Consumer Engagement with Energy Markets

The Energy and Climate Change Committee, chaired by Tim Yeo MP, is today launching an inquiry to investigate the way in which consumers engage with energy markets. The UK’s energy system will need to undergo significant changes in the next few years in order to deliver secure, clean and affordable energy in future. Consumers will … Show more

The Energy and Climate Change Committee, chaired by Tim Yeo MP, is today launching an inquiry to investigate the way in which consumers engage with energy markets. The UK’s energy system will need to undergo significant changes in the next few years in order to deliver secure, clean and affordable energy in future. Consumers will have a vital role to play in determining the success (or otherwise) of many of the policies and measures that will deliver these aims. This inquiry aims to investigate the extent to which consumers are willing to actively participate in markets (for example by switching their provider) and whether consumers are equipped with the right skills and knowledge to take full advantage of schemes such as the Green Deal and smart meter roll out. The Committee will also examine the factors that affect public perceptions of energy prices and explore whether better consumer education is needed as our energy system enters a period of significant change. Terms of reference The Committee will examine the extent to which consumers interact with energy markets and whether greater engagement will be needed to facilitate the successful implementation of energy policies and programmes. The Committee invites responses addressing some or all of the following questions: How "energy literate" are consumers in the UK? For example, are most consumers aware of how much their bills vary according to usage? Are terms such as "kWh" understood by most consumers? To what extent are consumers aware of the different components that make up their energy bills and the relative contribution of each aspect? (e.g. wholesale costs, transmission and distribution charges, environmental/social policies and VAT) To what extent are consumers aware of the future projected levels of energy prices and bills and the drivers behind this? What are the barriers to consumers switching energy provider? Will Ofgem’s proposed Retail Market Reform measures encourage behaviour change amongst consumers or are further actions necessary? Will Ofgem’s proposals (including on standard tariffs and greater transparency of information published by energy companies) help to increase public trust in energy companies? To what extent are consumers aware of policies such as the Green Deal, smart meter roll out and Ofgem’s Retail Market Reform that could affect the way they use energy in their homes and their engagement in the market? And what are their perceptions of the schemes? What are the potential implications of a lack of consumer awareness in these areas? Is greater consumer education needed and if so, who should take responsibility for this, who should deliver it and how should it be delivered? What impact does the media have on public perceptions of energy bills? What are the pros and cons of using levies on bills rather than general taxation to pay for environmental and social policies? Show less