What is E.on up to at the moment in the SME commercial energy market? Is there something sinister about E.on’s current behaviour? What’s it all about?
Over recent months E.on’s SME division have been sending out documentation to Brokers, Consultancies and sales agencies for signature relating to a ‘Code of Practice’ and a new ‘updated E.on contract’. Despite the increased efforts of Ofgem and the government to improve market liquidity [Big 6 forced to sell 25% of generation on wholesale market], some energy companies are still making efforts to erode the independent status of third parties; is this to be considered anti-competitive behaviour?
On the face of it, E.on are championing improved standards in the Commercial Energy market, on the back of Ofgem’s efforts to introduce broad Retail Market Review proposals. E.on have chosen to apparently ignore the due process and engage in their own equivocal and inappropriate implementation program. Beneath the thin veneer of enthusiastic promotion of an improved market, E.on are “thrilled” by the benefits to themselves and their customers.
The fundamental flaw of the new updated E.on contracts is that many of these businesses are in fact the clients of Independent Brokers and Consultants who work assiduously to reduce costs on behalf of clients, rather than ‘selling’ inflated price contracts [and in many cases extortionate renewal rates] as sales agencies tied by new commercial agreements and contractually ‘Committed to Volume not Value’.
There is nothing particularly wrong with E.on’s Code of Practice intentions; the problem is the process of forcing it on the industry unilaterally.
The fundamental concern with the new updated E.on contracts is that the Independent Brokers and Consultants who work assiduously on behalf of clients to reduce costs, rather than ‘selling’ inflated price contracts [and in many cases extortionate renewal rates] are being forced into a commercial relationship as a ‘sales agency’ tied by the new commercial agreements and contractually ‘Committed to Volume not Value’. Independent TPIs work for their clients, not for the suppliers.
With regards to their new commercial agreements they need to have two types of agreement:
There has been vociferous objection to the whole process; TPI’s are being bullied into acceptance with a vague promise of ‘looking for answers going forward’. The people sending out the condescending marketing drivel ask for comments and contributions but actually ignore all but the most persistent enquirers.
E.on’s history of marketing practices which at best could probably be called ‘sharp’, need to be brought to heel by Ofgem and the Government. Hopefully after they’ve had a serious go at the banks the energy companies will be next.
What’s to be done right now? Resolution being the primary objective, E.on need to stop their current unilateral activities. There needs to be involvement of Ofgem and the Office of Fair Trading and TPI’s in a broader and more transparent dialogue. If not there is a great danger of significantly reduced competition in this marketplace and as a result, increased costs to the business energy consumer.
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