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Ofgem Announce Investigation into BES

Ofgem have announced a wide ranging investigating into the compliance of “BES” with regards its “obligations under the gas and electricity supply licences”.

Ofgem explained that BES Commercial Electricity Ltd (electricity supplier) and Business Energy Solutions Ltd (gas supplier) were the subject of an investigation as to:

“Whether BES (encompassing both licensees) is complying with the requirements of conditions 7A, 7B, 7, 14 and 21B of their gas and electricity supply licences. We are aware of a high level of complaints made about BES and have also received a referral from Citizens Advice.”

Under Ofgem’s energy supply licence conditions (SLCs) all accredited energy suppliers are required to abide by set terms. Each of which is designed to ensure transparency and fairness in the treatment of business customers, specifically those who are deemed micro businesses.

Condition 7A

Under SLC 7A.4(b), suppliers must take all reasonable steps, before the licensee enters into a Micro Business Consumer Contract, to bring the Principal Terms of the proposed Contract to the attention of the Micro Business Consumer and ensure that the information is communicated in plain and intelligible language.

Condition 7B

Under SLC 7B (non-domestic Standards of Conduct) the licensee is required to behave and carry out any actions in a fair, honest, transparent, appropriate and professional manner. It is a requirement that information is provided (whether in writing or orally) to each Micro Business Consumer which is complete, accurate and not misleading (in terms of the information provided or omitted); that it is communicated (and, if provided in writing, drafted) in plain and intelligible language; that it relates to products or services which are appropriate to the Micro Business Consumer to whom it is directed; and that it is otherwise fair both in terms of its content and in terms of how it is presented (with more important information being given appropriate prominence).

The objective of SLC 7B is for the licensee to ensure that each Micro Business Consumer is treated fairly. For the purposes of this condition, the licensee would not be regarded as treating a Micro Business Consumer fairly if their actions or omissions significantly favour the interests of the licensee; and give rise to a likelihood of detriment to the Micro Business Consumer.

Condition 7.6A

Under SLC 7.6A a Deemed Contract must not, subject to sub-paragraph 5(b), require a Customer to give any form of notice before they are able to change supplier. Under SLC 7.6B the licensee must not, and must ensure that its staff and any Representative does not, inform any customer subject to a Deemed Contract that they are, subject to sub-paragraph 5(b), required to give any form of notice before they are able to change supplier.

Condition 14

Under SLC 14 a supplier is only allowed to object to the transfer of a non-domestic customer, if they have a term in the Contract they can rely on at the time. SLC 1 specifically excludes Deemed Contract from the definition of a Contract and therefore a supplier cannot object to any transfer of a customer on a Deemed Contract.

Condition 21B

Under SLC 21B, if a Customer provides a meter reading to the licensee that the licensee considers reasonably accurate, or if the Electricity Meter is read by the licensee, the licensee must take all reasonable steps to reflect the meter reading in the next Bill or statement of account sent to the Customer. If the licensee considers that a meter reading provided by a Customer is not reasonably accurate, the licensee must take all reasonable steps to contact the Customer to obtain a new meter reading from him.

The announcement will come as a blow to BES given the confident defence provided recently that:

”BES has operational controls beyond Ofgem’s requirements yet we have never been the subject of any formal Ofgem investigation in the seven years we have held a supply licence”.

Whilst the outcome of Ofgem’s investigation remains to be seen the existence of such a process again underlines the problems facing business energy customers and the care required to navigate the market if companies are to avoid falling foul of potentially substandard practices.

With the Big 6 suppliers the focal point of the Competition and Markets Authority investigation into the energy market and now this latest investigation into ‘BES’ the oft prompted claim that big is bad, small is good may require revision.

In our latest “ease to leave” survey, BES have again been identified as the supplier most likely to ‘object’ to an application to transfer away at contract end with a rate of objection 4x the industry average.

Whilst a poor rating doesn’t necessarily suggest the supplier is doing anything untoward given some reasons for preventing transfer perfectly legitimate. However it does suggest customers need to be fully prepared for any such obstacle and to carefully consider the trends amongst suppliers before entering a contract.