Plans outlining the government’s strategy for the energy retail market have been branded “disappointing” by the sector’s trade body.
Energy UK’s chief executive Emma Pinchbeck issued a statement following the publication of the Department for Business, Energy and Industrial Strategy’s (BEIS) strategy for the next decade.
Among its chief proposals were to trial automatically switching disengaged consumers to a new, cheaper tariff and introducing legislation allowing the government to extend the price cap beyond 2023.
It also proposed ‘opt-in’ switching in which suppliers encourage disengaged customers to change supplier.
However, Pinchbeck said the strategy was not looking towards the future and was instead “stuck in the past”.
She said: “The energy retail sector has changed beyond all recognition in recent years – and will continue to do so at even greater speed for the benefit of customers – and yet this strategy, which should be looking to the future, is stuck in the past.
“Retailers are playing a crucial role in helping deliver net zero, supporting customers as they switch to electric vehicles and low carbon heating systems and guiding them through the smart tariffs and technologies that will benefit them.
“In the net zero energy system, there will be a different, two-way relationship between suppliers and their customers but the proposals around switching risk undermining that future.
“It’s disappointing and concerning that the government’s approach to the retail sector threatens to cut across their own decarbonisation strategy.”
Speaking to Utility Week Daniel Alchin, the trade body’s deputy director, said: “We don’t necessarily think the switching proposals are the right solutions for this sector. It’s looking to address a problem of the past, not looking to the future.
“It feels like there is a continued focus on the narrative that engagement in energy means switching supplier every year. That has certainly been true in the past but with every passing year it gets less and less true.”
Alchin added: “There’s a lot in there, it’s potentially a confused picture with opt-in, opt-out proposals and a continuation of the price cap. It feels like there’s two or three solutions looking at the same problem and how they all interact is not quite clear in what the government has put out.”
Hayden Wood, co-founder and chief executive of Bulb, said the switching proposals would not protect the 15 million customers “currently being ripped off”.
He said: “You’d be shocked if your local coffee shop charged regular customers more – it should be no different with energy companies. Bulb’s been calling for the government to take action, but these switching proposals won’t protect the 15 million customers currently being ripped off.
“The government urgently needs to act to ban the loyalty tax outright and make energy simpler and fairer. While it’s good news that the government will be able to extend the price cap to keep that protection in place we really need to work quickly to build a fairer energy market for everyone.”
However Tom Lyon, director of energy at energyhelpline, a company heavily involved in the first opt-in switching trials welcomed the news about opt-in switching.
He said: “Opt-in switching is a proven initiative that will drive positive outcomes for the most disengaged consumers. We welcome these proposals and believe they could generate levels of long-term competition into the energy market like we’ve never seen before.
“Previous opt-in switching trials helped significant numbers of consumers switch energy suppliers than otherwise would have; a widespread rollout will empower customers to drive down the cost of their bills.”
In its statement charity National Energy Action (NEA) welcomed the news about the cap.
Peter Smith, director of policy and advocacy at NEA, said: “These proposals would ensure that the government retains the option of protecting prices beyond the current end date of 2023. It could also offer an opportunity to consider deeper protection for the most vulnerable customers and those using legacy prepayment meters.
“It is imperative that the government takes the opportunity to bring forward new legislation, exercises its new powers and strengthens protections for the most vulnerable customers who currently face a vicious cocktail of higher prices, lower incomes and soaring inflation.”
Meanwhile Clare Moriarty, chief executive of Citizens Advice, said: “The price cap prevents loyal customers who don’t switch from being ripped off by their energy supplier. The government’s commitment to keeping the price cap in place until such protections are no longer needed is good news for customers. It is especially important at a time when many households face significant financial challenges resulting from the pandemic.
”People can make savings by switching suppliers. The government’s proposals to improve the switching process should help more people get a fair deal on their bills.”