Energy bills are 'unfair to some' - Ofgem

Former_MSE_Archna

14 October 08

What's this about?

Since February 2008 Ofgem (the independant regulator for gas and electricity) has been conducting a probe into the markets and has just released the results.

You can read the full Initial Findings Report but here is a quick summary of the main actions proposed.

The aim of the probe

The main aim is to look at competition within the domestic and small to medium businesses market. Wholesale energy markets were also considered but not in great depth. Here's a bit more on what was covered:

• The customer's experience and perspective of switching
• Suplier's market shares and switching rates for different groups (such as online, dual fuel and prepayment customers).
• The competitiveness of suppliers' pricing.
• The relationship between retail and wholesale prices.
• The economics of new companies entering the energy markets.

What Ofgem has said should happen

Suppliers should implement the following:

• Clearer information on customer bills
• An annual statement to customers which includes your tariff, any premiums you are paying for example for different payment types or relative to the average.
• An annual prompt to customers on how to switch suppliers.

Ofgem to follow up on:

• A programme to promote confidence in price switching sites and to extend their scope, especially to enable prepayment switching.
• Ofgem will consider if it's possible to make the switching process even easier.
• Ofgem will look again at debt blocking - not being able to switch supplier if you are in arrears with your bills.
• A sustained customer awareness programme to explain the switching process and the benefits of switching.
• Easier to understand price tariffs
• Rules governing suppliers marketing and sales procedures will be strengthened
• An efficient roll out of smart meters.
• A new licence requirement on suppliers which means any differences in charges for different payment methods must be cost reflective.

Martin and I met with Ofgem a few months ago as part of the probe (read Martin's blog 'Ofgem, the regulator is listening' on it). It's nice to know it has listened to some if not all of our feedback!

If you want to reply to Ofgem about the probe, it's open for reposnses until 1 December.

Click reply to discuss.

P.S. Thanks to Premier for first posting this.

[threadbanner]box[/threadbanner]

Premier_2

The energy regulator Ofgem has told companies to stop charging customers different rates if they pay by direct debit or pre-payment meters.

It added it was unfair that 4.3 million customers with no gas supply could not get the best deals on electricity....

"Ofgem's proposals to improve the market are welcome, particularly if these lead to the banning of price differences for pre-payment customers and those that pay by cash or cheque," said Gordon Lishman, director general of Age Concern...

http://news.bbc.co.uk/1/hi/business/7654002.stm

Cardew

A 15 page summary of the Ofgem report is http://www.ofgem.gov.uk/Pages/MoreInformation.aspx?docid=5&refer=Markets/RetMkts/ensuppro


and the full version http://www.ofgem.gov.uk/Pages/MoreInformation.aspx?docid=4&refer=Markets/RetMkts/ensuppro

It won't please many readers of this forum, but by and large the Utility companies come out of this investigation very well, no cartel, true competition etc.

Standby for full frontal attacks on Ofgem!

olly300

Interesting.

Ofgem wants people to become more actively engaged in the market by switching more often.

Cardew

The problem with a 210 page report there is the ability for anyone to 'cherry-pick' any nugget of information they feel will further their side of the argument.

The concentration of media cover has been on the pre-pay customers and electricity only customers paying over the odds.

However justified those complaints might be, if those issues are addressed by the Utility companies the result will be higher prices for the rest of the customers - Robbing Peter to pay Paul!!

Gareth56

Can anyone tell me what is the point of OFGEM? As far as I can see they are totally impotent as far as protecting the consumer from the energy companies that appear to have some kind of cartel going on with respect to prices. Pathetic and toothless is how they (OFGEM) were described on Radio 5Live one morning, I tend to agree.

Cardew

Gareth56 wrote: »

Can anyone tell me what is the point of OFGEM? As far as I can see they are totally impotent as far as protecting the consumer from the energy companies that appear to have some kind of cartel going on with respect to prices. Pathetic and toothless is how they (OFGEM) were described on Radio 5Live one morning, I tend to agree.

If you read Ofgem's report they are quite specific about their being no cartel:

1.16. Although we have received no evidence, concerns that there is a cartel operating amongst the Big 6 suppliers have been raised. We have examined this issue carefully and are satisfied the suppliers’ key pricing decisions are made independently and without unlawful agreements or information exchange between suppliers, although suppliers do consider the pricing policies of their competitors and possible reactions to price changes in reaching these decisions. This is a feature of a competitive market which we would expect to see.

The recent Parliamentary Committee on Energy reached the same conclusion in their preliminary report; and whatever you might say about Ofgem being toothless, that Committee ain't!!! They are carnivores.

The media want a 'sexy' story about the Utility companies ripping us off, and because Ofgem do not agree, they shoot the messenger.

The fact is that in percentage terms the Utility companies' profits are modest compared with many major UK companies Tesco etc. Even BG/Centrica's profits are measured in £tens pa for each customer; and non-profit making suppliers like Ebico are no cheaper.

As I said in Post#2 - "Standby for full frontal attacks on Ofgem."

Gareth56

Cardew wrote: »

If you read Ofgem's report they are quite specific about their being no cartel:

They would say that wouldn't they; you'll forgive me if I take whatever they say with a cellar of salt

It's almost as bad as when Energywatch told me that "Rules were meant to be broken" when it came to the energy companies not adhering to their own T&Cs

1carminestocky

I'm assuming there was no mention of the wholly discredited practice of replacing the online tariff with a shiny, new and cheaper tariff whilst not actually telling their loyal customers about the new tariff, let alone automatically transferring them?

Ofgem =

Cardew

Gareth56 wrote: »

They would say that wouldn't they; you'll forgive me if I take whatever they say with a cellar of salt

Can we be serious for a moment.

Ofgem have investigated and say there isn't a cartel.

The Parliamentary Committee investigated and say there isn't a cartel.

A cartel is illegal and people risk jail if they are discovered.

Yet you are convinced there is a cartel.

As a matter of interest, what would it take to convince you that you might be wrong?

Or are you unhappy at the prices you are paying and want to blame someone, and it might as well be the Utility companies and Ofgem?

Gareth56

Cardew wrote: »

Can we be serious for a moment.

Ofgem have investigated and say there isn't a cartel.

The Parliamentary Committee investigated and say there isn't a cartel.

A cartel is illegal and people risk jail if they are discovered.

Yet you are convinced there is a cartel.

As a matter of interest, what would it take to convince you that you might be wrong?

Or are you unhappy at the prices you are paying and want to blame someone, and it might as well be the Utility companies and Ofgem?

Calm yourself down

It's not only me that thinks OFGEM are as useful as a chocolate fire guard when it comes to protecting the interests of energy consumers there are far far better informed people than me (and dare I say it even YOU!!!) who also belive OFGEM are pathetic and toothless.

Now go and take a pill and lie down


And by the way I didn't say I was 'convinced" there was a cartel, I said "they appear to have some kind of cartel going on with respect to prices" .

Get your facts straight next time