David Blackman Customers, Policy & regulation, Strategy & management, News, Dermot Nolan

Recently-introduced EU data protection rules are making it “hugely difficult” to identify vulnerable customers, Dermot Nolan has told MPs.

Under cross examination by the House of Commons’ public accounts committee (PAC) on Monday, the Ofgem chief executive highlighted his concerns that the GDPR (general data protection regulation) rules are hampering efforts to share information with other utilities that could make it easier to spot vulnerable customers.

Suppliers require some form of consent from customers to share their information, Nolan said, with the picture having become “much more difficult” since the implementation of the tightened up GDPR regime last year.

“Data protection makes these issues very difficult,” Nolan told the committee.

“We are finding it hugely difficult under the new data protection rules.”

As an example, he said Ofgem has “no legal basis” to share information about vulnerable customers on the priority services register.

Nolan said the government’s energy data taskforce is due to report within weeks.

The Ofgem chief also gave the PAC an update on the regulator’s work preparing for the lifting of the price cap on standard variable tariff bills, which is due to happen in 2023 at the latest.

He said that work on the removal of the price cap is the “absolute priority” for Ofgem over the next two to three years.

Price caps are “not perfect”, he said: “They tend to have quite positive short run effects but in the long run can be gamed and of limited effectiveness.”

But vulnerable customers are likely to require some form of protection from the market even once the broader price cap has been phased out.

“For vulnerable customers in energy, given the nature of the service, there will need to be some form of significant long run intervention” he said, adding this could either be a continued price cap or a switching service.

Nolan said Ofgem is obliged to report on the effectiveness of the price cap within the next 18 months. It is also due to unveil its proposals for replacing the price cap within the next 12 to 24 months with the first indications due to be published later this year.

But he said that the government must set out a framework for the industry.

“If the price cap to be removed, we will require a precise set of conditions for how the energy market is working.”

And Nolan identified the biggest upcoming challenge facing the regulator is managing the process of decarbonisation.

He highlighted the issue of rolling out electric vehicles (EV) charging points, which could saddle poorer customers, who were less likely to purchase the expensive new vehicles, with higher energy costs.