When the UK's competition watchdog (the Competition and Markets Authority or CMA) began its investigation into the retail energy market in June 2014 we had high hopes it would deliver genuine reform for energy customers in Great Britain.
However, after almost 2 years, we were disappointed with the publication of the CMA's penultimate report on 10th March. You may have seen our CEO Stephen Fitzpatrick’s remarks calling the investigation "a complete waste of time and taxpayers' money".
In essence the CMA identified two problems in the market: over-pricing and low customer engagement. In facts and figures this equates to 70% of Big Six customers stuck on high cost, out of contract tariffs, over paying to the tune of £1.7bn a year.
We identified a similar problem in June last year (see here) which confirmed that the gap between the cheapest deals in the market and the average Big Six standard variable tariffs was getting wider. In fact, the problem has worsened over the past year with this gap almost [doubling] since June 2015.
So, the CMA has spotted the problems but what are its solutions?
The CMA has proposed a price cap for prepayment customers - which we're proud to say is calculated based on OVO's PAYG tariff, one of the cheapest in the market.
While we welcome this solution, prepayment customers account for only % of all energy customers and only 1/3rd of fuel poor households. This means there is no pricing protection for the other 2/3rds of fuel poor households (let alone all credit customers).
As a result we've called once again for at the very least a social tariff cap which would help the remaining 1.5 million fuel poor customers who don’t use prepayment receiving some protection from being overcharged.
OVO has campaigned hard and we continue to believe that all customers should be protected from unfair exploitative pricing and have the benefit of a price cap. Indeed this is something that the CMA considered last year. But it seems the CMA has bowed to intense political pressure from the Big Six not to do this.
The CMA has also proposed removing the "whole of market" requirement from Ofgem's Confidence Code for switching sites. This means that customers using switching sites will no longer be able to compare tariffs across all suppliers - instead they will see only those suppliers who have signed deals with the switching sites.
These are just two examples of solutions that fail to address the root problems of poor engagement and market wide overcharging.
Nevertheless, the CMA’s unambitious and ineffective proposals will not deter OVO from continuing to provide our customers with fair prices, innovative products and award winning service.
If you’re interested in finding out more about the CMA’s investigation and reading OVO’s formal responses, visit https://www.gov.uk/cma-cases/energy-market-investigation.
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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.