Engagement trials mandatory for suppliers

UK energy suppliers will be required to run experiments this summer targeted at motivating more customer engagement with energy, regulator Ofgem has said.

The Competition and Markets Authority recommended that Ofgem instigate trials to find better ways of prompting disengaged customers to look for cheaper energy deals as part of its report on the energy market last year.

The authority found during its two-year investigation into energy market failings that two-thirds of customers who are on standard variable tariffs are paying far more than they need to for their energy.

However, Ofgem has now passed responsibility for conducting engagement trials over to suppliers.

Rachel Fletcher, senior partner, consumers and competition at the energy regulator explained: “By overseeing these trials, we will make sure that suppliers are doing everything they can to test ways to help these customers find better deals. This could be through switching supplier, or helping loyal customers find cheaper tariffs with the current supplier.”

Fletcher added the Ofgem percieves suppliers as holding a “special responsibility” to engage customers in vulnerable circumstances. “We are proposing an enforceable principle for suppliers to make all efforts to identify and support them,” she said.

Suppliers must begin trials this summer which address issues such as:

• Informing customers of the cheapest market deals
• Tackling billing jargon, for example, by changing the name of standard tariffs “out of contract” tariffs 
• Lack of clarity in domestic billing more generally
• Processes for informing customers when they have come to the end of a fixed deal.

Consumer body Which? welcomed Ofgem’s ruling that suppliers must invest in such trials.

Alex Neill, Which? managing director of home and legal services said: “The competition inquiry’s findings were clear – the energy market is not working for consumers with too many people stuck on expensive standard tariffs. Finding new ways to reach these customers is critical and the energy regulator must use these trials to deliver a more competitive market.”

She added that: “The energy industry has been dragging it’s feet on this problem for too long,” and reminded suppliers that they have only one more day in which to submit information to Which? about their plans to boost customer engagement.

The watchdog asked suppliers to voluntarily submit this information as part of its Fair Energy Prices campaign. 

Tomorrow (31 January), the Business, Energy and Industrial Strategy committee will hear evidence form Which? Citizens Advice, the CMA and a range of energy companies on the state of fair energy pricing and competition in the UK.