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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
Debbie Short says:
17 December 2014

We had our boiler serviced on contract by a British Gas engineer, he had to contact British Gas as part of the service and was kept waiting for nearly 45 minutes to get an answer! Now if he had trouble getting through?????? What are a customer’s chances of being able to contact them?

Frank McConaghy says:
17 December 2014

It really is a bit rich for Ofgen to tell us what the energy market should look like!!. They are the body that the government at the time of privatisation promised us would look after the customers interests!. Its no good Ofgen telling us they are doing everything they can they are useless and not fit for purpose. They are like a little kitten purring instead of a great lion roaring.

Carol Whittaker says:
17 December 2014

Emails sent to Scottish Power regarding changing to a different supplier which Scottish Power acknowledged. Changed supplier and Scottish Power continued to take money from account via direct debit. I have sent two emails to the official complaints address stipulated on web site and have automated response to both but no further communication from them.

Rang the help number specified for customer complaints and after 46 minutes the phone was answered and I was informed that I had been directed to the wrong department and I was transferred to the correct department. After a further 44 minutes the phone was answered by yet another incorrect department, this was due to the customer complaints being very busy. I spent a total of 1 hour 29 minutes and 42 seconds waiting the phone to be answered. Eventually I was speaking to someone and between that person checking with a supervisor regarding extra advice I was on the phone for 8 minutes 17 seconds.

Do Scottish Power think that we all have the time to wait on the phone for this amount of time or are they hoping you will eventually put the phone down?

There has been no apology or formal response to two emails sent to complain and without a reference number the case cannot be taken to the ombudsman.

The name “Customer Service” is an absolute joke. This company do not understand the meaning of customer service and should therefore rename this department “Frustrated Customer helpline”

S.RowIings says:
17 December 2014

All energy companies appear to struggle to provide effective customer service based on my experience whilst chasing the ‘best deal’. I’m currently with NPower x 13 months who must be close to being the worst, following 7 Emails, 3 conversation, 2 specific complaints, I have no agreed bill for the first 12 months, the balance on the account is incorrect and they seem unable to rectify despite consistent readings, they appear to have fundamental challenges.

Robert says:
17 December 2014

Four of the big six have been implementing new back office systems that handle billing, customer account data and call centers. In most cases when the systems are switched on there have been significant issues. The good news is the new systems should be able to offer better and more joined up service in the future – but only if customers keep the companies on their toes.

JamyHampshire says:
17 December 2014

I have an online account with Scottish Power which allows access to all the info I require and alter my account settings. To date I have not had an issue after being with them for 4 years. On the odd occasion I contacted them I have used email and got a prompt reply.

I am glad OFGEM seem tobe wrestling with the problem. A lot of this mess is not only caused by the way the power industry is structired but also by the takeovers etc leading to different systems within firms. Splitting any organisation into profit centres like British Gas fitters and the supply side leads to not a seamless service but a dysfunctional mess as each division tries to make it’s divisional financial or service targets.

I am for standing charges as they reflect the cost of the all the pipes and infrastructure to get the electric, gas or phoneline to a property. Thise with summer cottages or second homes would no doubt love the benefit of paying by the unit as they will reap considerable benefit.

Adding a fictional cost to a unit to cover the infrastructure will then bear down on those who live in poor housing , or for age reasons need to keep warm, and use more units than the couple who are out at work all day.

If there is deemed a national interest to take infrastructure costs and make them more even that can be done. The costs were published around 3 months ago and unsurprsingly areas of the country with high numbers of properties per square mile paid less than regions with low density.

In any event properties left empty, or are connected to gas and electric but only use one, and properties that are second homes , all need to pay a tarfii for the facility of connection. Replacing pipes and substations is to their benefit also.

Derek Green says:
17 December 2014

I have not had to call SSE too many times but there is always a bit of a wait and I hear the music tape a few times whilst waiting

Why does it take such a long time for any action to be taken by the respective Government Bodies that have some control over these Energy Companies. Once issues such as these have been raised and brought into the public domain they should be rectified very quickly. I have found myself, when I belonged to FirstUtility, hanging on the telephone for 35 minutes before I could speak to someone. When I complained I was told they were understaffed. There is simple solution to this problem which is to hire more staff.
Do all companies not have to satisfy basic requirements before they are permitted to ‘trade’, irrespective of whether they are Utility Companies or in any other line of business?

chrissie says:
17 December 2014

Every time I have a problem with my Electricity account, I try to phone, I have never had the phone answered under 28 minutes, and then I sometimes I get a person on the other end who actually knows what he’s doing as well! as it is their mistakes in the first I get very frustrated when they do not even understand accounts, especially as I have had to wait half an hour for them to actually answer, N.Power needs to wise up to the fact that people do not like to have to wait so long before the phone is answered.

Thank you for all the comments you’ve shared so far. A number of you have raised concerns over the costly phone numbers some energy companies advertise to call their customer service lines.

This link on our Which? Switch site provides the phone numbers for all energy companies, most of which are 0800 numbers: http://switch.which.co.uk/faq/energy-suppliers.html

If you click on the ‘How can I contact energy companies directly?’ link the full list will appear. We will also be speaking to our energy team to encourage energy companies to advertise the cheapest possible phone numbers for customers to contact.

Dora Marchment says:
17 December 2014

It isn’t just the length of time companies take to answer it can be the cost involved. Some companies don’t answer quickly as they are making money from you all the time you are connected.

David ross says:
17 December 2014

Why is it if you press the button for thinking of leaving your call is answered but if it’s a query oh we are busy but your call is important please hold I right

Alexander says:
17 December 2014

Energy treat existing customers with contempt by prioritising sales enquiries calls. Customer service lines are often expensive and the hold times totally unacceptable. Automated answering services are infuriating.
There is no reason why a customer can get straight through to a real person based in this country as the First Direct Bank ALWAYS does: that’s one reason why they consistently top the bank service polls

Ken Snaith says:
17 December 2014

Having retired after 40+ years in the electricity supply industry it is so disappointing to see what privitisation has done to the industry. This is not some “old dinosaur” view but one based on good industry experience. Whilst nationalised it was not perfect but it worked much better that today because the generation and usage needs were co-ordinated by predicting load growth 5 and 10 years ahead. This enabled new power stations too be planned (often a 10yr project to bring to fruition) and placed in the existing grid and local supply networks i.e. at the point of need but also with strong interconnections to other parts of the network to ensure continuity of supply.
Since those times we have gone through the “dash for gas” generation where small capacity generating stations could be planned and installed comparatively easy and lately the hugely subsidized wind generation farms, the offshore kind of which will have a very short operating life due to the environment most will have to operate in. We are now hearing dire warnings of shortage of generating capacity as there has been no incentive for companies to build/operate base load stations without huge subsidies/cost offsets by the government, as instanced by the recent french company bid to build nuclear stations. All this is in addition to companies being paid not to generate, known as restrained off! Ofgem must get to grip with the industry and work for the consumer and not be so swayed by the companies.

Robert says:
17 December 2014

Public ownership has its merits but I’m not sure the track record of the CEGB is as good as implied. For example the attempt to build 8 nuclear powers to a design unique to the UK (advanced gas cooled reactors – http://en.wikipedia.org/wiki/Advanced_gas-cooled_reactor). The first Dungeness B was ordered in 1965 with an expected commissioning of 1970 but finally came online in 1983. I don’t have the data but speaking to the engineers, its poor operational reliability issues have been best managed under EdF’s current ownership. It was also under private ownership and EU rules that coal power stations (apart from Drax) finally had proper kit fitted to clean up the sulfur emissions that cause acid rain.

Also the way the networks are regulated mean cost control is much more tightly managed. Since privatization, investment programmes have been delivered almost entirely on time and often under budget (consumers get to share the benefits of this, by the way). I’d love to think the same could happen with High Speed 2.

martin chaplin says:
17 December 2014

I am absolutely disgusted with scottish power. I switched to brit gas on 7th Aug 2014 resulting from a Dudley big energy auction switch. I was several hundreds of pounds in credit for the Scot Power dual fuel account. After several calls & emails they closed my gas account and made a cheque rebate. 4 months later they have closed my electric account but failed to return £64 owing. They have failed to answer my phone calls and failed to action recent emails for the £64 return. They are totally unprofessional and need to go on a customer satisfaction course from the directors down. Better still shut them down.
In late 2013 they modified their billing internet software. This also went off the rails because it hadn’t been tried and tested. It caused me considerable frustration because I failed to know or understand what was going on at their end. when I phoned to find out why I wasn’t getting meter reading prompts their representatives verbally covered up & failed to admit the problems.

F.G.Evans says:
17 December 2014

tried to contact E-On 5 times to no avail gave up after about 20 minutes each call, appears that Eon have enough telephone lines but not enough people to answer them or enough people prepared to answer them

I haven’t had much problems having to get through to British Gas whenever I’ve had to call but I’d like to comment on the salesperson that badger people on the high street and ask which utility company you’re with and ask if you’d like to switch companies. These people get a commission they aren’t standing with a tablet in their hands in freezing cold weather to do us all a favour. I did switch supplier before and once you do this your new supplier will raise their prices. I think the big four need more competition in the market as they put prices up each year and never pass the saving on to the customer and there is a lot of fuel poverty out there amongst people on very low incomes I don’t just mean the pensioners but people with young families and need to keep the home warm when the temperature dips. I object to this green tax too as I live near a farm which has a wind turbine some days that isn’t switched on and he gets the benefit from us the utility customer as we’re paying for this. Most times these monsters need to be repaired in exposed areas with high winds and the turbines aren’t made here they are made in Europe and transported here by our road and rail links. The gripe about phone calls or kept on hold is the tip of the iceberg we have to have a fairer system and we get taxed to the hilt as we want to keep our homes warm but these utility companies are too busy paying the bosses behind a desk in a lovely warm office and we are the ones who are struggling to pay. When Mrs Thatcher privatised the companies in the eighties this was the step of midas getting richer and the poor in our society being worse off. It’s time we had a fairer system as the fat cats of the land have had it too good for too long.

Martin Gem says:
17 December 2014

As someone who is hard of hearing I not infrequently find that having waited to get through to a human I find that I cannot understand the hear the person because of a soft voice and/or an unfamiliar accent. I find this very frustrating.

Jenny says:
17 December 2014

I used to be with EDF and later npower, both of whom had an awful customer service and endless waiting times on hold. I switched to ecotricity a few years back. They certainly have the best customer service I ever experienced and I have been very satisfied with all my dealings with the support team. I can 100% recommend them.

I was with npower. Customer service – atrocious! 30mins plus hanging on and then someone with an accent I just could not understand! I’m now with OVO. no more than 5 mins to answer
and good intelligible English. Their “system” has its “glitches” but they recognise these and soon correct them. Good for Ovo! your’ve got me as a satisfied customer for along time. Arthur Harvey. Alton.