The CMA announcement: What does it mean for Britain’s businesses?
The Competition and Markets Authority have announced their eagerly awaited findings following their investigation into Britain’s energy market. Unsurprisingly, a lot of the focus surrounded the domestic energy market. But, it’s no secret that barriers to switching exist for Britain’s businesses as well - and these issues need addressing.
It was hoped by many involved with the non-domestic energy market that the CMA would announce a code of conduct to help regulate the market, however no such announcements were made. So what did the CMA find in their investigation, and how will it affect Britain’s business owners? We take a look below.
Customers being rolled-over on to expensive out of contract rates has been an issue at the focus of the CMA in the past.
In their most recent announcement, the CMA has pledged to help smooth the switching process by extending the period that businesses have to switch to a new energy deal. Currently, a business energy customer is unable to switch to a new deal until they are within their renewal window – which is typically six months prior to their contract end date.
Under new rulings, business energy customers will have the power to switch right up until the last day of their renewal period, without providing notice. Essentially, this means that businesses have had their opportunity to switch extended by an additional 30 days, introducing thousands of new switchers to the market, and reducing the chance that businesses will be rolled onto expensive out of contract rates.
Access to ECOES
Another way the CMA hope to help smooth the switching process for Britain’s businesses is to provide third party intermediaries (TPIs), such as price comparison sites like Make It Cheaper, with access to the ECOES database, which contains information such as contract end date and consumption data.
Currently in the non-domestic energy market, suppliers are able to object to a customer’s switch based on certain criteria, such as the customer trying to switch before their contract end date. This can result in unnecessarily long switching times which can put businesses off of switching again in the future.
By allowing TPIs access to the ECOES database, it is hoped that they can identify these issues ahead of time, which in turn will help resolve them and smooth the energy switching process.
Progress is also being made by making the non-domestic energy market more transparent for Britain’s businesses. The CMA has announced that suppliers are now required to disclose prices of available acquisition and retention deals. It is up to the supplier to determine how these prices will be displayed – either through an online tool on their site, or through the services of a price comparison site.
However, it’s important that note the prices suppliers are required to disclose to switchers may not necessarily be the best prices available to them. It is possible for businesses to secure better deals by using a price comparison site, such as Make it Cheaper, because often it is possible to negotiate and secure an exclusive rate that will often beat the standard pricing that is normally offered through other means.
Engagement with the commercial energy market is another long standing issue that the CMA have pledged to take action on. In the announcement, the CMA has revealed that they will make available a database of all customers that have not switched within 3 years. As yet, it is unclear as to who exactly will have access to this database, however we do know that there will be some restrictions in place.
For example, communication with customers will be limited to direct mail marketing, however it remains to be seen whether this method will go far enough to coerce the millions of sleeper energy customers into switching. Another issue with this method is that it could neglect to communicate the best possible prices available to sleeper customers if only energy suppliers are able to communicate with them through these means.
No code of conduct
As mentioned above, one thing that wasn’t included in the CMA announcement was the introduction of a code of conduct for TPIs operating in the business energy market – despite many who are involved in the commercial energy market hoping for it.
There is currently an issue with unscrupulous TPIs operating without their customers best interests as a priority, which cheapens the hard work carried out by services, such as Make It Cheaper, to save businesses money. The actions of these unprincipled TPIs results in more of Britain’s businesses disengaging with the energy switching market due to poor experiences when attempting to proactively find a better deal.
It was hoped that the introduction of a code of confidence for TPIs would put an end to these unsavoury operations. However, it appears the due diligence still lies with Britain’s business owners to ensure that they are working with a respectable company when switching their business energy.
For more information on the CMAs latest announcement, click here.