25 March 2013

Unfair exemptions for small suppliers must go say npower and British Gas

npower and British Gas want an end to exemptions on environment and social policies for smaller suppliers.

Under the consultation process of Ofgem's Retail Market Review, npower and British Gas have complained about the unfair bias in the energy market in favour of small suppliers. RWE npower have asked for the reforms to be put on hold until the "unjustified discrimination in favour of small suppliers” is removed.

The basis of the argument is that, under current rules, energy suppliers with fewer than 250,000 customers do not have to participate in energy efficiency schemes such as insulating the homes of vulnerable customers and the Green Deal. British Gas estimates these exemptions save smaller energy suppliers approximately £97 per year, savings the smaller companies can pass on to their customers in the form of more competitive tariffs.

British Gas said "Recommendations designed to improve the comparability etc of competing prices should not be put forward at a time when there is such an unlevel playing field in favour of small suppliers.”

RWE npower also noted that, with the smaller energy companies attracting the more active customers, this left a greater proportion of more vulnerable customers paying for the schemes designed to protect the vulnerable.

There clearly is an argument for removing the exemption of smaller suppliers in energy efficiency schemes, though they would probably incur higher costs per customer to resource them than the Big Six. However, as the Big Six currently control 95% of the consumer market, there is still some way to go to break their dominance.

It's a tricky balancing act, if you want competition in the marketplace, there will be bargains for savvy customers to grab at the expense of the rest of the market and therefore the least active, vulnerable members of society.

Recognition should be given to EDF Energy for their excellent Price Reassurance Scheme where customers identified by the Government as being eligible to receive the Warm Home Discount payment automatically receive EDF's lowest price. However there are plenty of people that do not qualify for the Warm Home Discount that still struggle to pay their fuel bills.

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