ElectraLink estimates that Ofgem proposes giving £2.79m in compensation to customers. We explore how energy suppliers could limit their liability…
Ofgem has released a paper (https://www.ofgem.gov.uk/publications-and-updates/supplier-guaranteed-standards-performance-consultation-switching-compensation) which strives to improve customers’ experience of switching, by targeting issues Ofgem believes most impact the end customer.
Two of the measures outlined in the paper involve compensation to the customer of £45 (£30 for nominating supplier and £15 for current supplier) for an Erroneous Transfer (ET) occurring and a further £15 if that ET is not resolved within 20 days. At ElectraLink we have visibility of all the ETs for both Gas and Electricity customers. We modelled the cost to the industry if this compensation arrangement had been in place between July 2017 – June 2018, where the industry would have compensated affected customers a total of £2,794,605 – a combination of the two charges below:
- Total for ET occurring £2,688,390, of which £896,130 would relate to penalties paid by the supplier who was losing the customer and not involved in the process
- Total for ETs not resolved in time is £106,215.
Ofgem claims that the split of (£30/£15) will fairly apportion the blame, but what if you are an operationally efficient supplier? Is this unfair? What are the downstream settlement costs of this process?
To understand your ET performance, benchmarked against the industry, talk to ElectraLink to see if you are disproportionally affected by this. We can also incorporate our dataset into your processes to ensure you limit your liability.