Energy suppliers 'in the last chance saloon' must give customers a better deal
Alex Neill, Managing Director of Home & Legal
| Which?
The Managing Director of Home & Legal at Which? calls on the Government to respond to the CMA inquiry into the energy market, and deliver a more competitive market which is fairer for the most vulnerable consumers.
Energy is a perennial issue for households and Government. With much policy debate on this essential utility taking place during conference season, Which? is warning the Government - meddle at your peril.
Three months on from the biggest inquiry into the energy market since privatisation, people may be wondering what changes are coming for hard pressed energy customers.
After years of inflation busting price hikes, dire customer service and falling levels of trust, the public expect to see big improvements from their energy company. The two-year inquiry clearly revealed how the energy market is failing its customers - particularly people with prepayment meters and customers who remain on the big energy suppliers expensive standard tariffs.
The Competition and Markets Authority (CMA) set out a raft of proposals to try and tackle these failings. The eye catching recommendations were extra protections for prepayment meter customers and ideas to get energy companies to encourage customers on poor value deals to switch.
These ideas will inevitably take some time to test, to get right and then to introduce.
However in the midst of party conference season - there is a danger that politicians of all colours will not give the energy regulator the time or space to introduce the inquiry’s reforms.
Our message to those politicians is don't meddle, yet. Yes, it is tempting as there are questions about whether the inquiry went far enough - but after years of well meaning, but ill-judged interventions by regulators, Prime Ministers and leaders of the Opposition - your attention would be better placed elsewhere.
That doesn't mean we expect the new Secretary of State to sit on his hands though. So how can the Government, and particularly Greg Clark, usefully act to help people struggling with their energy bills this winter?
First, they should be turning up the heat on energy company bosses; energy companies should be genuinely competing to win and keep their customers, getting them engaged and switching to better deals and delivering a much higher standard of service. This was one of the inquiry’s recommendations but the energy industry shouldn't be waiting for the regulator to force them to do it. They should be doing it now.
Second, they should hold the energy regulator to account for the reforms they introduce. Which?, like many others, are sceptical about whether ideas like the energy database will bring about real change. Implementing the remedies is not enough, we’re expecting to see the regulator to be able to explain what good consumer outcomes would look like, by engaging with energy customers, and put in place metrics to measure progress towards those outcomes.
The Government needs to oversee whether the regulator is succeeding and working to put in place the right processes to deliver a competitive market, in a way that doesn't harm consumers interests and in practice actually meets consumers expectations.
The Government may want to consider other wider social policy reforms to help vulnerable customers, who won't benefit from the protection being provided to prepayment meter customers. But in doing this they must carefully evaluate the impact any further interventions would have on the existing set of reforms and that further help usually comes at a cost - whether paid by taxpayers or out of other people's energy bills and this must be controlled.
So, we believe it's the energy industry themselves who now need to rise to the challenge. They cannot think that they've got off scot free from the inquiry. It showed we're collectively overpaying £1.4bn due to a lack of competition. This is the last chance saloon for the energy suppliers - and unless they prove they can genuinely compete for customers and give customers a better deal, there will be no one to blame for further intervention than themselves.
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