OVO Energy (‘OVO’) entered the UK energy retail market in 2009 with the intention of offering a fairer, simpler and more competitively priced service to customers. OVO is now one of the UK’s fastest growing independent suppliers, with more than 400,000 customers and 600 staff. Whilst continuing to champion the core values on which the business was founded, OVO is focusing increasingly on improving customer experience and engagement through technology and innovation. Our goal is to reach one million customers by 2017 and to be the most trusted energy company in the UK.
OVO currently offers one ‘conventional’ white label, in partnership with the Woodland Trust (‘Woodland Trust Energy’). We are also developing a package of community tariffs with local authorities, housing associations and community groups, under the umbrella of ‘OVO Communities’.
Currently each OVO Communities partnership (the purpose of which is to facilitate more competition in the retail market by enabling local organisations to become energy suppliers) has to apply for a derogation from Ofgem in order to be able to offer our Communities partners the ability to set their own tariffs. This is the lynchpin of the OVO Communities offering as it allows these organisations to tailor tariffs to local needs and preferences.
While Ofgem have been helpful in this process so far, we think it would be preferable that the appropriateness of the tariff is decided by the market rather than the regulator. We are aiming to set up 500 of these partnership overs the coming years. It seems over-burdensome that we have to apply for a derogation for each one.
OVO opposed the limits on tariffs in the Retail Market Review (RMR), and has done so in the Competition and Market Assessment (CMA) inquiry into the energy industry. While well-intentioned, we do not think the measure to limit tariffs is helpful to consumers. We think it stifles innovation and risks limiting the ability of companies to take advantage of innovations such as community energy and smart meters. Our preference would be for the four-tariff rule to be removed entirely.
It seems unclear how Ofgem’s stated aims in RMR fit with the proposals to allow a free-for-all in the white label market. It would be much simpler to simply remove the four tariff rule and focus on what we think has been and continues to be a more important issue for competition in the energy market: the proliferation of short-term protective tariffs by incumbent suppliers who are able to segment their market because of their large group of inactive customers. In fact, we think the proposed treatment of white labels risk making it easier for the large incumbent suppliers to do exactly this. There has been some evidence of this happening in the market in recent months.
We would prefer greater scrutiny of whether aggressive, short-term tariffs reflect the underlying costs of supplying energy. We are pleased this is one of the areas under scrutiny by the CMA. Moreover, because white label arrangements effectively allow energy companies to market their products under the banner of a trusted brand, we would urge the regulator to take a particularly active stance in scrutinising whether such tariffs are being used as short-term protective tariffs.
We agree with Ofgem’s assessment that white labels have the potential to add to choice, customer service and engagement for customers, but have a limited benefit for price competition.
However, we are concerned that the current and proposed white label rules combined with RMR continue to allow short-term, protective tariffs into the market. While this provides price competition of a sort, we remain unconvinced it is of wider benefit to consumers. The real purpose of such tariffs appears to be defensive; to squeeze out small suppliers. We think this is a much wider risk for the energy supply market than the issue of apparent simplicity that RMR was meant to solve.
The large incumbent suppliers are able to segment their market because they retain a large group of inactive customers. White labels should not offer another avenue for such suppliers to take advantage of this position.
We do not agree that suppliers should be limited to four tariffs. We think such an arrangement stifles innovation without benefiting customers.
We agree with the proposals about increased flexibility around white labels and that a derogation would not be required for each new white label. We think they are a source of innovation in the industry and can help reach customers who are not currently active in the market. We do not think it is necessary to limit the potential tariffs within a white label.
We agree with most of Ofgem’s CTM proposals. We think customers with the ‘home supplier’ should be told if they could get a cheaper tariff with a white label partner (or vice versa).
However, we also think white label customers should be told if other white labels linked to the partner supplier are cheaper. This is the fairest approach for customers and gives the most transparency. As a result customers would be in an informed position to make decisions about their energy supplier. The risk of the current proposal by Ofgem is further fragmentation of the market, without any benefit for customers. The principle of making things as transparent as possible for customers should be followed and we see this as a pro-competitive position.
OVO Energy Ltd, registered office 1 Rivergate Temple Quay Bristol, BS1 6ED, company no. 06890795 registered in England and Wales, VAT No. 100119879
Additional terms and conditions
Please see below for full terms and conditions on 33% renewable electricity, 3% interest rewards, exit fees and saving claims.
1Monthly cost - Representative monthly direct debit costs based on a non-economy-7, dual-fuel, medium user (3100 kWhs elec. and 12500 kWhs gas) paying in advance by direct debit, including online discount. All rates correct as of 23/08/16, but may go up or down.
2Weekly cost - Representative weekly costs based on a non-economy-7, dual-fuel, medium user (3100 kWhs elec. and 12500 kWhs gas). All rates correct as of 23/08/16, but may go up or down.
3Pay Monthly Savings are based on the average estimated annual costs for new PAYM OVO customers quoted through the OVO website (based on household and/or consumption information provided by those customers), compared to their current supplier and tariff. Comparisons taken between 01/01/2016 and 11/10/16. Incl VAT. Actual savings may vary according to your current supplier or tariff, individual tariff options, household information, consumption and location.
4Pay As You Go Savings are based on the average estimated annual costs for new PAYG OVO customers quoted through the OVO website (based on household and/or consumption information provided by those customers), compared to their current supplier and tariff. Comparisons taken between 01/01/2016 and 11/10/16. Incl VAT. Actual savings may vary according to your current supplier or tariff, individual tariff options, household information, consumption and location.
We include almost twice as much renewable electricity as the national average: At least 33% of electricity in all of our tariffs comes from renewable sources. The national average, according to Ofgem as at March 2014 was 16.7%. For more information please visit this page.
33% of your electricity comes from renewable sources: 33% renewable electricity as standard as of 1st April 2015. Renewable electricity is generated from wind, solar, geothermal, wave, tidal, hydro, biomass, landfill gas, sewage treatment plant gas and biogas.
3% interest: Calculated at 3% per year, paid monthly based on number of days in credit and the amount left in your account after you’ve paid your bill. OVO Interest Reward is capped at 12 times the amount of the current direct debit amount and is available to customers paying by advance direct debit. Terms apply: http://www.ovoenergy.com/terms/
95% of new customers save when switching to OVO: Based on all new customer signups between 01/02/2016 and 31/07/2016
94% of surveyed customers would recommend us: OVO conducted a survey of their customers in between 1st January 2016 and 15th April 2016. Out of 15,312 customers who responded, over 94% rated OVO 6+ when asked 'how likely would you be to recommend us to a friend and family, on a scale of 1 to 10.
Britain's top rated energy provider: Britain's top rated energy provider in the Which? 2015 satisfaction survey. Survey conducted in October 2015. Awarded in January 2016.