The Utility Regulator today publishes a report which, for the first time, provides an independent assessment of the effectiveness of competition in retail energy markets in Northern Ireland. The report, produced by independent energy experts Cornwall Energy, was commissioned by the Regulator as part of a review of retail energy competition initiated earlier this year.
Cornwall Energy’s research analysed the market in Northern Ireland, compared to standard criteria set out by the UK competition body - the Competition and Markets Authority. It is the first independent assessment of the electricity and gas retail markets in NI regulated by the UR since new suppliers entered the market to challenge incumbent suppliers.
Key findings from the Cornwall Energy research are:
1. almost 90% of gas and electricity customers in Northern Ireland are satisfied with their energy supplier;
2. around 70% of customers confirmed that they trusted their supplier to be open and transparent in their dealings with consumers;
3. a large percentage of consumers know they are able to switch energy supplier - 83% of electricity consumers and 84% of gas consumers were aware of the ability to choose provider;
4. around 25% of customers have switched since the introduction of competition.
Overall, Cornwall Energy conclude that:
• competition in the NI energy retail markets is becoming established and delivers benefits to consumers that have switched;
• price regulation for smaller business and households has ensured reasonable and stable prices for the benefit of those consumers that have chosen not to switch;
• vigilance is required to avoid the risk that a small number of suppliers may use their market dominance to set prices that adversely affect consumers; and Cornwall expect to see continuing price regulation for some time to come;
• the NI experience strongly suggests that regulation and competition can usefully co-exist. This “hybrid” approach to the energy markets provide the dual benefits of competitive offering and regulated prices to ensure excessive profits are avoided, and there is and there is transparency with regards pricing for regulators, government and customers. .
• there are a number of measures that could or should be considered to improve the functioning of the energy markets in NI – including improving aspects of the competitive process, improving customer access to information or improving predictability of costs.
Welcoming the publication of the report, Jenny Pyper, Chief Executive of the Utility Regulator said:
“Cornwall Energy’s independent assessment provides a valuable and transparent reference point for our review of the effectiveness of competition in retail energy markets. The assessment shows that most consumers believe that retail energy markets are working with high levels of customer satisfaction and encouraging levels of switching.
The endorsement and expert validation by Cornwall Energy of the Northern Ireland model for regulating energy markets, while highlighting the ongoing challenges for competition in relatively small markets, is also welcomed.
We will consider further the implications of this assessment for our review of competition and expect to finalise our work next year, when we will publish our conclusions and recommendations.”
This marks the end of Phase 1 of the Regulator’s review of retail energy markets and we are also publishing information about the next steps in review. Interested stakeholders are invited to attend a briefing event on the phase 1 findings contained in the Cornwall Energy report. This event will held at our offices from 11.00 to 13.00 on Monday 24th November 2014. This will be an opportunity for Cornwall Energy to provide more detail on the review and answer stakeholder questions.
If you would like to register your interest in attending this event, please contact Samantha Young (samantha.young@uregni.gov.uk) by 2.00pm on Thursday 20th November 2014.