Ofgem changes rules to promote customer engagement

Ofgem changes rules to promote customer engagement

The UK energy regulator, Ofgem, is setting out its plans to encourage greater engagement by both businesses and domestic customers. In a number of consultations released this week, Ofgem is aiming to bring a sharper focus on consumer outcomes which suppliers are expected to achieve.

This move from Ofgem comes as a result of the Competition and Markets Authority (CMA) recommendation that the energy regulator no longer relies on multi-year projects and narrow regulations to protect consumers. Instead, the focus should be on prescriptive rules and principles.

Changes to Standards of conduct for suppliers

  • The supply licence is an important framework for protection of both domestic and micro-businesses. Ofgem has recognised that under the current wording of the standards, microbusinesses receive fewer protections under consumer law than domestic consumers. This is due to the way the Fairness Test is defined, favouring the interest of the supplier rather than the customer according to Ofgem’s consultation. Therefore the regulator is proposing to change the definition, bringing more balance to the term. Interested parties are invited to respond by 13 March.

Trial to help customers strike a better deal

  • Ofgem also announced they are looking at how to deliver CMA’s remedy to help customers get a better deal from the market. As a result, Ofgem is inviting suppliers to take part in a trial to find out the best ways to help disengaged customers (starting by this summer). The trial will cover issues such as:
    • changing information received by customers at the end of a fixed deal
    • the way information is presented on bills for domestic customers
    • improving communication between suppliers and customers – highlighting the cheapest deals across the whole market and changing the name of standard tariffs, for example, to ‘out of contract’ tariffs

 Helping consumers make informed choices

  • The energy regulator is trying to remove unnecessary regulatory burden so as to make information less misleading. They have released a series of consultations on the removal of detailed rules relating to sales and marketing activities within the domestic market. Changes being made concern the addition of clearer information tools. The five principles proposed are aimed at promoting the comparison of tariffs as well as fair and responsible sales and marketing practices. Ofgem want to make domestic consumers more proactive, and be provided with information to make decisions about their energy services. The closing date for response to the consultation is 6 March.

Keeping up to date

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Veronica Truman

Posted by on Wednesday, the 1. February at 12.44

Veronica Truman has been working in the energy industry since 2002 and currently manages the Market Intelligence, Analytics and Bureau Teams for Utilitywise. These teams are responsible for bespoke strategic consultancy projects for their clients, as well as delivering detailed analytics on clients’ consumption data. In addition to this, the Analytics team have developed models to forecast commodity and non-commodity charges out to 2040, and a market-leading Triad forecasting model.