Ofgem consultations and response to CMA Energy Market Investigation

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Ofgem consultations and response to CMA Energy Market Investigation

Post by ALEO Admin » Wed Aug 03, 2016 10:47 am

On 3 August, Ofgem published its response to the recommendations of the recent Competition and Market Authority (CMA) Energy Market Investigation, aimed at freeing up competition and innovation in the market to drive down bills and improve service for all consumers.

See https://www.ofgem.gov.uk/publications-a ... -consumers, for Ofgem's press release, and https://www.ofgem.gov.uk/publications-a ... n-strategy, for Ofgem's response to the CMA's Final Report as well as Ofgem's Remedy Implementation Strategy.

Ofgem have also published three consultations on its proposals for implementing the CMA's recommended remedies.

1. Confidence Code review 2016 consultation (Response deadline: 28 September 2016.)
https://www.ofgem.gov.uk/publications-a ... nsultation

2. Helping consumers make informed choices – proposed changes to rules around tariff comparability and marketing (Response deadline: 28 September 2016.)
https://www.ofgem.gov.uk/publications-a ... -marketing

3. Statutory consultations on the removal of certain Retail Market Review Simpler Tariff Choices rules (Response deadline: 16 September 2016.)
https://www.ofgem.gov.uk/publications-a ... ices-rules

Ofgem also published a consultation on Monitoring trends in suppliers’ expected costs, on 3 August.
https://www.ofgem.gov.uk/publications-a ... -marketing

In particular, the CMA's proposal that energy tariff price comparison websites should be allowed to show only energy deals that earn them commission from suppliers, has attracted recent criticism. (See viewtopic.php?f=86&t=863).

Ofgem's response to the CMA states the following:
Changes to the Confidence Code
We have also published today a separate consultation on changes to the Confidence Code governing accredited price comparison websites. The CMA proposes removing the requirement for the ‘whole of market’ comparison of tariffs by accredited price comparison websites. Given the complexity of the remedy and its wider implications for the operation of the Confidence Code, our view is that we should not move straight to consulting on full removal of the whole of market requirement at this stage.

We are proposing an intermediate step as this will allow us to realise significant consumer benefits as quickly as possible, whilst considering the mitigation of the risks and uncertainties involved in full implementation of the remedy. We propose to remove some of the changes we made to strengthen the whole of market requirement in the 2015 Code Review and make consequential changes to ensure consistency with the overall CMA package of remedies.

The changes proposed would allow price comparison sites increased flexibility on how they display tariffs. This would give them an increased incentive to innovate and potentially work with suppliers on a wide choice of good value tariffs and exclusive deals for consumers. Under the Confidence Code, accredited websites would still be required to remain independent of suppliers and to display tariffs to consumers accurately and transparently, including the market coverage provided.
There has been extensive coverage in the media of Ogem's proposals. An article on the BBC website discusses criticism that the proposals don't go far enough. See http://www.bbc.co.uk/news/business-36961798

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