Examination of Witness (Questions 480-497)|
WEDNESDAY 14 MAY 2003
480. What about Scottish Power? They both generate
and they operate the transmission lines, do they notor
so they tell me anyway?
(Ms Davies) They do, but when competition was introduced
for electricity, using the Utilities Act 2000, it required the
creation of quite separate companies within a group, structured
to ensure that there was a real separation of activities. I think
that all of the accountability issues were taken into account
and were part and parcel of what was quite an intensive piece
of work at the time of the whole process, called "business
separation". Part and parcel of that, for example, was having
compliance officers and all of that sort of thing. In terms of
consumers and competition, there really is a distinction between
how they interact with the competitive supply market and in terms
of the regulation that is there to govern the protection, and
so on, versus the degree of protection that there is in terms
of the provision of a secure network, making sure that your lights
stay on, and so on. That whole remit is very heavily regulated
by Ofgem, through quite a robust and consumer-focussed set of
licence conditions. So consumers really do have quite a degree
of protection there, because it is well recognised that that is
a natural monopoly and should be separate from the issues Ann
has raised about competition in the retail market and competition
for wholesale electricity.
481. So the problem which I suggested to you
does not really arise?
(Ms Davies) It does arise in that there are supply
failures, but there are different mechanisms for dealing with
482. Finally, in your paper you point to Ofgem's
consultations. It appears from the documents we have seen that
the scope of Ofgem's work has reduced by about 70 per cent over
the years. However, we are told that the running costs are now
up, it is either 200 or 300 per centa huge increase. Is
it your impression that you are being deluged with papers from
Ofgem, some of which no doubt are extremely interesting and important,
some of which are perhaps not quite so important? And, if not,
how have the running costs escalated to such an extent?
(Ms Robinson) I do not really want to comment on Ofgem's
running costs. I do not think that it would be reasonable or fair,
and I do not think that I am in a position to do so. One of the
things that is quite nice, I have to say, is that the number of
consultation papers that have been coming out of Ofgem over the
last 12 months or so has been reduced.
(Ms Davies) A little!
(Ms Robinson) We are not a large organisation. We
do not have a lot of people to comment on things. Lesley and her
team are very few in number. So we are very selective and only
focus on the things that we know are going to have a big customer
impact, and the rest we do not touch. There have been times when
the regulator has been just a touch fed-up with that, because
they would like us to comment on everything; but I do not see
any point. We have to use our resources wisely, and we have to
be focussed in what we do.
483. Can you, without embarrassment, perhaps
elaborate a bit on your reluctance to comment on Ofgem's running
(Ms Robinson) I am embarrassed about it. I feel a
bit awkward. Let me put it this way. We represent the consumer.
We have a lot of information about what matters to consumers and
we do talk to Ofgem. I think that we are in a very strong position
to say what the impact is likely to be. However, we have a policy
team within our organisation of only eight people. I think that
Ofgem, and I may be wrong in thisand they will kill me,
I am not going to live beyond the night if I carry on at this
rate!have about 40 people who deal with just the social
aspects of regulation. That
is almost as big as my headquarters in total, including my communications
and everybodyincluding me, for that matter.
484. So they are a very powerful organisation
and you feel that you perhaps should not risk your arm against
(Ms Robinson) Oh, I would not say that! I definitely
would not say that! We may not have the numbers, but we certainly
have the muscle.
485. That is very helpful and gives me a little
more background to my next question. I have seen you, or thought
I saw you, as an organisation which achieved results by jumping
up and down and making a lot of noise, drawing attention to things
in public. You say in your report, however, that the way you achieved
the success you did, in securing first the introduction and then
the retention of licence conditions to protect consumers from
mis-selling, was because of the statistical and anecdotal evidence
that you presented of mis-selling. What I really want to know
is what do you regard as your most effective activity?
(Ms Robinson) I will tell you it as it really was.
Before we started our mis-selling campaign, we were getting noises
from Ofgem that they were thinking about not replacing the licence
condition that was running out six months later. We made it very
clear that we were going to start a campaign on this, and campaign
in a heavy way. As a result of that, I think that we did have
some success. In fairness to Ofgemand I have to be absolutely
fair to Ofgemas soon as we started making big noises about
it, Ofgem came on board with the new licence condition and, almost
for the first time, they used their fining power. It was against
London Electricity. I have no doubt in my mind at all that it
was that activity, plus our campaignplus the Minister's
strong backing against mis-sellingthat persuaded the industry
that they had better go in for some self-regulation. So that has
been a success so far. The next one that I am looking forward
to is doing exactly what we are setting out to do now, which is
to make sure that bills arrive when they are meant to arrive,
that they are accurate, and that people understand them. That
is the next thing I am going for.
486. Your modus operandi, presumably,
will not be drawing attention to the people who sent the bill
out. Ofgem do not send the bill out, but do you find it necessary
to send them copies of bills? I am trying to get into my head
what you see yourself as, as a campaigning animal. Are you out
on the streets and on the television screens, or are you researching
and making suggestions behind the scenes, or are you giving advice
to government, or are you doing all three?
(Ms Robinson) I think that we are doing all three.
We obviously do get a lot of evidence all the time from the complaints
that come in. We also conduct surveys, as we did for the billing
campaign. We went out to over 2,000 people to find out what the
actual experience was. Because there are a lot of people who do
not know about us, we feel that we have to go that extra mile
to gather the opinion in, which is what we did. Having done that,
I am a lobbyist and I am a campaigner, therefore I do talk to
government and to ministers and, I am lucky, I usually get them
on my side. We talk to Ofgem but, in the meantime, we are needed
to start the ball rolling for changeto get that campaign
for change. If we did not do it, everything would probably rumble
on and on. It might get there eventually, but might take several
years to do so.
487. What could Parliament do to make this a
(Ms Robinson) What I would like to suggest is what
Clare was coming up with. I believe that what we need is a select
committee on regulation. When you think about it, regulation covers
so much of people's lives, not just in the utilities but there
is a need more generally. That committee has to be very effective;
it has to be able to challenge and look into how decisions are
made. There will be transparency. The other thing that I feel
quite desperately about is that I look at what is happening across
the whole regulatory scene and I sometimes try to make a bit of
sense of it, but I cannot make any sense of it. I look at it and
thinkin simple terms, because I am not an economistwhat
is in the mind of the Competition Commission when they are making
a judgment about what is or is not consumer benefit? I would like
to know that. I think that should be a guiding principle. If I
knew that, I would be able to make a big difference in terms of
whether competition is really working in our market. I think that
there are some really clear things that ought to come out of a
very different approachone which looks across the whole
of regulation, looks for the best practices, and also looks for
some common principles. In fact, I would like a regulatory committee
something like the PACsomething with real teeth that can
carry out investigations.
Baroness Gould of Potternewton
488. You have talked a lot about being a campaigning
organisation which, it seems to me, many of the other consumer
bodies are not, and therefore your role is somewhat differentwhich
personally I welcome. You also mention that you have brought together
other consumer bodies to look at the Energy White Paper. In your
document you refer to getting support from other consumer bodies.
Perhaps you could elaborate a little more on which consumer bodies,
the response to them, and how you might then be putting forward
a collective response to government or to the various organisations
that you work with?
(Ms Robinson) The organisations that we have been
involved with on thisand we have had several meetings so
farare an organisation which represents large industrial
and commercial users, the CBI, representatives of small business,
the Federation of Small Businesses, the Consumers Association,
people representing poverty groups. So it has been a range of
people. One of the most helpful things during the whole development
process of the Energy White Paper was getting the consumer groupsand
everybody signed up to this, it was not just me trying to pressurise
peopleto sign up to some key principles relating to what
we expect of an energy policy into the future. We all agreed that
we were not into energy at the cheapest possible price. We wanted
sustainability. We were looking for affordable energy that was
secure, where the lights would stay on, and where we also had
a say. We quickly arrived at some guiding principles, some key
points. All the way through the processand I have been
bringing people togetherwe have been elaborating on those.
Just recently, since the Energy White Paper came out, we have
said, with all the consumer groups, "Okay, the Government
needs to introduce some indicators so that it can see whether
the energy policy is on track", because there is a strong
sense of direction in the White Paper but it is a bit flaky on
targets and so on, and we want to make sure that there are some
clear indicators. We have worked quite hard as a group, identifying
what those indicators might be, so that judgments could be made
about whether or not the energy policy was on track. For example,
in the White Paper there is a fairly heroic assumption about energy
efficiency and how far that will extend. What we wanted was an
indicator to find out the extent to which energy efficiency was
being introduced and by whom; whether there were any groups which
were missing out on this, so that we would be better placed to
make judgments and to influence, as necessary, to get changes
in the policy as it developed.
Baroness Howells of St Davids
489. You began by saying that you were not reaching
disadvantaged groups. People tend to refer to minority groups
as all being disadvantaged. Do you feel that in any way you are
reaching the advantaged minority groupsthose in retail
business and suchlike?
(Ms Robinson) I really do not think that we do enough
there either. That is why I think that small businesses are a
very important part. Small businesses seem to lose out in so many
different directions. We did a piece of work and we went to small
businesses, asking them certain things. We discovered, for example,
that 60 per cent of small businesses do not understand their bills.
There are lots of issues, and tremendous difficulty about access
to energy efficiency measures. We think that should change. I
would like to do two things. I would like to do more work with
small businesses, in terms of providing better service, and even
small things, like leaflets and so on, which will help and support
small businesses. I would also like to get together the kind of
agenda that I now have for large businesses and have a similar
agenda for small business, in order to try to get some very important
changes made which will help them. The answer is that it is small
business as well as vulnerable people.
490. You mentioned that you hoped to get some
more money from government. Have you any plans for using some
of that money to reach the minority groups? Because black and
ethnic minority businesses feel that Energywatch is not even considering
them, not even through their voluntary groups. I wondered how
you proposed to do that.
(Ms Robinson) We are expecting some more money. To
be perfectly honest, most of that additional money will still
have to go to deal with the numbers of complaints we have, because
there is a lot to do. There have been serious worries in the last
12 months about whether we are maintaining the quality of our
work, and I have to be careful to make sure that we are providing
a consistent quality service. The short answer to your question,
however, is yes, we are planning a much more ambitious, what we
call "reach out" programme, that goes out and meets
people in ethnic minority communities, that goes out to small
businesses, perhaps through chambers of commerce or in other ways,
in locationsand we will do our best to achieve that.
491. Is that part of your application to the
Government? Is that mentioned in the paper?
(Ms Robinson) Yes, it is. I will not get as much as
I asked for. You never do, do you? But part of my case was not
just to be paid for the existing workload but also to do more
in terms of information and education. Part of my case was very
much to do more of the kind of work that we are talking about,
to work with particular groups that do require support and help.
It depends finally on what I do get. There will be some extra
going, but it will not be enough. I know that. It will not be
enough to do what I would want to do.
492. Ms Spottiswoode and you have both advocated
a select committee. Ms Spottiswoode wanted it to be in the House
of Lords. You are a campaigner and you are somebody who wants
more money. Where would you advocate it would be?
(Ms Robinson) I was actually quite attracted to Clare's
arguments for it being in the House of Lords, from the point of
view of objectivity. To be perfectly honest, however, put that
way, I think that it probably ought to be in the House of Commons.
I am more likely to get a bit more pressure put on various ministers
if it is in the House of Commons.
493. Can I pursue two questions with you? It
is to pick up on points that have variously been raised already,
because you have been developing, in answer to questions, the
relationship you have with Ofgem. You have mentioned, as did Ofgem
in their submission to us, that you have a memorandum of understanding
to cover the relationship, how you contact one another. To a large
extent the stress this afternoon is on responding to consultations,
when Ofgem consult youas, on a number of issues, they are
required to do anyway. In their evidence to us they also volunteered
that sometimes they consult on issues even when they are not required
to. One might read into their evidence that they thought they
were in effect doing you a favour. From your evidence this afternoon,
in terms of your limited resources, perhaps you feel that they
are not doing you a favour in actually consulting you. What I
am interested in, however, is getting a feel for, if not the actual
nature of the contact, the volume of it. To what extent are you
proactive in contacting Ofgem and what form does it take? Is it
a highly formalistic relationship or is it more informal, where
you can simply pick up the phone, go round and have meetings?
(Ms Robinson) Increasingly, it has become more and
more informal, and that is a lot better because it works better
that way. There are things that Ofgem do consult on, but I take
the viewand always have donethat you are better
influencing before a consultation document is written, because
once a consultation document is written it is probably a bit difficult
to get certain things changed. We are talking to Ofgem. The more
we have an agreed agenda, and we talk about things that we disagree
on, the more likely we are to be happy with what comes out of
that process as a document. The answer is that we do have some
formal mechanisms; a great deal is informal. I doubt if there
is a day that passes when Lesley does not talk to somebody in
Ofgem. Every time I walk to her desk, there is a fifty-fifty chance
that she is with Ofgem anyway or meeting them somewhere. So it
happens at all levels, and that is very good. On the form of consultation
process itself, there is one personal matter about which I feel
fairly strongly. I do not think that we are just any other organisation.
We are the consumer advocates. We are the people who are close
to consumers, and I do think that we deserve to be listened to.
I do think that we deserve to have a proper response if anything
that we have said has been overturned or ignored. Quite frankly,
I have not always been satisfied with the responses I have had.
Sometimes I have had no response. The relationship with Ofgem
is changing; it is improving. But I will not sit here and pretend
that I am totally happy with it, because I am not. I think that
we could take it even further.
494. That leads into my more general question.
It is clear from your paper to us what you expect from Ofgem,
not least in greater transparency and a proper period of consultation.
We know what you expect from Ofgem. Are you clear what Ofgem expects
from you? I was going to ask you what your view of the relationship
is, but you have to a certain extent answered that.
(Ms Robinson) I will be perfectly honest. When we
inherited the work that we had, we also inherited, to put it bluntly,
awful statistics about what was actually happening in the market.
Our complaint statistics were all over the place, and they had
no credibility at all. So we have had to work quite hard to get
them right. Ofgem, for very good reasons, became increasingly
irritated with us, because they expect us to provide the evidence
that leads to investigation. So they have to be certain that what
we provide them with is strong and good enough for that. It is
less than 12 months since we had a new database and new statistics.
So I would argue that for the first year or so of our existenceand
there is no point in saying it in any other waywe failed
Ofgem. It was not our fault. We inherited the problem. Nevertheless,
we were not able to give Ofgem what they wanted. Now I think that
there is a better working-together. We are understanding their
need a bit better; they are understanding our need a bit better.
Occasionally we have a bit of a debate, when they make a request
for information of us, in terms of what is reasonable or unreasonable,
and over what period of time; but you would expect that anyway.
We do talk civilly about it, however. We are not falling out any
moreI do not think so, anyway.
495. So the relations are improving and, in
so far as there is a continuing problem, then, from what you have
said earlier, the root of that is now resources rather than a
stance on the part of Ofgem itself?
(Ms Robinson) I do not think that the resources give
us much of a problem with Ofgem as such. Our resources are more
to do with going out and providing a service.
496. I was thinking in terms of, if you had
the resources, you would be able to provide the accurate data
and so on, which they expect you to produce for them.
(Ms Robinson) If we had the resources, yes. And if
Lesley could double her team, then it would be very differentwhich
would probably double my workload as well, so I am not quite sure
497. So if I said that Ofgem expected of you
that your advice to consumers will be timely and accurate, resulting
in a high level of satisfaction rating for users and that, when
adopting an advocacy role on behalf of consumers, Energywatch's
arguments will be well founded in fact and analysis, that would
be a fair assumption on their part?
(Ms Robinson) That would be fair. I have to say that
we have just completed yet another NOP survey, which is customer
satisfaction with us, because we think that we ought to do that
every six months, so that we check on what people are thinking
about us. We got an overall satisfaction rate of 84 per cent.
I personally do not think that is good enough. It has to be up
to 95 per cent plus, which is what I am hoping for and I hope
to be there in six months. We must measure ourselves all the time
against what consumers think of us.
Chairman: I am sure if a parliamentary committee
were set up and achieved that level of satisfaction, we would
be very satisfied indeed. Ms Robinson and Ms Davies, I am very
grateful to you for being with us today, for the paper that Energywatch
put in, and for your answering our questions. It has been extremely
valuable for us, and we are very grateful indeed.
1 Note by the Witness: Ofgem have subsequently
confirmed that they have 3 staff working exclusively on social
aspects of regulation. Back