Regulation and reputation: The impact of Ofgem’s intervention

Ofgem has accused the “Big Six” of not playing a fair game with consumers, offering a complex system of tariffs with a great difference between their standard tariffs and direct debit tariffs.

In spite of increased consumer calls for a sector reform, ever more frequent investigations and a radical change in utilities’ billing, Ofgem admits that, for now, not many things can be done for an effective and comprehensive overhaul of the system.

At the moment Ofgem can only pose a fine of up to 10% of a supplier’s turnover. However, from a reputation perspective, the impact can be much greater. Recent fines for utilities, such as those levied against Scottish and Southern Energy (SSE) and National Grid were the top issues for determining the companies’ reputation scores for that period. Indeed, National Grid’s £8m fine in January for misreporting information accounted for 57.86% of its overall monthly negative coverage and 20% of its entire coverage. Similarly, SSE’s fine in February for connection delays comprised 94% of its monthly negative coverage and 26% of its entire coverage. Therefore, it is clear that regulatory investigation or involvement with a supplier is one of the major drivers of negative coverage and reputational damage for the supplier.

This article was written by Nicholas Chrysanthou, energy consultant analyst at Alva and released in full on Energy Business Review.