Retail Market Review (RMR) - non-domestic

What does RMR mean to business energy users?

Ofgem – the regulator of gas and electricity markets – launched their Retail Market Review (RMR) in March 2011 to assess their earlier reforms implemented as part of the 2008 Energy Supply Probe, including the protections introduced for micro-business customers.

4 RMR elements:

There are a four core areas that Ofgem are currently considering as part of their RMR while the issue of Third Party Intermediaries (TPIs)/Brokers is continuing as a separate work-stream:

 1. Micro-business definition increasing to cover more small businesses.

The proposed change will increase the consumption threshold in order to cover small businesses. Gazprom Energy already treat all gas customers who consume less than 293,000 kWh per year as micro-businesses. The proposed change will benefit more of our electricity customers who will be entitled to the same protection and communications as those currently classed as 'micro-businesses'.

Micro-business definition

Viewpoint: Gazprom Energy are supportive of the change in microbusiness definition that will extend its scope to cover more businesses.

2. Contract end date and last date that termination can be received printed on invoices.

Ofgem proposed that suppliers will need to print contract end dates on customer’s invoices as well as, the last date by which suppliers must receive a notice of termination from customers. This would apply to all those on fixed term contracts covered by the micro-business/small business definition.

Viewpoint: Gazprom Energy are supportive of this change as we believe it will be a useful reminder for customers when their contract is due to end and it should encourage more competition and customer switching in the small business market.

3. Standards of Conduct for suppliers.

Ofgem propose that when dealing with small business customers in relation to contracting, billing and transfers: suppliers will need to abide by set standards of conduct. The overarching objective of the standards of conduct is for the customer to be “treated fairly”.

Viewpoint: Gazprom Energy strives to offer the highest quality of service for all customers, in all areas. So whilst we welcome Ofgem’s proposals, we have some concerns over the subjective nature of the proposed obligations.

4. Customer-transfer blocking – ‘objections’.

The objections process allows energy suppliers a limited opportunity to prevent a customer from switching to another supplier e.g. if the customer is still under contract or if the transfer was initiated in error. Ofgem are currently undertaking a review of objections and have encouraged the industry to work together to improve processes in this area to offer a smoother switching for customers.

Viewpoint: Gazprom Energy recognise that Ofgem have concerns in this area and we agree that they should continue to monitor customer transfers and encourage and support industry developments, in order to ensure the smoothest and fastest switching process for customers.

Next Steps

Ofgem have confirmed these changes will be implemented into the energy market between late summer and early 2014.

More details on Ofgem’s non-domestic Retail Market Review can be viewed on their website.

Third Party Intermediaries (TPIs)/Brokers

Ofgem have highlighted some concerns over mis-selling in the TPI market which is damaging for both customers and the energy industry. Consequently, Ofgem have proposed to introduce a Code of Practice for non-domestic TPIs. Ofgem and a broad stakeholder group are developing the details of the Code of Practice. In addition, Ofgem are considering seeking powers so they can ensure businesses comply with the Business Protection from Misleading Marketing Regulations.

Viewpoint: Gazprom Energy is supportive of Ofgem’s initiative to introduce a Code of Practice for non-domestic TPIs and is assisting with its development. The Code of Practice should give customers confidence when dealing with TPI’s in the non-domestic energy sector and safeguard trust and transparency. Work is continuing on the Code of Practice throughout 2013.