Retail energy market renewal - reflections from a Citizens Advice roundtable
The retail energy market has been rocked by instability over recent months as wholesale energy prices have risen sharply. These rises have contributed to a succession of market exits, with 31 suppliers leaving the market since the start of last year. This means energy prices are now at a generational high - with significant increases in fuel poverty and energy debt likely as a result. The failure of so many companies and ongoing high prices mean that Ofgem is focused on improving resilience in the sector, with the Government focused on short-term affordability challenges.
However, ongoing work to prepare the retail market for the future must also continue. Key decisions are needed on the retail energy market’s role in delivering net zero and how to enable the innovative products and services that will help consumers do so. These changes should mean better choices for consumers, but could also mean new risks for some, particularly from reforms to gas and electricity pricing to better incentivise low-carbon choices.
Not all households will be able to adapt their usage or take up new technologies at the same pace, and there are risks of unfair outcomes during this transition which could undermine public support for net zero. Consumer protections and support schemes will therefore need to adapt to these challenges.
Citizens Advice hosted a roundtable in January 2022 to contribute to this discussion and help identify where there is consensus on the need for reform, and where there is a need for further evaluation. The event brought together senior policy-makers from different government departments and regulators, as well as representatives of suppliers, the broader energy industry, think tanks and academia. The event was held under the Chatham House rule, so this note does not identify the stakeholders who held a perspective, but does give an overview of the discussion and the balance of views. We give a high-level summary of the key themes that emerged from the event, and the actions that we will pursue as a result.