Britain’s energy regulator today introduced its widest-ever raft of reforms in heat and power supply, aiming to lift standards of customer service, curbing sharp practice & incompetence, and benefitting businesses & households.
As the reforms’ centrepiece, Ofgem launched
- A market review of supply to businesses & non-domestic users. Covered are:
- Practical steps in stiffening protection for purchasers in pricing & contract behaviour, strengthening competition & safeguarding certain types of non-domestic consumers.
The review of supply to enterprises seeks to end sharp practice among suppliers charging so-called deemed contract rates, i.e. overcharging business users not under contract, or bending rules laid down in applying the government’s Energy Bill Relief Scheme (EBRS). Clamping down on abuse of security deposits and on fixed price contracts, and shortening the intervals imposed by bad landlords on commercial tenants when switching suppliers, are also targeted.
On topics needing an extension of its powers, Ofgem will also consult on
- Introducing better complaint handling between suppliers & businesses. The agency’s review heard suppliers often fall short in respect of service to enterprise customers.
- Extending micro-business protections to all businesses, so energy bills spell out more clearly fees paid to brokers & intermediaries. Businesses should be allowed too to resolve disputes through a redress scheme.
- Creating better guidance over ‘deemed contract rates’ between customers who have not yet agreed contractual terms with a supplier to avoid problems like overcharging.
Ofgem’s powers in energy supply to enterprises are more limited than in home supply. So it is asking government for further power in protection, such as over energy brokers.
Businesses now must have access too to the independent energy ombudsman, Ofgem believes, just as householders do in deciding disputes.
Further details here. Businesses & commercial energy purchasers have until September 6 to respond.
Also mooted in Ofgem’s package are:
- New minimum capital requirements for balance sheets of domestic energy suppliers. After the 2021-22 fiasco which saw over 25 home suppliers go bust, Ofgem today is raising the minimum cash reserves which domestic suppliers will need to retain their licence.
- From April 2025, for every equivalent customer on a dual fuel tariff, a capital floor of £0 and a capital target of £115 will apply, assessed against the adjusted net assets on a supplier’s balance sheet
- The agency also seeks new powers to compel suppliers to ringfence against insolvency some or all of customers’ credit balances, when deemed to be in the public interest
- For vulnerable domestic consumers on non-domestic contracts – occupants of care homes & social housing and in mobile home parks, for example – additional protections need to be extended.
Included in the measures is a consultation on better standards of consumer care. Customer satisfaction with energy firms has plummeted since 2018, the agency notes, particularly among home billpayers. Among Ofgem’s specifics;
- Customer service phone lines must stay open longer, into evenings & weekends. Additional contact methods such as email, webchat or other digital-based platforms must be offered.
- Emergency round-the-clock personal support must be available to customers whose power or gas is cut off due to problems originating with their supplier, such as meter faults.
“Suppliers are short-changing too many of their customers, who deserve better”, said Ofgem director Neil Lawrence.
“Energy users need more support when they are struggling and should be able to contact their supplier without frustration or undue delay when they need help.
“The plans we are announcing put the welfare of business and domestic consumers first and set out a comprehensive package to tackle poor behaviour by energy suppliers”, the Ofgem official observed.
For the Federation of Small Businesses, policy chair Tina McKenzie said Ofgem’s steps reflected the FSB’s intended “blend and extend” reforms to energy contracts.
Backing the package, the FSB’s policy head declared: “Small firms have been waiting for measures that could help alleviate the soaring energy costs and address the heavy-handed approach of energy suppliers.
”The Federation is pleased to see today’s publication of the non-domestic market review”, McKenzie went on.
“We have been calling for a ‘blend and extend’ contract renegotiation for small businesses who fixed their tariffs during market peak last year. We’re glad to see the energy regulator has backed our call and again urge suppliers to step up, act with fairness and adapt.
“While a handful of energy suppliers have adopted our ‘blend and extend’ proposals, small businesses have been complaining to us that they were excluded from the renegotiation because they secured contracts through a third-party broker”.
