From October energy suppliers must tell customers if their cheapest deal is marketed under a different brand
Ofgem has recently published its final decision on how suppliers who sell energy using white labels in the domestic energy market will be regulated. From October, suppliers will have to be more transparent and tell customers what the cheapest tariff is for them regardless of the brand they use.
- Suppliers with white labels will have to inform customers of the cheapest tariff for them, whatever brand it is sold under
- Ofgem’s decision will make it easier for consumers to find the cheapest tariff for them
- New rules provide greater flexibility for white label brands to operate and engage consumers in the retail energy market
White labels are organisations that do not hold a supply licence, but instead work in partnership with a licensed supplier to offer gas and electricity using their own brands.
Under Ofgem regulations, suppliers already have to tell customers about their cheapest deal, but until now this rule hasn’t extended to white label tariffs. Ofgem wants to ensure that suppliers are clear with their customers about their cheapest tariffs, regardless of the brand they use to offer the tariff.
Under Ofgem’s new rules, white labels will have the same flexibility as their partner suppliers in areas such as the number of tariffs and types of bundles they can offer. This will make it easier for new companies to enter the energy market. The decision on white labels unlocks further opportunities for consumers to engage with the market through well-known household names and innovative brands, while retaining the additional protection that Ofgem has put in place for consumers.
Rachel Fletcher, Ofgem senior partner, said: “Selling energy through white label brands has the potential to increase consumer choice and engage consumers to shop around through well-known brands. But it is important that consumers are given the complete picture about all their supplier’s tariffs. We are acting to reduce barriers to white labels entering the market and to ensure suppliers tell their customers what the cheapest deal is for them, whatever brand it is marketed under. Transparency about the cheapest tariff that a supplier offers is important in rebuilding consumer trust in the market.”
Notes to editors
- Recently Ofgem has published the document outlining its final decision on how white label partnerships will be regulated following a call for evidence in March 2014, a consultation in September 2014 and a statutory consultation on the regulatory proposals in February 2015. The new rules will come into force on 1 October 2015.
- In 2013 Ofgem created temporary arrangements for suppliers with pre-existing white labels, including temporary exemptions for white label tariffs from the Retail Market Review (RMR) rules. The document Ofgem published recently sets out its decision on regulatory arrangements that apply equally across suppliers, including those setting up new white label partnerships.
- The new arrangements for regulating white labels are as follows:
On tariffs: Each white label will be allowed four core tariffs, as is the case for licensed suppliers and there is no limit on the number of white labels that a supplier can have. White labels can differentiate themselves from their partner supplier in the other RMR tariff rules, including on discounts and bundles. This extends the current flexibility in the temporary arrangements to new white labels and it facilitates consumer engagement and choice.
On information: Suppliers must tell their customers about their white label tariffs when they are the cheapest via the Cheapest Tariff Message (CTM) on bills and other customer communications. For white labels, the CTM includes the partner supplier’s tariffs, but not the tariffs of its other white labels. This supports transparency around the relationship between supplier and white label so that consumers are told what their cheapest deal is with their licenced supplier, whatever brand it is marketed under.
- The document Ofgem published recently also presents some pricing information of partner suppliers, white labels and large suppliers without white labels. When comparing tariffs, both price and non-price elements should be taken into account, such as customer service.
- The temporary regulatory arrangements applied to the white label partnerships that have been in place on or before March 2013. These are the white label partnerships covered by the temporary regulations:
- British Gas with the white label Sainsbury’s Energy
- SSE with the white labels M&S Energy and Ebico
- Ofgem will monitor the impact of these new arrangements as part of its ongoing evaluation of its RMR reforms.
For further press information contact:
Claudia Cimino: 020 3263 2722
Tim Webb: 020 7901 7179
Out of hours media contact number 07766 511470
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