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Policy makers have become “obsessed” with encouraging customers to switch
It is time to look beyond promoting competition and switching in order to fix the energy market, according to a government minister.
Margot James, minister of state at BEIS (business, energy and industrial strategy) told a fringe meeting at the Conservative party conference yesterday that policy makers and regulators had become “obsessed” with encouraging customers to switch suppliers.
Pointing to business secretary Greg Clark’s view that customers should not have to rely on switching to get a good deal from utilities, she said: “We have been far too dependent on that policy option and it is time to look at other solutions.”
She also hinted at the meeting, which debated a new report on encouraging loyalty in the energy market by the Social Market Foundation and Scottish Power, that less focus on switching would require a change of mindset by regulators.
James said: “They have traditionally focused on their role as guarantors of competition but that was on the assumption that competition alone would deliver fairer access to the market and better prices but that hasn’t been as uniform as hoped.”
Commenting on the regulator’s delayed response to last year’s Competition and Markets Authority energy market probe, she said: “I hope they will respond by the end of the year not least because of the fact that they are investigating this further is putting some companies off from introducing new tariffs.”
Speaking at another meeting later, Octopus Energy chief executive officer Greg Jackson compared overcharging by energy companies to the payment protection insurance (PPI) scandal, which has seen banks repay billions of pounds to hoodwinked customers.
He said: “Customers are overpaying by a phenomenal amount: it’s comparable to PPI in terms of the damage it is doing to consumers.”
John Penrose, who has led the backbench Parliamentary campaign to clampdown on energy bills, said: “At the heart of this market is a fundamental moral flaw. We make it illegal in pretty much any other market to do inertia marketing and yet in this one, the first cousin, which is switching you quietly onto the most expensive and biggest rip off standard variable tariffs, is allowed.”
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