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Ofgem: Why energy regulation must focus on consumers

Pound coins on energy prices

At a Which? event, Ofgem’s chief Dermot Nolan outlined his vision for getting customers involved in the energy market. In this guest post, he explains more about this vision.

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.

Which? Conversation provides guest spots to external contributors. This is by Dermot Nolan, Chief Executive at Ofgem. All opinions expressed here are Dermot’s own, not necessarily those of Which?.

Dave P says:
28 December 2014

Dermot Nolan, CEO Ofgem has a duty and responsibility to challenge and take appropriate action against all energy suppliers regarding poor service standards including complaint handling and if he fails in his mandate then he in turn should be complained about to the Secretary of State of the Government of the day.

I completed a priority form when I changed to First Utility to ask for my gas meter to be placed higher as I couldn’t read it without having to lay on the floor. As you can guess nothing happened I left it then I wrote to customer services asking for this to be done, I received an email telling me to read such and such a page and it would give me the answer to my query, this happened a few time so in the end I told them if they didn’t do some thing to help me I would go to the Citizens Advice, again they did nothing so I did go to the CAB office, brilliant things got moving and a date was arranged I waited in, they sneaked a note to say that I wasn’t available and I would have to make another date each date was to be 10 days ahead, finally my Gas meter was placed where I could reach it by a very nice person from the National Grid. No thanks to First Utility though

Maureen, As I have said before and will continue to repeat for the benefit of the readership, First Utility are not fit to be dealing with the public. The short summary of our dreadful experience with FU that appeared on page 28 of the August Which? Magazine tells only a fraction of the whole story. I would recommend that you plan now to change supplier as soon as convenient avoiding the “big six”.

Phoned Scottish power numerous times to no avail,their site is very customer unfriendly,and does not work most of the time.I have tried to alter to a new tariff,unable to do will not let me.Also when contacted them,they said I was not a customer,kept bringing old account up which I had left 10 months previous.Have phoned numerous times,either not got through or,cut of or kept waiting 30 mins,avoid this company,ther must be many better.

Caroline Bowyer says:
4 January 2015

I once had on going unnecessary issues with N Power, things never added up and it was my time suffering on trying to get through always and I wasn’t even with them anymore (thought I was finally free of them, but no). I have a telephone that shows the length of time of the call, I took a photo on my iphone, as that gives the date and time I’ve attempted again to try and contact them. It got as far as 1 hour and 15 minutes without someone picking up, that was normal. My advice is to contact Trading Standards, they listen and are your life line if you are still not happy after they put you through to N Power…..oddly enough no having to wait. Log your attempts every time and the fact I had gone via Trading Standards with this N Power finally sorted everything out that day, even refunded me too. I forgot to mention the duration of this was over 1.5 years. If one thing I could not stand was going around in circles with N Power and having to repeat myself to different people over many occasions without anything getting resolved and taking up my time beyond the line of humanity, the organisation is appalling. Draw the line and call Trading Standards to help, these companies do resolve it when you do. Thanks to Which too who help.

Why when retail energy prices are the lowest they have been for 10 years are the energy companies getting away with NOT REDUCING they prices

I know the excuses that they brought the energy in advance to avoid price fluctuations during the year but the retail costs have been falling year on year while the energy companies have been increasing there prices

If it’s the case that they do buy in advance does that mean we will all be receiving lower energy bills for the next 10 YEARS

How can I compare rates easily when all of the tariffs vary in how they are charged. Some have a standing charge, some don’t. The two-tier pricing tariffs have different usage limits where the second lower tier kicks in. The suppliers should be made to standardise their tariffs. Also all suppliers should tell their customers if they are not on the cheapest tariff for their usage.

Dave2n. There is no two tier tariff any longer (although I think it was a good option).

My supplier emails me whenever cheaper deals come on the market – from competitors as well as themselves. More should do this.

Getting your best tariff is simple. Check your annual electricity and gas usage (£ or kWh) and put it into Which?Switch. Yoiu will get a list of what all companies will currently charge you, in ascending price order. It’s nearly as quick and easy as posting a conversation comment.

Have your say! If you want the opportunity to submit views to Ofgem try this invitation:


They have asked! Why not tell them.
I assume Which? will be contributing?

Ofgem publish, monthly, an SMI (Supply Market Indicator) that shows in an average domestic energy bill how an average major supplier’s charges are made up.

It is estimated that “environmental and social obligations” cost us £93 – or 7% of our bill. Perhaps these should be funded elsewhere.

More importantly it shows that the pre-tax margin the supplier makes has increased from 3.9% in 2013 to an estimated 6% last year and a predicted 9.6% this year – that is a 2 1/2 times increase in % margin. As it is an average clearly some will make more than this. That, to me, seems an overgenerous increase in return at our expense. Should not Ofgem be stepping in here to protect consumers?

Which? – perhaps you could quiz Ofgem and let us know their stance?


Alan says:
31 January 2015

I joined “First Utility” in October 2013 to later find that they don’t seem to routinely send out paper records of the calculations and charges made by monthly DD. I’d phone them if I could find a contact number in their emails which ask me to do the monthly meter readings (dual fuel) so that’s poor service. They don’t display their contact address either, so, annoying, inconvenient and disappointing.

Does anyone else lack paper records from FU ?

How do I contact them to demand/request this sort of service on a regular basis without further prompting?