Column: The highs and lows of 2016 – a supplier’s perspective.
From an industry perspective, 2016 began with great optimism about the future of the domestic energy market. Sadly it went downhill from there.
We hoped that the final report from the Competition and Markets Authority (CMA) would deliver a route to more transparency, fairer pricing and greater customer engagement. However, when the final remedies were announced they were disappointing to say the least. Having actively spent the past two years challenging the status quo and championing the need for a simpler, more open, competitive energy market, it is our opinion that the CMA totally missed the mark.
We felt at the time that impactful remedies were needed that would fuel a transformation of the energy market to the benefit of all customers. Instead, we are exactly where we were before: with a two-speed market where those who shop around get the best deals, while the majority – some 60 per cent of the UK population – languish on overpriced standard variable tariffs for decades.
We won’t see greater engagement off the back of the proposed remedies – in fact we strongly believe that we will see less. While the ideal scenario is a market that is competitive, innovative and inclusive, the reality is that the energy industry is set to regress rather than progress. And those who will suffer the most are those who are most in need of support. That’s why we feel the government needs to intervene now.
As things stand, we have pricing that favours the engaged, while the disengaged pay more and are kept in the dark about better deals. The removal of the simpler tariff rules, ostensibly in order to encourage innovation, has created a melee in which incumbency can be played to great advantage and irrational pricing abounds, from both the smallest and largest suppliers.
And nothing immediate is being done to address the needs of the long-term disengaged market, which includes many of the UK’s most vulnerable customers.
The big six cannot be trusted to help consumers engage in the market because their business model rests on keeping their loyal customers in the dark about better offers with new-customer only offers, “exclusive” collective switches and infrequent and opaque customer communication.
That is why we are seeking a stronger intervention from government. We believe the big six should be forced to switch their loyal customers – those who have been on a standard variable tariff for three, five or even ten years or more – automatically to cheaper tariffs.
This would not only immediately save consumers money, eroding some of that £2 billion of overcharging identified by the CMA, it would transform the market.
Knowing disengaged customers were no longer “inert” would stop the big six overcharging them. And, unable to over-charge their loyal customers, they would have to become more efficient businesses.
The government has promised to bring forward further proposals to combat energy overcharging by spring 2017. We sincerely hope that 2017 provides better news to the millions of households who pay more than they should.
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