CMA final remedies: data sharing, temporary price control
The Competition and Markets Authority has today (24 June) concluded its two-year probe into the energy market and published its final remedies for the industry, including a safeguard price cap and forced data sharing.
The data sharing proposal, which was announced in the CMA’s provisional remedies, will go ahead, despite many suppliers expressing opposition to the move.
The remedy will involve the creation of an Ofgem-controlled database of disengaged customers who have been on a standard variable tariff (SVT) for more than three years, allowing rival suppliers to target their marketing to those customers.
Other controversial moves by the CMA include the introduction of a temporary price control for the four million customers on prepayment meters, pending the full rollout of smart meters and wider reform of the market by 2020, and the removal of the confidence code which requires price comparison websites (PCWs) to display a whole market view. This move has been pushed forward despite a recent survey suggesting that the majority of MPs do not support the move.
As expected, the CMA has also confirmed its decision to scrap the four-tarriff limit imposed by Retail Market Reform. This move has been keenly anticipated by suppliers since it is felt the tarriff cap has stiffled innovation in energy supply.
In addition, following criticism from suppliers, the CMA has re-evaluated its central claim that the big six have been overcharging customers by £1.7 billion per year between 2009 and 2013. The report now states that customers could have saved £1.4 billion in a fully competitive market.
Prior to the release of these final remedies, regulator Ofgem urged energy suppliers to embrace all of the CMA's remedies or face the prospect of further price regulation in the sector.
Main remedies to be imposed by the CMA include:
- Giving more data, such as customer meter numbers, to PCWs and other intermediaries, and allowing them to negotiate exclusive deals with suppliers. In return, PCWs must be transparent about how they cover the market.
- Removal of the confidence code which requires PCWs to show a whole market view – the sites will now only show commission paying suppliers
- Measures to help new suppliers compete for prepayment meter customers and reduce barriers such as personal debt issues that make it difficult for such customers to switch.
- A range of measures to help microbusinesses.
- Ensuring the transparency of green subsidies that go on the customer’s bill and assessing their impact beforehand, with a clear rationale for the allocation of funding to different technologies.
- Reforms to the electricity and gas settlement processes to lower costs to consumers by enabling more accurate measurement of consumption and more efficient supply - and to enable the full benefit of smart meters to be realised.
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