Future Energy has got it right, says competition agency

The provisional findings of a major study of the energy supply market by the Government’s Competition and Markets Authority (CMA) demonstrate that Future Energy has already anticipated and addressed many of its key findings.

Future Energy promises fair prices for gas and electricity; easy-to-understand bills; accurate meter readings; and a free “smart” meter so customers can keep constant tabs on their energy use.

The CMA’s provisional case for energy market reform was published on Tuesday, with a full report due out at the end of this week.

The report is the second in a week to highlight the extent of overpayment by customers and the huge energy surcharges facing the “fuel-poor” who buy their energy through prepayment meters. The CMA finds that customers could save, on average, £160 a year by switching suppliers to get a cheaper deal. Last week Citizens Advice said customers on prepayment meters were paying an average of £226 more than those on direct debit accounts – and the gap between wealthier energy consumers and those on prepayment meters had actually widened by a third in just six months.

The CMA report identifies a number of factors that need to be to be addressed so as to make the energy market work better for consumers:

• Energy customers are not sufficiently “engaged” in the market
• More than a third of consumers have never considered switching suppliers
• More than two thirds of consumers are on the “default” standard variable tariff, when cheaper fixed rate deals are available
• Bills are often confusing and inaccurate
• Consumers think it will be difficult to switch suppliers

The report concludes that “a lack of transparency is hampering trust in the sector” and Roger Witcomb, Chairman of the energy market investigation, said: “There are millions of customers paying too much for their energy bills – but they don’t have to.

“While competition is delivering benefits to increasing numbers of customers, mainly through the growth of smaller suppliers with cheaper fixed-price deals, the majority of us are still on more expensive default tariffs. Many customers do not shop around to see if there’s a better deal out there – let alone switch. The confusing way energy is measured and billed can make comparing deals understandably daunting.

“The result is that some energy suppliers know they don’t have to work hard to keep these customers. It’s notable that there are such high levels of complaints about customer service.”

The report identifies smart meters as a key tool in transforming customer understanding and engagement. By bringing in near real-time measurement of energy use they promise an end to estimated billing and better opportunities for customers to understand their energy use and their bills.

“At Future Energy we’re very much ahead of the game, having worked hard over two years to develop our smart meter installation training facilities,” said Tim Cantle-Jones, Managing Director. “We’ll be issuing a smart meter all our customers who want one as early as next year and we’ll be well ahead of the industry on this as the Government target is for all homes to have a smart meter by 2020.

“I welcome the CMA report because it is such a clear endorsement of the key pillars of our strategy at Future Energy, where we’ve identified the need for fair and transparent pricing, easy-to-understand bills and accurate meter readings as the cornerstones of our offer to consumers.”

Future Energy has already cleared all the regulatory hurdles prior to entering the market later this month, when staff will begin switching customers before “going live” at the start of August.

“In the first instance we are very focussed on the 34 per cent of people who’ve never considered switching supplier,” said Tim. “We believe we can deliver them annual savings of up to 15 per cent, or £300, because our operation will be more efficient than the bloated so-called Big Six suppliers, which have a lazy attitude towards customers.”

Future Energy has already employed about 20 staff in Newcastle and it will be entirely locally-based. The company was formally launched to regional business figures last month on a platform of a fairer deal for energy consumers, especially those in fuel poverty, and it is the first regionally-based energy supplier in 20 years.

“Interestingly, the CMA report also shows higher levels of brand loyalty in Scotland and Wales than in England and we now aspire to build a powerful regional link and high degree of trust with our customers here in North East England,” said Tim.

A percentage of all Future Energy profits will also be ploughed back into the community through a charitable foundation.

The company aims to have signed up 5,000 households by the end of October and intending customers can pre-register via the website www.future-energy.com now.