large Energy Firms (excluding prepayment customers, who, as noted below, have a very restricted range of tariffs) could have made average annual savings of around £330 in mid- 2015 if they had switched to another supplier. At Energylinx we can't say this enough, fixed priced tariffs are significantly cheaper than a suppliers standard tariffs, so shop around for your energy because you could save a small fortune.
A price cap will also be transitioned (2017-2020) in for the 4m households on a prepayment meter, this is intended to reduce the combined bill for these customers by £300m a year.The CMA believe that the detriment suffered by prepayment customers is particularly high and they have not been able to benefit from competitive prices in the same way as other customers due to the constraints we have identified.
Furthermore, the CMA announced that it intended to strengthen some of the powers that OFGEM had, which should allow the regulator to push through change more efficiently and to keep a closer eye on the marketplace.
The measures announced today are intended to increase competition in the marketplace and ultimately ensure customers can get the best deal possible on their energy bills. The CMA research also revealed that customers are currently paying £1.4bn more than they would be in a fully competitive market.
Roger Witcomb, chairman of the energy market investigation, said: "Competition is working well for some customers in this market - but nowhere near enough of them. Our measures will help more customers get a better deal and put in place a modernised energy market equipped for the future."
Posted on June 24, 2016 at 11:34 AM
June 16, 2016
There was some good news for energy suppliers this week, figures from Energy UKs 2015 Billing Code Audit shows an improvement across the board.
Energy UK worked closely with five of the "Big Six" Energy Suppliers; British Gas, EDF Energy, E.ON, RWE npower and ScottishPower to develop the billing code. The code currently only applies to domestic customers and sets voluntary standards to go over and above the supplier standard licence conditions.
Participating energy suppliers are judged against five key commitment areas: switching, meter reading, energy bills and statements, payments, and back-billing. Although other energy suppliers undoubtedly follow the principles of the billing code, they are not audited to the same strict standards as members of the code.
An audit is carried out of the five code members each year to make sure that they are continuing to follow it. Of the five members, two suppliers received a gold rating for their audit - British Gas and EDF Energy. E.On and ScottishPower received Bronze and RWE nPower didn't receive a rating due to billing issues the supplier experience in 2015.
General findings of the audit showed in the majority or cases, suppliers are billing customers properly and have robust processes and controls in place. The auditors found many areas of good practice particularly when it came to meter-reading and back billing.
From a consumer point of view, it looks as if the Energy UK's billing code framework is helping energy suppliers to identify issues before they became a serious problem. This is potentially stopping customers receiving bills in error and unnecessary stress that can inevitably cause. Notably, the suppliers that achieved the highest rating this year have also seen a reduction in billing complaints.
Energy UK Chief Executive Lawrence Slade said:
"The latest audit results are testament to the work suppliers are doing to improve the standard of service for their customers.
Energy suppliers are striving for improved conversations with their customers. It is important for customers to check their bills and to get in touch with their supplier if they have any questions."
Posted on June 16, 2016 at 01:40 PM
June 8, 2016
In a bid to give consumers more faith in the energy industry, Energy UK have launched an agreement between energy suppliers and the UK Government called the Energy Switch Guarantee. The Guarantee promises UK Consumers that when they switch their energy supply it will be efficient, problem-free and completed within 21 days.
The Guarantee is made up of 10 commitments. It is hoped that by energy suppliers adhering to these obligations, consumers' confidence and understanding in the switching process will improve and it will encourage them to switch their energy supplier.
The guarantee will act as a reassurance to customers that have never previously considered switching their energy supply. After all, energy suppliers all use the same wires and pipes and switching energy supplier should never cause any disruption to your energy supply.
Energy suppliers that sign the guarantee will regularly have their standards related to the commitments inspected to ensure compliance is being met. Currently there are 9 suppliers signed up, however over time Energylinx expect many more to follow suit. The suppliers currently signed up are; British Gas, E.ON, EDF, First:Utility, Flow, nPower, Octopus Energy, Sainsburys Energy, So Energy.
Lawrence Slade, CEO Energy UK said:
"It's fantastic news to see that nearly two million people have switched supplier since the beginning of the year. The new Energy Switch Guarantee will give customers the extra boost of confidence to engage in the market.
Industry has been working hard to put customers at the heart of what we do and with the CMA set to give its final recommendations, the Guarantee is certainly a step in the right direction. The aim is to reach out to those customers who have never switched before so hopefully we'll get millions more households engaging in the market."
The Guarantee has come on the back of a switching high in May. 350,000 households changed their gas and electricity last month - a 47% increase on 2015. 2 million customers have switched their energy supply in 2016 so far.
Energylinx is the only energy comparison website that will tell you when a switch is covered by the Energy Switch Guarantee. Giving you extra piece of mind when changing energy suppliers. Not only is switching easy, safe and efficient - it can also save you money. Get a quote for your household energy costs by clicking here or give one of our friendly energy advisers a call on 01259 220000.
Posted on June 8, 2016 at 10:19 AM