Customer Protection
30. The statutory duties
of the two regulators in respect of customer protection are similar,
but not identical. The DGGS has a duty to protect the interests
of mains gas consumers in respect of prices charged and supply
terms, the continuity of supply, the quality of supply services
and the exercise of suppliers' rights to enter customers' premises.
In respect of the quality of supply services, she must also take
into account the interests of those who are chronically sick,
disabled or of pensionable age. The DGES must protect the interests
of electricity consumers in respect of prices charged and supply
terms, continuity of supply and quality of supply services. He
must take into account the interests of consumers in rural areas
in respect of prices charged and of those who are disabled or
elderly in respect of quality of services. As with those considerations
relating to the environment, the regulators are required to perform
these duties, subject to their primary duties.[39]
They also share them with the Secretary of State. Thus, arguably,
the three key issues in customer protection are price controls,
supply obligations and supply services.
31. Some witnesses claimed
that customer protection is not given a high enough priority in
the regulators' statutory duties. The Gas Consumers Council (GCC)
wanted to see "consumer interests come first".[40]
Dr Dieter Helm proposed that the regulators' statutory duties
should be altered to give priority to the interests of the consumer
and to make the promotion of competition a secondary concern.[41]
The weight of our evidence does not support such calls. As Yorkshire
Electricity pointed out, consumer interest should not be understood
in narrow terms: "The three primary duties of the electricity
regulator include two that have a strong element of customer protection:
to secure that all reasonable demands for electricity are satisfied,
and to promote competition in supply and generation. The third
duty - to secure that licence holders are able to finance their
licensed activities - may not have an obvious link to customer
protection, but the infrastructure of the energy utilities is
critical for industrial, commercial and residential customers,
as they would suffer loss of service if there were inadequate
investment".[42]
32. The regulators insisted
that the best way to discharge their duty to customers is through
the introduction of competition. OFFER told us that "The
Director General of Electricity Supply where this is feasible
considers that customers are more effectively protected by competition
than they are by regulation";[43]
and Ms Spottiswoode said that since she had come to OFGAS she
had concluded that "competition is far and away the best
way of helping customers, both through standards of service and
price".[44]
33. The official energy
consumers' representative groups shared the regulators' optimism
about competition as a means to benefiting the consumer, although
not regarding it as an end in itself.[45]
They were aware, as were the regulators, of the problems of vulnerable
consumers (see paras 142-145), but felt that properly implemented
(which would include, in the case of electricity, reform of the
Pool),[46]
competition would benefit even these in the long run.[47]
39 Gas Act 1986, as amended; Electricity Act 1989. Back
40 Q.379. Back
41 Mem.
p.123. Back
42 Mem.
p.273. Back
43 Ev.
p.273. Back
44 Q.866. Back
45 Q.379. Back
46 Q.482. Back
47 QQ.380,
487. Back
