Is cutting red tape the first step in an energy revolution?
This week it was announced that smaller energy suppliers can cut some of the red tape and will be exempt from two government programmes. At First Utility, we’re glad the market’s finally being shaken up.
Ever since privatisation, there have been frequent calls from consumers and industry bodies for greater competition in the energy market.
I’ve been lobbying with First Utility for several years to encourage changes that will enable greater competition and innovation within this sector. So, earlier this week, it was very positive to hear that we may indeed be moving closer to the change that’s so desperately needed.
Time for a more competitive market
On Monday, the government department for Energy and Climate Change (DECC) announced that it would remove an obstacle to growth that we (along with several other energy firms) have been campaigning on for some time now.
It means that, from next year, energy companies with fewer than 250,000 customers will be exempt from two costly government programmes – The Carbon Emissions Reduction Target (CERT) and the Community Energy Saving Programme (CESP).
Previously, suppliers with as few as 50,000 customers were obliged to participate in these schemes, placing a huge (and disproportionate) burden on small suppliers, effectively acting as a barrier to market entry and reducing incentives to grow.
In turn, this contributes to a less competitive energy market for consumers, as innovative new suppliers were presented with unrealistic market conditions in which to challenge the ‘Big Six’ companies.
An energy revolution?
Yesterday’s announcement is a significant milestone, and it’s encouraging to see that DECC has listened to the concerns and proposals of new entrants such as ourselves. New suppliers are key to shaking up the UK’s energy market and often provide customers with significant value-added services (in our case, a free smart meter for all customers) to differentiate themselves within the market.
Such services are driving much-needed innovation and empowering people to adapt their behaviour and reduce their long-term energy consumption, regardless of the unpredictable nature of wholesale energy costs.
Some major issues still remain within the energy sector that need to be resolved to allow the type of success that privatisation brought to the telecoms sector. Not least of these is the urgent need to clarify the full details of the wider UK smart meter roll-out. But for the time being, this week’s announcement is a welcome step in the right direction.
What do you think of these changes – do you agree that they will shake up the energy market? Should smaller energy companies have even more red tape removed to allow them to offer more competitive packages to customers?
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