Ensuring consumers benefit from the evolving energy market (UK)
Fundamental issues relating to the current structure of the energy market and how it may need to evolve to enable greater innovation and competition, while ensuring all customers enjoy the benefits and are protected from the risks, are covered in a wide-ranging call for evidence launched by Ofgem.
Central to ‘Future supply market arrangements – call for evidence’ is whether the suppliers who comprise the ‘supplier hub’ model established when the energy industry was privatised should remain the primary interface between consumers and the energy system as innovation opportunities multiply and the industry evolves.
Underpinning it is evidence suggesting
- the current regulatory framework often constrains companies’ ambitions or slows their progress
- existing arrangements can prevent companies with disruptive business models from entering the market
There is also the need to consider whether market arrangements are working for current and future consumers and whether a regulatory framework is needed to enable new ways of offering energy supply and associated services, where this is in consumers’ interests.
At the scoping stage, Ofgem is interested in views on
- whether the current supplier hub arrangements are fit for purpose to deliver overall objectives
- where any regulatory change should be focused and why
- how any changes to the supplier hub model could best align with and ensure wider market activities continue to be performed efficiently
Annex 1 covers the role of suppliers, recognising among other things that energy is an essential service so suppliers have a duty of care towards consumers, including those who are inactive or vulnerable.
Annex 2 asks questions relating to 4 topics.
Topic 1
The guiding criteria to evaluate a success supply market, where competition and innovation deliver lower bills, lower environmental impacts, improved reliability and safety, better quality of service and better social outcomes.
Topic 2
The barriers to innovation, including those hindering new business models seeking to offer new energy services to consumers.
Topic 3
Alternative default arrangements – ie disengaged consumers on default arrangements are typically supplied by their existing supplier on poor valuable standard, variable tariffs. Ofgem is particularly interested in ideas for alternatives to price protection to ensure they get a better deal.
Topic 4
Consumer protection. There is a set of standard licence conditions for each licensable activity, including supplying gas and electricity to consumers.
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