Since the start of the year we have seen four key licence changes that have taken effect and altered the compliance landscape. This in turn affects the requirements energy suppliers face to make sure they comply with their licence and do not fall foul of Ofgem enforcement action in relation to their customer facing activities. A number of the changes implemented look to be reviewed in the near future as a result of action taken by the government and Competition and Markets Authority's current investigation.
Firstly, in April we saw the implementation of a new licence condition for green tariffs, SLC21D. This obligates suppliers who offer green tariffs with environmental claims to provide three key things:
- additionality -to go over and above the environmental obligations they already face;
- transparency - meaning suppliers have to be upfront with the information they provide giving a clear description of the benefits of a green tariff; and
- evidence of supply - when a supplier makes a claim about a tariff being from renewable energy they have to make sure they hold enough Renewable Energy Guarantees of Origin or Levy Exemption Certificates (Lecs) to cover the volume supplied.
Initially, these principles may have caused a few concerns, as the regulator left the additionality area up to individual suppliers to determine how they go about it. Further questions have been raised now that Ofgem has confirmed Lecs will no longer be issued to renewable electricity generated post 31 July. Suppliers will need to satisfy themselves that the evidence of supply is appropriate.
Last year Ofgem confirmed it believes that the automatic rollover contracts are not necessarily a bad thing. It said the contract for microbusinesses ensure those customers who are less involved in the energy market will not automatically be switched to a more expensive deemed tariff if the customer takes no action. However the regulator confirmed that from the end of April a number of changes would take effect in relation to the obligations on suppliers to notify customers that their contract is coming to an end. These include reducing the cut-off date that a customer can terminate to be 30 days before the end of a contract, rather than the previous 90 days. The regulator has also placed an obligation on suppliers to acknowledge receipt of customers' termination notice within five working days. Suppliers are now required to provide information on the charges that will take effect once should the customer take no action at the end of their contract. Ofgem had said it would keep this section of the market under review. However the fact that the Competition and Markets Authority suggested in its provisional findings that auto rollovers adversely affect competition, it is likely Ofgem will reconsider this market feature.
In the past month we have also seen the requirement for machine readable images to be on all bills, such as the more commonly known Quick Response (QR) codes. Although a decision was made on this back in December last year, we saw implementation at the end of June 2015, with the updated licence conditions published by Ofgem in early July. It is not surprising if some suppliers' are unaware of this licence modification as it would appear both the government and Ofgem have not been transparent in publically providing information on the requirements. This licence condition is very prescriptive on the information that needs to be included and on the order in which it should be presented to the customer. The information includes the customer's postcode, their current tariff, their annual payment method, and annual consumption; all of which can be found on the bill already.
However, it is the intention that QR codes, or "Optical Images" as the licence sets out, should be scanned using a smart phone to provide the customer with all the data needed to compare tariffs or complete the information needed on switching websites. To assist suppliers with the technical aspects of the QR codes DECC has held a number of workshops over the past few months and circulated Technical Specifications to all licensed suppliers at the time. Although not available on the DECC website, the Technical Specifications can be accessed on our Compliance Portal here. It should be noted only suppliers with over 50,000 customers are obliged to provide QR codes on bills.
And finally Ofgem published amended licence conditions for the increase the mandatory threshold to £500 for the Debt Assignment Protocol (DAP). This allows for customers with prepayment meters that are in debt to be eligible to switch electricity supplier. Initially the review came about following Ofgem's review of the DAP which highlighted that less than 1% of all PPM customers' who were allowed to switch actually managed to switch. This very low level of switching was said to be due different credit limits between the mandatory and voluntary thresholds causing confusion and the requirement to receive customer consent to enable a supplier to share customer debt information with the gaining supplier.
A number of changes that are due to be implemented in the remaining months of 2015 including: the enduring arrangements for White Labels Tariffs, consumption data privacy rules for Remote Access Meters and lowering the Typical Domestic Consumption Values (TDCV's).