Utility Week

28 | 16TH - 22ND FEBRUARY 2018 | UTILITY WEEK Customers "Some suppliers do not have the systems in place to meet the minimum standards set out in their supply licence – Ofgem must tighten up the regime." Comment Gillian Cooper T here are more energy suppliers in the market than ever before, with over 70 now vying for business. But we're concerned that it's too easy for compa- nies to start supplying energy before they're ready to provide an adequate service. It was disappointing but unsurprising when Future Energy stopped trading. Our experience of working with newer suppliers has shown that some companies do not have the systems in place to meet the minimum standards set out in the sup- ply licence. We also see evidence of cash flow problems, which suggest some new entrants may not have sustain- able business models. This matters because it's the customers who pay when suppliers fail. GB Energy's failure alone cost con- sumers £14 million. Over the past year Ofgem has tightened up its monitoring of new suppliers, but it hasn't made any changes to the licensing process itself. It's time this was addressed. Every year, Citizens Advice is contacted by tens of thousands of energy consumers. Newer suppliers are accounting for a growing share of these contacts, far and above their actual share of the market. Many consumers are telling us that they have experienced long telephone wait times, that companies have failed to respond to emails, or that they've been sent inaccurate bills – or in some cases no bills at all. Perhaps more worry- ingly, the lack of preparedness on the part of new suppliers means households can be le without an energy supply for extended periods of time. We know people can sometimes face significant mental and finan- cial stress because of delays in getting their problems resolved. In the past year, we've referred several suppliers to Ofgem because of our concerns about their ability to safely and effectively serve their customers. It remains our view that it is far too easy to get a supply licence, and the routes open to Ofgem to remove a licence are much too limited. The time has come for this issue to move up the regulator's list of priorities. Ofgem should tighten up its licensing regime so it can prevent poorly prepared suppliers from entering the market, and remove failing companies from the market swily. Doing so will help to protect consumers, and will go a long way to addressing the types of problems we're currently seeing. Specifically, we think Ofgem should ensure new sup- pliers have four key things in place before being able to start offering services to the public. • First, they need to have enough money behind them to allow for investment in the staff and systems necessary to provide a good customer experience. Entering the energy market isn't something that can or should be done on the cheap. They should also be able to pass "stress tests" to demonstrate they have the resources in place to survive any volatility in the wholesale market, or a failure to win enough customers. • Second, they should have realistic business plans so that they always have enough staff to properly handle growing numbers of customers and avoid leaving them hanging on the telephone for hours on end or sending multiple emails that don't get answered. • Third, they need to have in place an experienced team of staff who understand how to provide good customer service, and with the skills to respond appropriately to the challenges any new company is bound to experience. • Finally, they need to show evidence they understand that energy is an essential service, not just another market. New entrants need to have a thorough understanding of all their regulatory obligations. This includes having thought about how they're going to provide great service to customers with additional needs or vulnerabilities. This can't be an add-on or something they learn along the way. It needs to be built into their business plan from the start. All of these requirements should form part of a stronger assessment of new suppliers before granting a company access to the market. It is only by strengthening the licensing regime that we can ensure hundreds of thou- sands more consumers are not le to suffer at the hands of unprepared and unstable new companies. Gillian Cooper, head of retail energy markets, Citizens Advice

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