Guest Post
by Robert Buckley
Competition is more than a fringe in the non-domestic energy markets
In the latest of our guest blogs, Robert Buckley, Director of energy consultancy Cornwall Energy tackles competition in the business energy market.
Consumer Focus has just published a report that my colleague Kate Hill and I have written on the non-domestic energy markets called ‘Under the microscope’.
Our brief was to take a snapshot of the non-domestic markets in 2012 and compare it with the view we came to back in 2004 when we undertook a similar review for Energywatch.
Energywatch was Consumer Focus’s energy specific predecessor. One difference was that Energywatch’s remit was the whole non-domestic market, whereas Consumer Focus only concentrates on micro businesses.
If you are familiar with the Energywatch report—and surprisingly many people remember us for it—you’ll see that ‘Under the microscope’ naturally concentrates much more on micro business. It also makes some recommendations on how to make things better.
So what did we find?
Well first of all we wouldn’t have found anything without the considerable help we received from Consumer Focus, business groups, brokers and suppliers, for which we would like to say thank you. We were also able to help solve a couple of specific problems for individual businesses too, which was great.
We also worked with Consumer Focus to commission an independent telephone survey of 500 micro-businesses on what they thought of the business energy market.
Our assumption when we started was that, though competition was increasing through the entry of independent suppliers, the micro business market was pretty stagnant and probably borderline dysfunctional.
Suppliers, especially the Big 6, had been telling us that the market was becoming more competitive, and our own market share survey was recording the rise of non-Big 6 suppliers like Opus Energy, Haven Power, Contract Natural Gas and Gazprom Energy. But we were not convinced.
Craftily enforced rollovers, random back bills and poor service would probably be the order of the day, or so we thought.
There are real issues in the market, as we make clear in the report, but it was evident from the telephone survey and also other feedback that micro businesses are becoming increasingly aware of and confident in dealing with their energy contracts.
We think the combination of a very tough economy, rising energy prices and generally rising costs has prompted them to become more interested in their energy contracts.
There’s much to do—we show 40% disengaged from the market and also problems with back bills and brokers—but crucially we shouldn’t write off energy competition for small businesses just yet.
If your business hasn’t yet engaged in the energy market, now is the time to start.