Doing nothing costs you money. The Competition and Markets Authority (CMA) discovered this, as part of its investigation into the energy market: it’s not working for all energy consumers.
This is because the people who stick with the same energy tariff year after year typically end up paying more than those who switch – collectively, £1.4bn per year more, according to the CMA.
The CMA decided that one way to fix this was to create a service for those who have been on an expensive ‘standard variable’ tariff - a supplier’s basic energy offer - for over three years. If that’s you, then through the service you’ll get personalised energy offers straight to your door or perhaps digitally through an online service, so you won’t have to search for them. You can then choose to switch to a cheaper tariff than your current one, if you want to.
Here we explain the service, how we’ll test it and how customer data will be kept secure.
About the service
To help consumers on more expensive standard energy tariffs, the CMA recommended that we:
- develop and operate a secure database of information of consumers who have been on a standard variable tariff with the same supplier for three years or more. The database will contain, for example, information about these consumers’ energy tariffs and annual energy use. This is needed to calculate cheaper tariff offers.
- test how the service works so we can address any potential running problems and ensure customer data is secure.
- monitor the impact of the service on improving engagement in the market.
In addition, the CMA recommended that we establish an ongoing work programme to identify, test and implement measures to give consumers information that will further encourage engagement in the market.
Opting out will be simple and you’ll be able to do it at any time. If you have been on a standard variable tariff with the same supplier for three years or more, you will be asked if you want to opt out of being on the service database. Your supplier will contact you, to tell you about the database service, how your data will be used, and the process for opting out (such as by email, telephone or post).
Testing and trials
We don’t want to launch a service to millions of customers without having tested it first. So we’re piloting different formats first to test what approach is most effective. We’ll make a decision on next steps after the digital service trial, including the format of the service and if we will roll it out more broadly.
In January 2017, we carried out a small trial with suppliers contacting customers with better tariff offers by post. This proved successful.
However, our user research suggests a digital service might better meet consumer needs. A digital service would allow you to find and switch to cheaper deals, without needing to remember complex information, at a convenient time like on your commute to work. The digital service we are testing is called ‘Check Your Energy Deal’.
The 'Check Your Energy Deal’ trial will test the effectiveness of a ‘digital service’ format.
We will run our digital service trial in Northampton over a couple of months. This pilot won’t be open to everyone in Northampton – only those with who have been on a standard variable tariff for three years or more with our partner supplier. We estimate the target population to be 10,000 customers.
Your consumption and tariff information would be pre-entered for you with a digital service. All you would need to do is confirm your postcode, address and the name of your current supplier to see if you’re on an expensive deal.
This digital design would also mean we don’t share your data with any energy suppliers. If you wanted to, you could also choose share limited information held by us with a price comparison website through the service. They could then help you shop around further.
We know that there will be vulnerable consumers included in this service and as we develop the project we will ensure that their specific needs are met in the service design.
We will be working with organisations that can provide ‘assisted digital’ support to customers who need help accessing the service.
We outlined that we would prioritise trialling the service with domestic consumers in our CMA implementation plan. This will continue to be our focus for the remainder of the trials this year. We will provide more details relevant to microbusinesses after that.
The database will only store data that is needed to provide you with an offer personal to you if have been on a standard variable tariff for three years or more. This will include your address, meter number, current supplier, meter type, annual energy consumption and your current tariff name. If you are on a restricted meter, further information may be needed about how much energy you use in different time periods.
Protecting your data is crucial to us and we take this very seriously. We are ensuring all data protection and privacy legislation requirements are met though our service design, and are adopting publicly-recognised standards for data security.
We’ll also work closely with consumer groups such as Which? and Citizens Advice to ensure we maintain the very highest consumer data protection standards.