Energy market regulator Ofgem responds to Competition and Markets Authority's recommendations

Caitlin Morrison
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(FILES) - Picture taken 31 August 2006 s
The competition regulator has been looking into the state of the energy market (Source: Getty)

Ofgem, the gas and electricity markets regulator, has set out its plans to improve competition in the sector, which includes creating a database of customer details to ensure consumers are being offered the best energy deals - and putting a price cap on the amount paid by households using a prepaid meter.

The Competition and Markets Authority (CMA) published its findings on the state of the energy market in June, when it recommended a database of customer details and the prepayment price cap. The watchdog also said it planned to increase Ofgem's powers, allowing it to make changes to the market more effectively.

The CMA said a database of "disengaged customers" - consumers who have been on a supplier's default tariff for three or more years - would help promote competition between rival energy companies, and would also be a useful tool for Ofgem to use in trying to engage with customers.

Today the energy regulator said a national database is to go live in spring 2018, and said: "Protecting consumers’ personal data is a priority. We will work with consumer bodies, amongst others, on how best to protect personal data."

Prepayment meters
Meanwhile, Ofgem also said it agreed the CMA's conclusions on prepayment meters. The competition authority said that a price cap should apply to domestic customers on prepayment meters for a transitional period, from 2017 to the end of 2020, when the roll-out of smart meters is expected to be "substantially complete", according to Ofgem.

Ofgem said it will "continue to assist the CMA as it implements the price cap and ensure we are ready to take on our role of monitoring compliance with the cap from April 2017 as well as updating the level of the cap as required".

Better futures
"The CMA’s final report into the energy market points the way to a better future for consumers," said Ofgem chief exec Dermot Nolan.

"We expect suppliers to compete for all consumers by offering good value and innovative deals and providing good customer service. Ultimately, it is in suppliers’ interests to make sure the CMA’s reforms lead to lasting benefits for consumers."

‚ÄčOfgem said the CMA's report "marks a watershed for the industry and consumers" and added that it had referred the market to the CMA for investigation because it was not working in the interests of all consumers.

The energy regulator also said that it hopes to act "quickly and effectively" on all the CMA's recommendations, with immediate action planned where possible. Ofgem also warned that suppliers will be expected to comply with all recommendations.

"We will be making clear to suppliers that they cannot pick and choose the remedies: they are designed to be acted on as a package," Ofgem said.

"We are encouraged that some suppliers are already taking the initiative to start to implement remedies before they are legally obliged to do so. We call on others to do the same."

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