Regulations must be reformed to pave the way for an energy market that is led by consumers and driven by data, Laura Sandys has urged.
The former MP has called for a complete overhaul of the existing framework, which she says has been built around the ways and needs of industry incumbents.
“We now have to look again at consumer regulation in its entirety and start regulating as consumers consume, not how businesses are organised,” she argued.
Speaking at the parliamentary launch of the ‘Reshaping Regulation’ report, which she co-authored, Sandys told the audience that, like an “Englishman abroad”, the sector has spent years trying to “shout at the consumer” and force them to engage with energy.
“We should realise that the louder we shout, the more the consumer is turned off,” she said.
“But what does the future look like?”, she asked. “It doesn’t look like the sort of structure that we’ve seen in the past… It is all about understanding consumers in a totally different way.”
Sandys said the complex web of institutions, regulations, business practices and industry codes that market participants currently have to navigate their way through, must be revamped to enable new entrants to deliver the kinds of tailored, hassle-free services that many consumers want. At the moment, they are forced to conform to the old ways of doing things.
She said the energy industry should stop trying to find a “silver bullet” that works for all consumers and instead develop personalised solutions to fit their individual desires.
“Every time you come up with a new business model in the sector, people say, ‘well that wouldn’t work for Mrs Miggins or it wouldn’t work for that young student’.
“No, because we’re in a dispersed system where there are going to be lots of products and lots of services that are weirdly designed around people,” she added sarcastically.
Sandys, who is the chief executive of Challenging Ideas, recalled how one major supplier had told her its offerings were based on just six consumer archetypes, adding that Amazon by comparison has around 150,000 different profiles.
“These new players will change the sector, whether we like it or not,” she added. “What we need to do is make sure our regulatory framework is actually shaping that and preventing abuses before they happen.”
Sandys said data will become increasingly valuable – not only for personalisation but also for optimisation – acting almost like a “currency”.
She said regulating the capture, ownership and use of this data will be the “big issue” for consumer protection.