CMA remedies too reliant on smart meters

The actions proposed by the Competition and Markets Authority to resolve a lack of customer engagement with energy suppliers have a flawed dependency on the roll out of smart meters, according to Which?

“An awful lot of importance has been placed on smart meters by the CMA,” said Pete Moorey, head of campaigns at the consumer watchdog as he gave evidence at a select committee hearing on the topic of domestic energy pricing and competition.

He said this is “a risk in terms of whether the roll out will deliver on time and whether smart meters will deliver all the benefits everyone thinks they will”.

If smart meters fail to deliver the outcomes expected, Moorey concluded that the temporary prepayment price cap, which will come into force this April to protect customers on pre-pay tariffs, will have to be extended.

Victoria MacGregor, director of energy at Citizens Advice, also gave evidence at the committee session. She said the pre-payment meter price cap should have been extended to other customers, including those with credit meters, anyway. She also said that the price cap should be pushed beyond the 2020 cut off date proposed by the CMA.

MacGregor added that regulator Ofgem, which has vowed to more towards “principles based regulation” in the energy sector, could learn from the principle of treating customers fairly which underpins the conduct of financial regulation,

“It’s critically important that the regulator can look at the tariffs coming onto the market and judge whether they are treating customers fairly,” she insisted.

National media reporting on the business, energy and industrial strategy committee session focussed on controversy around supplier treatment of loyal customers. The Times reported that committee chairman Iain Wright said suppliers appear to have “an abusive relationship” with their most loyal customers.

Wright said: “I can’t believe the customers are getting beaten black and blue all the time and they stay with their existing providers. I think customers are concerned about the hassle and the risk that they may be cut off.”

Simon Stacey, managing director of domestic markets at Npower hit back against criticism of suppliers for their expensive standard tariffs, which apply to over 70 per cent of customers, saying that these rates cannot be cut without impacting non-standard deals.

He also said: “We need to recognise that energy businesses need to make a return.”