Eurogas

CONSUMER PROTECTION & SWITCHING IN THE DOMESTIC GAS

MARKET

ERGEG Customer Focus Group WorkshopHelsinki

11th October 2005

Introduction

Eurogas represents the interests of the natural gas industry in 21 countries. Membership is open to national federations and individual gas companies.

Spring 2002:Gas Suppliers’ Group establishedfocus on issues of concern to suppliers, specifically those associated with the introduction of competition.

The content of this presentation is based largely on the work of this group over the past 3 years.

Autumn 2005: New structure for Eurogas groups is being introduced, and the GSG work will be continued under a new group, the Supply & Market Development Committee.

Eurogas Membership

Domestic (household) competition

Successful retail competition requires:

Efficient, smooth customer switching– Eurogas review of customer switching processes

Availability of consumer information– Eurogas consideration of provision of information, including

price comparisons

Consumer protection– Eurogas Position Paper on Direct Selling

1. Efficient, smooth customer switching

Eurogas review of customer switching processes

Focus on the domestic (household) market

Identified:

Key principles Main stages of switching process Approaches in different Member States

Key Switching Principles

Maximising customer satisfaction/minimising confusion

Effective mechanisms for controlling poor sales practices

Minimising rejections, errors and process problems

Fair and transparent procedures for process changes/improvements

Switching process to be non-discriminatory and pro-competitive

The Switching Process

Main stages: Contract Verification [Objection] Processing Meter Reading

Despite these common elements, models vary from country to country variations due to structural differences in industry

organisation

Speed of transfer balanced by need for process controls

Switching Models

Seeking to impose standardisation where systems are already (being) developed is not justified

But: helpful if customer experience at Member State level is

as far as possible similar for gas and electricity

helpful if systems over time can converge

helpful if modules can be identified to facilitate convergence

Critical success factors for customer switching

Successful customer switching not just on the switching model, but also on:

Robust service level agreements, in particular with DSO

High quality industry data

Properly managed industry dataflows

Acceptable transfer meter readings– differences between domestic and non-domestic markets

2. Availability of Consumer Information

Eurogas also recognises the importance of:

Fair statements concerning price savings, and fair price comparisons– Standard methodology

Simple clear billing– Not critical to show network charges and gas prices

separately

Independent and impartial websites– Accreditation of sites

3. Consumer Protection

The interests of domestic consumer, particularly vulnerable consumers, are best safeguarded by:

Competitive pricing

Protection against misselling

Clear communications, both as regards prices but also switching process, transfer date etc.

Dispute settlement

Importance of dialogue with industry in the development of appropriate safeguards

Eurogas Position Paper on Direct Selling

Position Paper on Direct Selling to Household Customers emphasised importance of :

– Responsible selling, particularly where vulnerable customers involved

– Clear information regarding services offered, prices, contractual conditions

– Gas suppliers should act promptly when problems arise

Conclusions

Customer interest closely aligned with that of suppliers

Switching processes– simple, efficient and as cheap as possible to operate– speed of transfer balanced by proper process controls– processes to be reviewed in light of experience

Consumer information– Ensure price comparisons not misleading– Standard methodology

Customer protection– Sales and marketing– Vulnerable customers

If full benefits of competition to be realised, industry and regulator must work in partnership to ensure these issues are addressed appropriately