27th Jun 2016 09:13
LONDON (Alliance News) - Flowgroup PLC Monday welcomed the proposals put forward by the Competition & Markets Authority as part of its lengthy investigation into the UK energy market, and said it believes the CMA measures will encourage higher levels of switching by customers.
The CMA is the UK's competition and consumer authority. It launched an investigation into the competitiveness of the energy market after the UK energy regulator Ofgem requested one back in June 2014, with the aim of assessing whether there were any features which prevent, restrict or distort competition.
Many of the main topics highlighted by the CMA were revealed in the preliminary findings published in March, and the stand out proposal involved creating the ability for suppliers to directly target customers that had not switched in over three years. The CMA opted not to introduce a price cap, an idea the authority was considering last year.
Flowgroup is an energy services company but also has a domestic supply business named Flow Energy, one of the many smaller independent suppliers to have emerged in the UK energy market. This has seen increased numbers of customers moving over from rivals as it has around 180,000 customers at present compared to only 100,000 at the end of 2015.
Although the number of independent suppliers in the UK energy market has increased significantly in recent years, there are still concerns that the Big Six suppliers still dominated the market, prompting the CMA to take action.
"We believe that the market is already competitive, due almost exclusively to the efforts of challenger suppliers like Flow Energy providing lower prices and better service than the Big Six. However, we do believe that the key changes suggested by the CMA would achieve their aim of encouraging even more customers to switch supplier, an effect that can only be positive for the continuing growth of our business," said Flowgroup.
Flowgroup highlighted three of the proposals as "key changes" for the market and company, out of the more than 30 set to be introduced by the CMA following the two-year-long investigation.
Flowgroup believes the creation of a database that will collect and present data on customers that have not switched suppliers for more than three years will assist in encouraging customers to move away from the Big Six suppliers, but also noted the importance of carefully implementing the system to ensure customers are not flooded with marketing materials.
The Big Six include London-listed firms Centrica PLC, the owner of British Gas, and SSE PLC, alongside EDF Energy, E.ON, nPower and ScottishPower.
The system will be controlled by regulator Ofgem and customers can opt-out at any time.
Flowgroup also believes the lifting of the four-tariff rule, which limited the type and number of tariffs that UK suppliers could offer customers, will "allow more innovation".
"This is particularly beneficial for our Energy for Life strategy since it allows us the flexibility to create a range of tariffs that bundle in our innovative microCHP, smart heating and connected home products, delivering value to customers in new ways," said Flowgroup.
Price comparison websites are being given a bigger role to play in the market by being given access to meter data which will enable customers to search instantly for deals. London-listed firms include Moneysupermarket.com Group PLC, Esure Group PLC and Zoopla Property Group PLC.
Flowgroup said that can help spur the creation of exclusive deals and rebated commission and change the way firms display comparison information to customers.
"We believe the differentiated elements of Flow Energy's offer - our Which? Recommended Provider status and our Energy for Life offer - will allow us to continue to stand out in the competitive price comparison space and that our focus on innovation will allow us to use these changes to our maximum advantage," said Flowgroup.
"We welcome the CMA findings and believe the implementation of their suggested changes will play their part in the continuing growth of our business. However, fundamentally, we believe that the best way to encourage switching is for challenger suppliers like Flow Energy to keep providing competitive pricing and outstanding service," said Andrew Beasley, managing director of Flow Energy.
"We must also continue to expand the idea of what an energy company can be, by offering a broader range of products and services to customers, so they have genuine choice and can find genuine value," he added.
Flowgroup shares were up 2.1% to 10.77 pence per share on Monday morning.
By Joshua Warner; [email protected]; @JoshAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.
Related Shares:
CentricaSSEFlowgroup