Ovo calls on CMA to end customer exploitation with simpler regulation

Ovo Energy is calling on the Competition and Markets Authority (CMA) to “sweep away red tape” and replace it with a simple regulation system based on the principle to “avoid customer harm”.

The independent supplier made the call in an open letter from chief executive Stephen Fitzpatrick to the CMA in which he highlights “customer exploitation” as the real problem in the energy retail market, rather than the vertical integration of the big six which he calls a “red herring”.

Fitzpatrick says simpler regulation would end the big six practise of loss-leading tariffs subsidised by their large inactive customer bases and support “nimbler, more customer-focused companies from competing” which he says are currently being held back by “too many complex rules and regulations.”

He said: “The CMA has a unique opportunity to sweep away the red tape (which has done little for competition or customers), and replace it with a regulatory model based on simplicity and common sense, underpinned by clear, strong and practical principles.”

“Simplicity makes us transparent, efficient and helps build trust. The same principle should apply to regulation and markets; the system only works if everyone understands and respects clear, simple, well-enforced rules.”

“In this new competitive environment, companies with the customer’s interests at heart would thrive. Those that profit from exploiting their customers would have no choice but to change.”

Fitzpatrick added: “The CMA has a unique opportunity to repair the energy market for good. For too long now the assumption has been that the CMA needs to break-up the big six, abolish vertical integration and fix the wholesale market.

“These have always been red herrings. It’s not the size of the big six that’s the issue. It’s the way they exploit their most loyal customers, charging what they think they can get away with when the customer isn’t looking.”

Citigroup analysts have said the CMA is unlikely to call for a break-up of the big six in its provisional findings on the energy retail market, which is expected at the end of June.

Ovo is also calling for reflective pricing and a regulated, annually-set social tariff for the most vulnerable customers “to help create a competitive, innovative, fair energy market, resulting in improved service and lower energy prices for millions of customers.”