In 2008 we launched the Energy Supply Probe. This was an investigation into the electricity and gas supply markets for households and small businesses.
The Probe found that although the market was working well in important respects - there was no evidence of a cartel, and retail price rises could be justified by wholesale costs - there were a range of features in the market that weakened competition. The result was that the market was not working in the best interests of consumers.
These included structural features, reinforced by the behaviour of suppliers and the lack of engagement and poor decision making by consumers.
Following an extensive consultation process, we developed a package of measures to improve the functioning of the market.
The first part of this package addressed concerns over unjustified price differentials through two new licence conditions for domestic suppliers, which came into effect on 1 September, 2009. These conditions:
- required any difference in the terms and conditions offered by suppliers in respect of different payment methods to be cost reflective
- prohibited undue discrimination in any terms and conditions offered to consumers.
The second part of the package promoted competition and consumer engagement and included obligations on suppliers to:
- improve the information they provide to customers on bills and in an annual statement
- help vulnerable and indebted customers who are currently blocked from changing suppliers due to outstanding debts
- improve the conduct of their sales and marketing activities
- help small business customers by providing them with better information regarding the terms and conditions of their contracts
- improve the transparency of their supply and generation activities.
These measures became part of suppliers’ licences in October 2009, and were implemented between October 2009 and July 2010.