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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?.

Comments

There used to be free phone numbers for eon and British gas now we pay and wait .

Connie Harman says:
16 December 2014

Yesterday I spent 20 minutes on hold with e.on at the number they suggested. I complained, but don’t think that it was considered. It does make one angry.

H Rafferty says:
16 December 2014

Have had no problems with OVO customer service ,change from the big six and get a better deal all round.

A Hayden says:
16 December 2014

Fed up with waiting and paying for the inconvenience

I don’t set a budget at Christmas because I’m one of the fortunate who don’t need to. So I and my wife give according to what we can easily afford which of course must be very difficult for so many others.

As for our energy bills, I joined EBICO and have not had any reason to regret that move, even though they get supplied by SSE.
However I was disgusted with the service I used to get before directly from SSE, EDF & Brit Gas & Elec.
I think the ‘Watch Dog’ is either a very soft touch or more likely to be in the pockets of the big six. As they have certainly never been a friend of consumers. — RV

E mails are even worse. First Utility contacted me today in response to my last plea to them sent in October!

Denis says:
16 December 2014

Hi, I have contacted today EDF in regard to switching from my Blue +Prime Promise April 2016 tariff. I have asked if EDF Standard Variable tariff is lower, but have received a negative answer. I have asked about transparency and fairness of their standard variable tariff and when was the last time their standard variable tariff was changed. I was told that tariffs were changed in december 2013 which is a year ago since then when oil prices were 120 dollars a barrel they now have plummeted to less than 60 dollars. I question fairness , transparency and definition of word “variable” which is misleading termin and does not reflect changing variability of the pricing during the whole year with this particular energy provider. I urge you to investigate why standard variable tariffs dont change in line with spot prices of gas and electricity in the open market and dont benefit customers staying on those tariffs which show they effictively they work as “fixed” tariffs if their last price review was in december 2013.

Thank you

Best regards

It is such a shame that First Utility’s customer service does match their good energy prices. The excuse is always that they have attracted more customers than they budgeted for.Months after they had raised my monthly direct debit Against my emailed wishes I finally got it back to the agreed level and was able to obtain a refund of the hundreds of excess pounds in my account.

Trisha says:
16 December 2014

I changed to FirstUtility in May: they fixed my monthly DD payment at a high level and within two months I had a large credit of well over £200. I have been asking them to refund this to me: the first person I spoke to told me it would cover higher payments over the winter, and was quite bad tempered over my asking for a refund. I said I would like the money in my own bank account rather than theirs, and I would pay whatever the DD was at the end of each month, as arranged. I rang again a few weeks ago and insisted on having this large credit refunded. No refund has appeared, although it was promised by early November, despite having sent reminding them.

How much you pay each month by direct debit is irrelevant, many firms offer lower monthly payments. I’ve seen this many times and then they just ask for more money much later on to meet bills. They call it an “adjustment”. How much you pay the utility for the standing charge AND pence per unit is what really matters. It’s like only ever putting £30 of petrol in you car without looking at the pence per litre price.

I have today received a Letter Of Apology from Scottish Power apologising unreservedly for “poor service issues that some customers have experienced following the implementation of a new IT system. We know you are one of these customers and that you have contacted us a number of times recently.” They also state that voluntary improvement targets have been agreed with Ofgem and you can track their progress at http://www.scottishpower.co.uk/targets.

As previously posted I have recently received a much awaited refund from SP after much hassle and persuasion over two ‘phone calls. I am encouraged to receive feedback from Ofgem and to see they are at last working to restore competition in the energy market and look forward to receiving the findings of the CMA in the New Year.

Hi Beryl, I’ve pinged you an email to see if you can help us. Would be great to talk to you today. Thanks

dianna says:
16 December 2014

Let’s go back to the phones being engaged not putting you on hold. They are always busy whenever you ring. Clocking up money from you while you wait and listen to music. You are frightened to ring off cos you know you have to start all over again.

Chris Colborne says:
16 December 2014

Had to wait a while for phone to be picked up.(EDF)

When I got through to discuss money saving (following a letter from them) Spoke with a nice lady but the whole process went on for ages!

Any fines issued showed be at a level to hurt shareholders and machinery put in place to ensure said fines are not simply passed on to the consumer as they assuredley are at present.

When i last rang Npower i agreed to have a callback from them because the waiting time was 16 minuets they are nor performimg as well as people and Which think they are, and i am finding it difficult to understand thier customer service agents thier accents are so broad a simple request to ask them to reverse a bill because the system issued it after i asked a customer service agent not to issue a bill was an ordeal which i gave up on after 10 minuets on the phone with someone i found hard to understand

Brian P says:
16 December 2014

I was with Eon from 1964 till 2014 and in May I changed over to Ecotricity which is a British company that does not have any shareholders,and all the profit he makes he puts into new wind turbines.I had to ring up once about something at which I cannot remember what for and the phone rang twice only and I had a lovely helpful lady on the line.I send them meter readings every three months, and I cannot fault them.I even received an E-mail two days ago wishing me a happy Christmas.I am fed up with the big six and all this fantasy about changing between them and saving up to £200 is just not credible.As it happens I am paying £5 a month more with Ecotricity but I know I am doing something good for the planet.

Linda Munoz says:
16 December 2014

I had been an N Power customer and for some reason First Utility hijacked my account – I knew nothing about this until NPower said that they were sorry to see me go – I emailed back and said this was a mistake (at this point I didnt know who I had gone to???) they then came back and said First Utility said it was no mistake and sorry it was out of their hands and then quite suddenly I had a Debt Collection company chasing for payment and threatening to take items from my house if I didnt pay. I took a lot of time trying to get through to First Utility and finally they admitted although they had my name and address the email address and bank details were not mine – they would sent this back to NPower then after I thought it was sorted it happened again – Debt collection etc etc – they have never apologised never explained anything and Im still not confident that this isnt going to flair up again as Im still waiting on NPower to sort this out this is going back to last November – Im a widow with a child on a limited budget so the distress and sleepless nights – it is a disgrace that this can happen – these companies need to be regulated and companies should be more helpful and again as previous customers stated 45 mins waiting to get on to first Utility was quite normal.

Hi Linda, We had a very bad experience with First Utility including threats of inappropriate court action and debt collection when they owed us money. The complex mess that they created was only resolved with the help of the Ombudsman ( energy).They are a disgraceful company who are not fit to be trading with the public. You should contact the ombudsman without delay. The telephone number is 0330 440 1624. It will take time to resolve but you will win.

Brian Rye says:
16 December 2014

From my experience one can get through to Npower reasonably quickly and free as they have an 0800 number, the problem is that once you’ve got through, getting them to carry out a simple action is what causes the delay -and customer frustration. I was in credit over £200, I asked for a refund and had to telephone 3 times over a 14 day period to get the refund, it to 19 days!

When I need to contact a business and am left hanging on for more than a couple of minutes, I hang up and call their sales line which gets answered quickly then ask to be transferred. Most put you through straight away.

Bill Quinlan says:
16 December 2014

Let’s have 0800 helpline numbers made mandatory. Then see how quickly they’re answered! At about the same speed as the sales calls I’d reckon.

bill evans says:
16 December 2014

I have been trying for 2 days to talk to someone at Scottish Power about a complaint I raised last week concerning a refund due to me after switching suppliers I have given up on each occasion after 20 minutes and although I know its a free number I still think this is not good enough and they need a hefty kick up the backside

Warren Hearnden says:
16 December 2014

Re-nationalise the whole bloody lot of them…..

The sooner the better