Energy consumer action plan

Context 

We are changing the way consumer issues are viewed and tackled in Scotland… 

Supporting our ambition to build a Fairer Scotland, we are embarking on an ambitious journey to change the way consumer issues are viewed and tackled in Scotland. During 2018, we consulted on the creation of Consumer Scotland, which will be an independent public body set up to represent the interests of Scottish consumers. Consumer Scotland will examine the causes of consumer harm, particularly in complex markets such as energy, and will champion better outcomes for all consumers – especially those who are in most need. 

Through Consumer Scotland, we will ensure that consumer voices are better heard and integrated into regulatory and public policy and decision-making. As part of Consumer Scotland’s development, we will legislate to introduce a statutory consumer duty on Scottish public authorities to place consumer interests at the heart of policy and regulatory decision-making. Crucially, this includes ensuring that consumer outcomes are understood and addressed in the energy transition. 

In the context of a climate emergency, requiring accelerated action across society domestically and globally, we cannot underestimate the important role that Scotland’s consumers play in making a carbon-neutral Scotland a reality. We know how important it is that change happens with consumers, not to them, especially in a market that struggles with persistent mistrust and consumer harm. We must help to build consumer trust now if we are to encourage consumers to make some of the bigger changes that will be required in future  – from increasing uptake of electric vehicles to improving the energy efficiency of our buildings.

We are committed to overcoming consumer mistrust and harm in the energy market…

The energy retail market is changing rapidly and looks very different to how it did even a year ago following the introduction of a default tariff price cap and increasing numbers of energy supply company failures, triggering intervention by Ofgem as the regulator. Yet despite public concern leading to a market investigation by the Competition and Markets Authority in 2014, the market continues to fail many Scottish households: from the impacts of ever increasing energy prices, through to the persistent number of fuel poor consumers in society and persistently low switching rates. This is particularly true in Northern Scotland, where 59 per cent of all customers are on their incumbent electricity supplier; this compares to just 27 per cent for the UK as a whole. While there may be a variety of factors underpinning the differential, some of which may be positive in their nature such as customer loyalty, it may also reflect a perceived or actual lack of confidence in mechanisms for switching.

This is why we are taking action now. We are committed to establishing a public energy company to help rebuild consumer trust in the energy market. Prior to the establishment of a public energy company and setting up Consumer Scotland, we have a duty to act quickly within our powers to protect consumers from harm. 

We are already making a positive difference for consumers: 

• We have established the Just Transition Commission to advise Ministers on how we can make the transition to a carbon-neutral economy in a way that is fair for all. 
• As part of the Scottish Government’s participation in the Open Government Partnership, we are addressing citizens’ concerns over their ability to understand and influence the decision-making processes that affect them. 
• We have published a Vision for Scotland’s Electricity and Gas Networks to ensure consumers are central to regulatory interventions in the retail market and on wider network issues. 
• Through ShareLab Scotland, we are supporting a demonstration project that aims to test an innovative new platform to allow consumers and communities to use energy more flexibly. 
• Energy efficiency has been a long term priority for us – by the end of 2021, we will have allocated over £1 billion pounds since 2009 on tackling fuel poverty and improving energy efficiency with the aim of warmer and more efficient buildings by 2040. 
• In March 2019, we published the Quality Assurance Short Life Working Group Recommendations Report which put consumers at the heart of Energy Efficient Scotland, ensuring robust protections focused on high standards of quality and customer care. 
• The Low Carbon Infrastructure Transition Programme launched a £60 million Low Carbon Innovation Fund in January 2018 offering support for projects in three areas – integrated energy systems, low carbon heat and ultra-low emission vehicle infrastructure. 
• In November 2018, we launched the Financial Health Check for low income families and older people, backed by funding of £3.3 million over two years. It is delivered by Citizens Advice Network in Scotland and offers free advice on money matters including home energy. 
• We will publish a Local Energy System Policy Statement in 2019. The statement will be informed by this action plan and will place energy consumers at its centre. 

Despite these positive steps, we will continue to advocate to the UK Government and Ofgem on much-needed reforms to the energy market… 

Energy supply and consumer protection are reserved matters under the Scotland Act 1998. This prevents the Scottish Government from taking all the direct action that we would like to improve outcomes for Scottish consumers. However, this policy reservation does not stop us setting out our expectations in order to influence change. 

Scotland’s mix of devolved and reserved policy areas mean that our policy landscape is different from elsewhere in the UK. To date, consumer interventions put in place by the UK Government remain focused on understanding issues from a UK-wide perspective, rather than tackling national and regional variations. 

This does not work in Scotland’s consumer interests because Scotland’s distinct economic, social and geographic circumstances present unique challenges in ensuring the energy market works well for all Scottish consumers. 

This is why we continue to call on UK Government and Ofgem for much-needed reforms to the energy market. 

This action plan will ensure that Scotland uses its existing powers to give consumers a say about the decisions that shape our future energy system, while protecting those that can’t.

This action plan outlines a vision to unite Scottish Government and partners around consumer outcomes and actions designed to help consumers access energy at a fair price with good service. In doing so, it sets out a package of short, medium and long term actions – backed by £500,000 of Scottish Government funding. 

The actions aim to increase consumer understanding and confidence, and develop and test innovative approaches to protecting and empowering consumers. Crucially, it establishes a new way of designing policy with and for Scottish consumers.

We have to stop ignoring people who don’t always have the loudest voice, we have to stop avoiding people who are harder to engage, or more expensive and more difficult to help then others. We can do things better, because there are already good examples out there that we can learn from” 

Dr Joanne Wade OBE, UKERC