Energy Market Investigation

On Wednesday morning, energy regulator Ofgem hastily announced that they are consulting on plans to refer the energy market to the Competition Markets Authority. The investigation, which is slated to take at least 18 months, will look at increasing competition in the marketplace by removing the barriers to entry of smaller suppliers and encouraging more switching from consumers, thus driving down prices. Our most recent research showed that almost a third (31%) of retailers had experienced above inflation increases in their energy costs, so anything that reduces the cost of energy for a store is much needed. 

Aside from the price of a unit of gas or electricity, much of our focus when it comes to the energy market has been on ensuring that the contract terms for retailers are fair and that they are not being taken advantage of. For the most part, convenience store owners are no better placed to deal with energy companies than domestic consumers. The vast majority of stores don’t have a member of staff who deals with utilities contracts for them – they have to find time to go through contracts themselves whilst working 50+ hours a week and dealing with the multitude of other issues that present themselves when running a convenience store. Increased competition in the marketplace is absolutely a positive step for an energy market that suffers in some areas due to the domination of a few large players, but we cannot be so naïve as to believe that the expansion of smaller suppliers will solve all of the problems. 

In the small business market, where there is more prevalence of smaller suppliers than just the ‘big six’, choosing a supplier has often been a trade-off between price and standards. A retailer may get a better unit rate with a certain supplier, but they run the risk of their contract being rolled over and a backdated bill appearing on the doorstop for up to six years’ worth of incorrect meter readings (which are often the fault of the person employed by the supplier to go and read the meter). The culture of not adhering to voluntary standards of conduct in favour of a perceived price benefit cannot continue. All suppliers should be treating their customers fairly, whether they are the biggest or smallest player in the market. 

At this stage, the proposed investigation does not encompass the actions that have been taken as part of the Retail Market Review. This means that key issues like backbilling, rollover contracts and the behaviour of brokers will not feature. While Ofgem have confirmed to us that work in these areas will continue, it is essential that they do not get lost in the shuffle and we will be working hard to ensure that ALL suppliers are providing their customers with fair, honest and transparent contract terms that are already well overdue.

This entry was posted by Victoria on Fri, 28/03/2014 - 14:20