The government should completely drop its plans to introduce automatic switching arrangements, Energy UK has argued.
In its response to the Department for Business, Energy & Industrial Strategy (BEIS)’s recently concluded call for evidence on the future of the energy retail market, which has been seen by Utility Week, the sector’s umbrella body welcomes Kwasi Kwateng’s recent decision to put on hold plans to introduce opt-in and trial opt-out switching.
The secretary of state for BEIS should go further, it says: “These proposals should be dropped in their entirety as part of this refresh, and BEIS’ attention refocused on developing a framework and policy interventions that are geared towards creating and supporting a sustainable and innovative energy retail market.”
The response describes the automatic switching proposals as “not fit for the current market, let alone a future market focused on innovation and meeting net zero”.
“Instead of continuing the pursuit of increased switching and the proliferation of below cost tariffs to the expense of market sustainability, the government’s strategy should be geared towards creating a sector that is encouraged through reward to innovate, provide new and better services to customers, and fits in to the wider system’s overall transition to meet net zero.”
The response also urges the government to ensure that its work on developing a long-term retail strategy does not lead to delays in producing its short-term response to the immediate energy bills crisis facing customers and the industry
The development of a refreshed retail strategy over the longer term should not preclude urgent action over the coming weeks and months to address these challenges, it says: “We would urge the government to ensure that it does not delay taking action until this workstream is completed, nor shy away from the necessary policy interventions and levers in the short term that are needed to address these concerns.”
Energy UK warns that the government’s retail strategy will “stop short of what is needed” if it is not developed in tandem with wider efforts to decarbonise the UK’s energy system.
“Achieving net zero successfully and at the lowest cost to consumers will require changes across the whole energy system, and much work is already underway in other sections of the system to do so.
“Concerns need to be addressed to ensure enduring and future retail propositions are built on solid financial foundations and that the sector has the investment needed to innovate and drive the transition to net zero.”
The response also calls for clarity on whether BEIS or Ofgem will take the lead on long-term price cap reform, given there is no indication so far that the government is seeking to take on that role.