Retail Market Review
Energy Action Scotland (EAS) believes that it is fundamental to have a transparent energy market that consumers understand. This requires better information, simplification and the ability to easily compare and contrast different tariffs from different suppliers.
EAS points out, however, that there is a fine line between simplifying the market to be achieved by reducing the number of tariffs and offering the consumer a choice. Reform of the energy market should not stifle innovation, which would lead to the elevation of uniformity over choice. Although EAS supported a reduction in the number of tariffs, we believe that the key to tariff simplification lies not only in the number of tariffs available but in the ability of consumers to compare them easily, quickly and successfully.
EAS has concerns about the make-up of the daily standing charge. Increasing standing charges means that any energy efficiency gains are not felt in terms of reduced bills. This part of the bill cannot be influenced by consumer behaviour and no matter how energy efficient the consumer tries to be, the standing charge remains the same. EAS suggests that price rises be limited to price per unit to allow energy efficiency measures to have an effect financially and so help to reduce energy bills. There is also an important link here to the need for greater transparency. For some time now, the utilities have maintained that it is primarily the price of oil that has led to price increases. If that is the case, then surely it would be the unit cost alone and not the standing charge that would be increasing.
EAS supports the principle that energy companies should do a full review of their customer accounts every year to inform them of any better tariffs. Moreover, they should signpost customers to price comparison sites for independent comparisons with other companies. By making the market as a whole transparent, customer trust should start to be restored.