Change of Supplier Expert Group Meeting 2 10 June 2013 Rowaa - PowerPoint PPT Presentation

Change of Supplier Expert Group Meeting 2 10 June 2013

Rowaa Mahmoud OBJECTIONS 2

Objections Recap from previous meeting • Ofgem‟s aim is to reduce the impact of objections on the length of time it takes to transfer and the uncertainly this causes for customers 3

Disclaimer All charts presented in these slides represent information that Ofgem has received from Big six suppliers. Ofgem has undertaken limited validation on the data submitted so any information should be considered within this context. 4

10.00% 12.00% 14.00% 0.00% 2.00% 4.00% 6.00% 8.00% Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Objection rate - Domestic Dec-10 Jan-11 Feb-11 See caveat in slide 4 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 5 Feb-13

10.00% 12.00% 14.00% 0.00% 2.00% 4.00% 6.00% 8.00% Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Objection rate - Domestic Nov-10 Dec-10 Jan-11 See caveat in slide 4 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 6 Feb-13

Frequency of objections (source: Xoserve) 45000 40000 35000 30000 25000 20000 15000 10000 5000 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Occurrences 2291 19695 8635 2533 902 486 827 472 131 48 30 36 33 28 19 8 7 0 4 1 Total number of objections 2291 39390 25905 10132 4510 2916 5789 3776 1179 480 330 432 429 392 285 128 119 0 76 20 7

Objection reasons - Domestic 100% 98% 96% 94% 92% Related MPANs 90% Co-operative Objection Customer Requested Objection 88% Outstanding Debt 86% 84% 82% 80% 2010 2011 2012 See caveat in slide 4 8

Objection reasons - Domestic 100% 98% 96% 94% 92% Co-operative Objections 90% Customer Requested Objections Outstanding Debt 88% 86% 84% 82% 80% 2010 2011 2012 See caveat in slide 4 9

10.00% 15.00% 20.00% 25.00% 30.00% 0.00% 5.00% Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Objection withdrawal rate - Domestic Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 See caveat in slide 4 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 10 Jan-13 Feb-13

10.00% 15.00% 20.00% 25.00% 30.00% 0.00% 5.00% Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Objection withdrawal rate - Domestic Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 See caveat in slide 4 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 11 Jan-13 Feb-13

Objections Reform options Option Description Option 1 No objection process Option 2 Roll-backs Option 3a Shorter objection window: “x” hour objection window Option 3b Shorter objection window: fixed cut-off within day Option 3c Shorter objection window: 1 or 2 days Option 4a Central register of objections Option 4b New supplier can access central register of objections in advance of transfer Option 5 Losing supplier declaration of “no objection” 12

Objections Option 3b - Option1 – Option 2 - Roll Option 3a - x Option 3c - 1 or Option 4 - Central within day fixed remove back hour 2 day window register cut-off Criteria Speed Transfer quicker No impact for elec Transfer quicker Transfer quicker Transfer quicker Transfer quicker but could speed up gas Ease More certainty on Confusion to Minimum effort for Minimum effort for Minimum effort for Minimum effort for transfer consumers consumers consumers consumers consumers Accuracy More ETs ETs could be ET could be ET could be flagged ET could be Might not catch ETs prevented flagged but limited but limited flagged opportunity opportunity Coverage Applicable to all Applicable to all Applicable to all Applicable to all Applicable to all Applicable to all customers customers customers customers customers customers Consumer Faster transfers Effort and Faster transfers Faster transfers Faster transfers Faster transfers expectations confusion to consumers Design - No longer need to Complex design tbc tbc Similar to gas tbc flexibility consider this part of CoS process Integration No impact on Complex design tbc tbc No impact tbc other systems Design – No regulatory Complexity makes Require Ofgem to Require Ofgem to Require Ofgem to Require Ofgem to robustness input required it potentially monitor and monitor and monitor and monitor and difficult to enforce enforce enforce enforce regulate Solution tbc tbc tbc tbc tbc tbc cost/benefit Implementation tbc tbc tbc tbc tbc tbc 13

Objections COSEG has been asked to: • Identify any further options for discussion at today‟s meeting • Review options against the Evaluation Criteria • Identify any differences in approach required between – Smart and traditional meters – Domestic and non-domestic – Electricity and gas • Consider the requirement to retain an objection resolution period? • Identify any links and dependencies that should be taken into account 14

Objections ROUNDTABLE DISCUSSION 15

Objections Next steps • Summary and actions • Is further information required to support COSEG‟s assessment of the reform options • Is a further discussion required at a future COSEG? 16

Andrew Wallace AMENDED TERMS OF REFERENCE AND EVALUATION CRITERIA 17

Amendments to Terms of Reference • Focus remains on longer-term reform. However quick wins to be recorded in minutes (and summarised in Q1 2014 consultation) • Clarification on scope – Cooling off-periods – Objections – Access to metering data • Suppliers have right to request invitation to COSEG • Papers provided at least 5 working days in advance of COSEG meeting • Minuted discussion will not be attributed to an individual or organisation (unless requested or related to an agreed action) 18

Amendment to Evaluation Criteria The transfer process should be transparent for consumers. Once a customer has chosen a new supplier, the process should be Ease transparent and achieved with the minimum of effort for the consumer and for all parties who have an interest in the switch. The transfer process should meet or exceed consumers’ Consumer expectations in terms of speed, ease, accuracy and coverage. expectations 19

Andrew Wallace CONFIRMATION WINDOW - GAS ONLY 20

Confirmation window Recap from previous meeting • Our high level aim is to promote faster switching and alignment with electricity by removing or reducing the 7 WD timeframe between the objection window closing and the customer transfer date • Xoserve analysis on interventions to improve demand attribution during 7 WD window 21

Confirmation window Reform options Option Description Option 1 Reduce confirmation window Option 2 Remove confirmation window 22

Confirmation window Criteria Option1 – reduce confirmation Option 2 – remove confirmation window window Speed Transfer quicker Transfer quicker (better met than option 1) Ease No impact No impact Accuracy No impact (CoS read for customers with No impact (CoS read for customers with traditional meters) traditional meters) Coverage Applicable to all customers Applicable to all customers Consumer Faster transfers Faster transfers expectations Design - No impact on current position – potential to No longer need to consider this part of CoS restrict future business models and process flexibility alignment with electricity Integration tbc No longer need to consider this part of CoS process Design – No regulatory input required No regulatory input required robustness Solution tbc – Xoserve provided initial cost of £500k tbc – what is the impact on the quality of on reducing confirmation window from D-7 demand attribution? cost/benefit to D-5 for UNC 396. Implementation tbc tbc 23

Confirmation window COSEG has been asked to: • Identify any further options for discussion at today‟s meeting • Review options against the Evaluation Criteria • Identify any differences in approach required between – Smart and traditional meters – Domestic and non-domestic – Electricity and gas • Identify any links and dependencies that should be taken into account 24

Confirmation window ROUNDTABLE DISCUSSION 25

Confirmation window Next steps • Summary and actions • Is further information required to support COSEG‟s assessment of the reform options • Is a further discussion required at a future COSEG? 26

Andrew Wallace ERRONEOUS TRANSFERS 27

Erroneous Transfers Introduction • Our aim is to eradicate/substantially reduce the number of erroneous transfers • Current ET rate at around 1% of transfers (excluding Customer Service Returners) • Impact for smart meters potentially more significant as could lead to disruption in supply (PPM) and to services (load control) • Shortening the objection window will reduce the opportunity to block potential erroneous transfers 28