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Towards a more innovative energy retail market: call for evidence

22 September 2023

Towards a more innovative energy retail market: call for evidence [ 270 kb]

It’s vital that the retail energy market is prepared for the major reforms that are going to be implemented in the coming years, most notably the ongoing rollout of smart meters and the introduction of market-wide half hourly settlement. These changes will enable and incentivise suppliers to offer new smart products and services, but have wider repercussions for all consumers. Suppliers may also play a role in offering low carbon technologies that increase the ability of consumers to use their energy more flexibly. 

In this context it is vital that market reforms:

  • Upgrade consumer protections, so that consumers are confident to engage. We think adopting a Consumer Duty framework, similar to financial services, could deliver these changes.

  • Tackle barriers to ensure the market can work for as many consumers as possible, including renters, people who are digitally disadvantaged and households on lower incomes. 

  • Deliver appropriate information, advice and support to consumers to help them navigate the market and resolve problems when they arise.

  • Ensure a level playing field for competition and limit the risk of mutualised costs for consumers if suppliers fail. 

Government and regulators should avoid the approach of piecemeal reforms taken in the past, which led to a market that delivered some innovation, but also proved brittle to shocks and provided poor quality services for many consumers. They should consider all the impacts of forthcoming changes for consumers, including those on default tariffs and implications for the design of price protection. 

Reforms should also develop a clear pathway forward for the market, which is currently in near-stasis as it recovers from recent crises, with far fewer consumers switching than prior to 2021. This makes it challenging to assess the impact of the market framework on innovation currently, and may pose difficulty in moving to a more innovative market in future. 

Regardless of any retail reforms taken forward, energy prices are likely to remain elevated in the coming years, and market outcomes will not deliver affordable energy for many consumers. To ensure a fair transition to net zero Government must deliver energy efficiency upgrades and enduring bill support for households at most risk of fuel poverty.