Energy regulator slams utility company complaints handling

The energy regulator has given the ‘big six’ utility companies until the start of June to improve their complaints handling procedures and simplify tariffs that leave customers "bamboozled" or risk being referred to the Competition Commission.

Under sweeping proposals put forward by Ofgem, Centrica, Scottish and Southern Energy, EDF Energy, RWE Npower, Iberdrola’s ScottishPower and E.on will also have to auction off 20% of their electricity generation output to enable smaller players to enter the retail market, which should, it is hoped, also lead to greater pricing transparency.

Lord Mogg, the watchdog’s chairman said a recent review had found evidence that competition in the gas and electricity market was being stifled by a "combination of tariff complexity, poor supplier behaviour and lack of transparency".

"The energy supply companies have eight weeks in which to engage constructively with Ofgem’s proposals. If firms frustrate reforms, they risk ending up at the Competition Commission," he warned.

The clearest example of "poor behaviour" was that the ‘big six’ had "adjusted prices in response to rising costs more quickly than they reduced them when costs fell," Mogg said.

Alistair Buchanan, Ofgem’s chief executive, also pointed to consumer complaints that because energy suppliers’ prices were "too complicated", they were left "bamboozled". "This is why we are planning to sweep away this complexity so suppliers’ prices are fully exposed to allow easy price comparisons," he said.

Proposals include restricting the number of tariffs for products with no termination date to one per payment method for each domestic customer.

Buchanan, Ofgem’s chief executive also told the Financial Times that he was concerned about the utilities companies’ "lazy behaviour", which meant that they were "delivering really poor annual statements and bills, they have a poor customer complaints record and unconvincing accounts".