Keeping your eye on the ball – the Keeping your eye on the ball – the unexpected consequences of unexpected consequences of

liberalisationliberalisation

Carole PitkeathleyCarole Pitkeathley

Head of Regulatory AffairsHead of Regulatory Affairs

energywatchenergywatch, UK, UK

11 October 200511 October 2005

• The UK energy market

• Off to a good start!

• Market structure and the social dimension

• The need for continued reform

Presentation Presentation

OverviewOverview

• 25 million electricity households

• 20 million gas households

• 2 million+ in fuel poverty

• Gas market opened in 1996

• Electricity market opened in 1998

• 66k electricity & 83k gas ‘switch’ each week

The UK The UK

Energy MarketEnergy Market

Off to a good Off to a good start!start!

• Choice

•Lowering prices

•Removal of supply price controls

•Abuse of dominant position prevented

•NETA

•Suppliers’ offerings were innovative and attractive – e.g. Dual Fuel

Levels of Switching in UKLevels of Switching in UK

Customer Transfers ComparedCustomer Transfers Compared

Market Market Structure and Structure and the Social the Social DimensionDimension

Scottish and

Southern, 10%

British Gas, 41%

EDF, 11%

Scottish Power,

8%

Powergen, 17%

New Entrants,

1%

Npower, 12%

Market Market Structure and Structure and the Social the Social DimensionDimension

•Poor and dubious sales practices

•Erroneous transfers

•Bad billing

•Debt and disconnection

•Increasing prices

Direct Sales Complaints

0

500

1000

1500

2000

2500

Month

Cas

es R

ecei

ved

Domestic Direct Selling

Business Direct Selling

Direct Selling ComplaintsDirect Selling Complaints

All Transfer Related Complaints

0

500

1000

1500

2000

2500

3000

3500

4000

4500

Month

Cas

es R

ecei

ved

Domestic Transfers

Business Transfers

Customer Transfer ComplaintsCustomer Transfer Complaints

All Accounts & Billing Complaints

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Month

Cas

es

Domestic Accounts

Business Accounts

Accounts and Billing ComplaintsAccounts and Billing Complaints

The need for The need for continued continued reformreform

•Not a neutral option – affects firms’ strategic responses

•Actions to deliver intended benefits

•Expect the unexpected

•Prevent the “easy option” ethos

•Keep policy development ahead of the game

Keeping your eye on the ball – the Keeping your eye on the ball – the unexpected consequences of unexpected consequences of

liberalisationliberalisation

Carole PitkeathleyCarole Pitkeathley

Head of Regulatory AffairsHead of Regulatory Affairs

energywatchenergywatch, UK, UK

11 October 200511 October 2005