Shale Gas 2008
Ofgem Energy Probe
- Published on 30 November 2008
Friday afternoon is the traditional time to bury news you'd like others to ignore, miss out on or just plain forget ever existed.
Ofgem released this afternoon two pretty damning reports on both SME and domestic end user engagements with the energy market that Ofgem's Energy Probe already essentially cleared in early October.
As a rule, Ofgem would issue any supporting research and the report itself simultaneously. Not when the reports (which Ofgem commissioned) show results completely at odds with Ofgem's usual rosy picture of how great the UK energy market is. This time around Ofgem was wavering slightly, probably due to sustained public criticism from energywatch and the Parliamentary Business Affairs Committee and Public Accounts Committee. We assume that Ofgem is also feeling the heat from any MP of any party on literally thousands of complaints over either price or service or both on energy suppliers.
But now we see why: Ofgem's own reports show a complete breakdown of energy markets:
Few are both willing and able to seek out better deals proactively. Some who attempt to do so
struggle to compare prices easily on price comparison sites. Price comparison may also be
complicated by issues such as length of contracts
Business customers were at best fairly satisfied with their energy supplier and often
disappointed. They felt that energy companies deliver, at best, moderate standards of service
with no attempt to offer value-added services
This study suggests tighter regulation of TPIs and energy companies may be desirable.
The competitive energy market does not appear to have resulted in:-
companies seeking to deliver high levels of service
small businesses comparing prices easily, and being confident that they are comparing on a
like for like basis
A few days after interviewing was completed the British Chamber of Commerce issued a report
claiming that energy suppliers were not giving businesses the same “fair and transparent”
service as that received by domestic users.
BCC argued that, compared to domestic users, businesses were “significantly more vulnerable”
to exploitation and unfair practice, partly because
domestic suppliers are required to publish their tariffs but there is no regulatory requirement
covering business suppliers
domestic contracts allow people to switch every 28 days, but businesses have to sign up to
David Frost, director general of the BCC said:-
“with the economy slowing and energy bills on the rise it is totally unacceptable that
hard-pressed businesses are left so open to exploitation by energy suppliers.”
This study provides strong evidence in support of BCC‟s arguments.
Why didn't Ofgem release this research at the same time as the probe itself? Probably because the research would seem to contradict the conclusions.