Speaking at Cornwall Energy’s ‘Are retail markets in crisis?’ conference, Marchant did admit the number of tariffs available did need reducing, but warned under the proposals put forward by Ofgem in the Retail Market Review (RMR), “simplification has won over innovation”.
He added: “Four tariffs might be the right answer today, but it might not in the future.
“The cap will prevent innovation; it will prevent customers reaping the benefits of smart meters. Legislation must allow innovation to happen in the future. If not we are heading for disaster.”
Jonathan Smith, head of pricing and risk management at First Utility, shared Marchant’s fears over the potential for unintended consequences that RMR could have.
Smith said that the details of a cap needed to be “thrashed out”, before warning that a limit could prevent a number of time of use tariffs that could benefit customers coming to the market.
However, Audrey Gallacher, director of energy at Consumer Focus, believed that the tariff limit is a good first step and will help consumers re-engage with their energy supplier, while ensuring they get a better deal.
She told the audience: “RMR is unpopular and comes with risks but we support it. RMR is essential in helping less engaged customers.”