New energy suppliers should face tougher requirements

MPs have been warned that the conditions for entering the energy supply market should be re-examined following the recent collapse of GB Energy

The business, energy and industrial strategy (BEIS) select committee today heard evidence in a snap inquiry into the Competition and Markets Authority’s energy market probe.

Speaking at the session, Simon Stacey, managing director of domestic markets at Npower, said that the entry of smaller suppliers into the market had improved efficiency in the energy sector.

However, he warned about the risks to customers of another high-profile supplier failure, like that experienced by GB Energy Supply last year. He suggested that requirements for market entry should be reviewed by government and the regulator to mitigate against such risks.

“GB Energy created a very bad customer experience by holding customers’ money,” said Stacey. “That needs to be looked at because I fear there will be other failures that will damage the industry.” 

Stacey, and others, were also asked to address concerns that big six energy suppliers are disadvantaging loyal customers by saving their best deals for new joiners and that they are failing to motivate customer engagement.

Dan Hopcroft, residential sales director, EDF, told the committee that the French owned supplier is examining rewards for loyal customers and Stacey said that Npower too is looking at the scope for a loyalty bonus. This might include a free boiler service to encourage customers to stick with the company.

However, Stacey hit back against criticism of energy firms for percieved profiteering at the expense of customers on standard variable tariffs, saying that energy suppliers could not cut these tariff prices without there being an impact on non-standard rates.

“We need to recognise that energy businesses need to make a return,” he said.

Pete Moorey, head of campaigns at consumer watchdog Which?, said he was “very disappointed” that a number of energy suppliers, particularly those operating high standard tariffs, had not responded to a request for information about their plans to engage customers. Which? had given energy companies until today to respond to the request which was issued as part of the organisation’s Fair Energy Prices campaign.

Yesterday, Ofgem revealed that energy suppliers will be required to carry out experiments this summer to trial new ways to engage with customers, especially those in vulnerable circumstances.