Ofgem adopts CMA remedies: reaction

Ofgem has set out its plans to approach the remedies from the Competition and Markets Authority probe into the energy market.

The plans include a price cap remedy to save prepayment customers £75 per year from April 2017 and a controlled-database to allow target marketing at disengaged customers from spring 2018.

Here is some of the initial reaction to Ofgem’s approach from the utilities sector:

EDF Energy spokesperson

“EDF Energy supports the implementation of the CMA’s proposed remedies without delay, so that customers can continue to benefit fully from competition and innovation.

“We haven’t waited for the results of the CMA investigation to take action. We actively engage our customers in the market generally, to ensure they’re getting the best deal from their supplier and put them in control of their energy bills.

“Ofgem has an integral role to play in delivering the remedies package, especially in providing clear, reliable and trustworthy information about the energy industry. We want to see a strong, independent, respected regulator trusted by customers and companies alike.”

Alex Neill director of policy and campaigns Which?

“After two years of investigation into the energy market it’s now time for action, so it’s good to see Ofgem swiftly taking forward the CMAs recommendations to increase competition and reach people who are not engaged in the market. 

“The regulator faces a huge challenge in implementing all of these recommendations in a way that stimulates competition to deliver better outcomes for many more consumers. For this to happen the industry will need to commit to working with the regulator to ensure people get a fairer deal on their energy.”

Ed Kamm UK managing director First Utility

“The CMA’s report rightly identified the problem – too many people, some 70% of UK households, are overpaying for their energy.

“But the proposals put too much onus on the customer, don’t go far enough and the timing of their implementation is baffling. Ofgem itself admits that consumers who are already engaged in the market will see the first benefits.

“We are in real danger of continuing to fuel a ‘tale of two markets’ – helping those who already shop around and doing little to properly help those who are continuing to pay much more than they need to or should.

Jon Ferris strategy and innovation director Utilitywise

“In this environment, with increasing competition and differentiation among suppliers, it is neither practical nor desirable for every price comparison website (PCW) to show all rates.

“PCWs provide marketing services to suppliers as well as information to customers. If there is no differentiation between PCWs, and less revenue to support the cost of the service, PCWs will lack the motivation to remain in the market, driving overall competition down.

“Third Party Intermediaries (TPIs) have driven innovation in the business supply market, using their proximity to consumers to develop bespoke products in conjunction with suppliers. If the tariff must be available to all PCWs as recommended by CMA, this proposal will reduce the innovation that will be required for the transition to a smarter energy system.”

Juliet Davenport chief executive Good Energy

“It’s a good move from Ofgem to take forward the CMA’s proposals to protect prepayment customers from being over charged. For far too long the Big 6 have taken loyal customers for granted.

“Consumers deserve a fair and transparent market so they can have confidence in their energy suppliers. And energy companies deserve a level playing field which supports and encourages competition.

Will Herbertson director of home services Money Supermarket

“Today’s decision from Ofgem to implement the CMA’s final recommendations is welcome news. What’s clear is that there’s a long road ahead – Ofgem and the industry will need to work effectively together to see that the right outcomes are delivered for consumers and we’re committed to playing our part in that.

“Price comparison websites like Money Supermarket have a crucial role to play in helping consumers save money on their energy bills and helping new suppliers enter the market.”

Richard Neudegg head of regulation uSwitch

“The CMA spent two years thoroughly reviewing the market and we believe its final recommendations will boost competition and reduce energy bills. It’s now vital that Ofgem wastes no time in putting the CMA’s package of remedies into action, so consumers can benefit from improved choice, better service and cheaper energy deals.”

Will Hodson co-founder TheBigDeal.com

“Whilst it’s good news that Ofgem are to cap prices for those on prepayment meters, for the vast majority of people, there will be no price protection.

“Instead, Ofgem will place British consumers on a database open for all energy suppliers to approach with deals. Such spam is both unwelcome and ineffective because the public don’t trust energy companies anyway.

“The public’s trust in comparison sites also looks set to crumble, as Ofgem will allow them to hide any deal that doesn’t earn them a commission. These deals are often the cheapest on the market, so consumers will miss out on savings and competitive suppliers will be hidden from view. That can only hurt competition and benefit the Big Six – a bizarre outcome from a two-year competition inquiry.”