Which? debate: Ofgem's Dermot Nolan on why energy regulation must focus on consumers
Agendas, minutes and presentations
Publication date
Industry sector
Supply and Retail Market
On 9 December 2014, our chief executive outlined his vision to get customers involved in the energy market at a Which? debate on the future of energy regulation. Below you can read more on the vision and download our presentation pack from the event.
"People aren’t happy with the energy market. I know this. I also know we need to see suppliers transforming the way they treat consumers if we are to see trust rebuilt. That’s why our main goal now and in the future is to serve consumers and listen to them when they tell us what they want.
So this is why we listen to consumer organisations like Which? and Citizens Advice, and those helping vulnerable people, like Age UK. We also work with the energy industry, but above all, we want to listen to energy customers both householders and businesses.
Energy prices have risen considerably. Energy complaint numbers have also risen and trust in energy companies has fallen. Our analysis also shows that competition does not seem to be working as well as it could be for consumers and this is why we’ve referred the market to the Competition and Markets Authority (CMA).
The primary goal of the investigation is to see if there are any barriers that prevent competition from bearing down as hard as possible on prices. Also many of the problems in competition are rooted in lack of consumer trust and were clear when Which? recently captured the views of consumers on video.
What a good energy market looks like
To understand the market, we must first understand the experience of energy customers and the way they interact with energy products. And we must use this understanding to determine how and when we need to intervene. This insight will set our strategic priorities as we look to improve the energy market.
So what does a ‘good’ energy market look like? To start with, energy companies will need to raise their minimum standards and treat their customers fairly. Senior managers at energy companies need to be accountable for consumer engagement. We need switching rates and trust in energy companies to increase, and complaints about suppliers to fall. When the energy suppliers want to introduce innovative new products, they must do so fairly and manage the cost to those footing the bill.
How we’ll get there
To get there, we need better information for customers: simpler and clearer bills, and easier switching and this is what our recent reforms to the energy market have set out to deliver. We also need better complaints handling. We’ll hold energy suppliers to account if they let down consumers by poor complaint handling and we already have investigations into Npower and Scottish Power. Most importantly, we need better customer service with Standards of Conduct for all suppliers, and enforcement action if they fail. This is no idle threat as we have imposed penalties of over £50 million over the last four weeks against energy firms who have failed to deliver energy efficiency measures for some of Britain’s most vulnerable households.
To achieve these goals we’ve set to work in a number of areas aimed at helping consumers. We want to work with price comparison websites who have signed up to our confidence code to ensure that the way they present information is clear and easy for consumers to use. We worked with Government on a recent mail out to eight million recipients of winter fuel payments to remind them of their switching options as part of our Be An Energy Shopper campaign.
Improving customer service
We have also acted on customer service issues – we’ve ensured energy suppliers have committed to paying back balances left behind by consumers when they have closed accounts. And suppliers have recently launched the My Energy Credit campaign to help reunite consumers with their cash.
Alongside the CMA’s investigation into competition, we’re also looking to the future of the energy market. We believe smart meters will assist consumer switching and empowerment and we want innovation to be in the consumer’s interest. We’re committed to trialling products, measuring results, and disseminating successes more widely.
But in the meantime, I want to ensure that everything Ofgem does is informed by consumers as our primary duty is to protect their interests in the energy market."
This content recently featured as a guest post on the Which? Conversation blog.