Author Lauren Howells
In an “impassioned” speech which was reported by the to have a tone which “sometimes bordered on anger”, the chief executive of Ofgem, Dermot Nolan, has told energy firms that they could be looking at a range of reforms, one of which could include a rule that would mean some customers could automatically be switched to a better deal through a collective switch.
“It would be run in much the same way as other collective switches. Suppliers compete to offer the best deal, requiring them to be as efficient as possible and reducing their own costs,” Nolan said. “But rather than customers having to make an active choice as with conventional collective switches, the switch would be made on their behalf without them having to do anything.”
“It’s a bit like allowing better deals to find customers, rather than customers having to find the better deals themselves”
Nolan said that this was a bit like allowing better deals to find customers, rather than the other way around, but admitted Ofgem were in the “early stages of exploring this option” and said it would require “societal and consumer acceptance”, as well as legislation.
This report comes has published its draft legislation designed to place a temporary cap on energy prices.
“Many suppliers have resisted change”
In , Nolan told his audience of energy suppliers, that many had resisted change and although a few of them had stepped up, it was not enough.
Nolan said that “a fortnight ago some suppliers were apparently even briefing the media asking why they should co-operate with Ofgem on this winter.
Such action would be spectacularly ill-advised. We will extend price protection to those who need it most, with or without the help of industry.”
A future where the most vulnerable are protected
Nolan said that he wanted a future where the most vulnerable in society were protected and where large suppliers wouldn’t be able to profit from their disengaged customers on expensive default tariffs.
Nolan confirmed that Ofgem intended to make suppliers automatically pay compensation to customers if their switch went wrong.
He added that “radical action” was required in order “to deliver a truly competitive and smarter market which works for everyone.”
Nolan also referred to the rules currently in place, which do not permit consumers to have more than one supplier. He said that “this has forced new entrants wanting to trial peer to peer energy trading in our Innovation Link’s regulatory sandbox programme to scale back their plans.”
“Change is coming”
He went on to say that although important, competition wasn’t just about people switching. “It is also about suppliers and other new entrants actively competing to give customers a better deal.”
He finished his speech by saying that reforms were now overdue and neither Ofgem nor Parliament, would take no for an answer. “So you might as well embrace it,” Nolan concluded, “because change is coming.”