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Response to Ofgem consultations on directing suppliers to test consumer engagement measures

28 November 2016

We welcome Ofgem’s decision to implement the Competition and Markets Authority’s recommendations relating to the establishment of an ongoing programme of work to test consumer engagement measures for domestic and micro-business customers, and to modify suppliers’ standard licence conditions to enable the Authority to direct them to participate in such a programme.

The research programme is likely to play a significant role in understanding how consumers can be encouraged to respond to prompts and engage with the market. Previous behavioural research in the field of energy has often focused on consumers’ energy use and energy efficiency behaviour. However, there is a gap in understanding consumers’ market engagement and switching behaviour. Our research has shed some light on the reasons why consumers may be less engaged in the energy market than they are when it comes to clothing or car purchases, but more work remains to be done in this regard. There are particular gaps in understanding how suppliers can improve communications with prepayment customers. We have also previously called for more cross-industry learning to improve letters to consumers in debt. These trials would be a good opportunity to test new forms of engagement (which may not necessarily be through letters) across a range of areas and customer types.

In our response to the statutory consultation on the introduction of SLC 32A [ 340 kb], which introduces the power to direct suppliers to test consumer engagement measures, we make a number of recommendations and suggestions including:

  • referring consumers to our Citizens Advice price comparison website which displays a whole of market view,

  • involving Citizens Advice as the energy consumer watchdog in the formulation of guidance notes or a set of high-level principles which will guide the research design and implementation process,

  • publishing anonymised results as far possible to enable public scrutiny,

  • demanding that research proposals outline how they will identify whether a trial participant is vulnerable, and how to deal with wider ethical issues.

Furthermore, we agree that Ofgem should adopt a broad definition of ‘consumer engagement measures’ in order to remain open as to the exact topics to be covered and research methods to be employed in this programme. Considering the number of changes we are about to see in the energy market which are directly affecting consumer experience and engagement, such as the smart meter rollout, changes to the Confidence Code, and the removal of the four-tariff cap, it is wise not to close the door on any future issues that may be worth exploring through consumer research.  

We also responded to a related open letter consultation, ‘Proposed selection criteria for mandatory supplier testing of measures to promote domestic consumer engagement’. We are broadly supportive of the proposal that Ofgem will consider a supplier’s customer base, capabilities to undertake a trial and the proportionality of any order to conduct a trial. We also asked Ofgem to ensure that their criteria do not inadvertently exclude some consumer segments. In order to ensure that suppliers can successfully implement a trial the regulator should consider, on a case-by-case basis, whether they need to provide extra support.