Joanne Taylor

Special Projects Manager

Ofgem

9 Millbank

London SW1P 3GE

15 November 2002

Dear Joanne,

Objecting in the Domestic Market

Innogy, and the npower supply companies operating in the domestic market, have been actively engaged in discussing issues surrounding objections and improvements to the domestic customer transfer process in various different industry forums.

Throughout these discussions we have consistently argued that a supplier’s ability to object to transfers should be more customer led than the current rules and procedures allow for, and so it is encouraging to see this view reflected in your letter.

As you point out in the appendix to your letter, Yorkshire Electricity (as was) does not currently participate in the termination notice trial, and has developed processes and systems, in both gas and electricity, to ensure that in the event they are advised of a customer transfer without having received a termination notice, they object to the transfer.

When Innogy acquired their gas and electricity supply businesses last year, we were not able at that time to re-engineer their systems and processes due to resource constraints. The customer base is now planned to be migrated onto npower’s new world systems, which do not object for termination notice, and as development work on legacy systems has been scaled down dramatically, we do not expect the ex Yorkshire Electricity supply businesses to join the trial in the near future.

However, this should not be taken as indicating that we are against removing a supplier’s right to object to domestic transfers on grounds of lack of termination notice as we are not, and the four remaining npower supply businesses currently participating in the trial will continue to do so.

With regard to the issues raised in your letter about the operation of the proposed objection procedures, I have included our thoughts below. These reflect the comments we have previously made to the Co-operative Objection Workgroup.

1)Both old and new suppliers should be entitled to raise co-operative objections if they have reasonable grounds for believing the transfer to be erroneous, regardless of whether the customer or the supplier initiated the contact. A co-operative objection cannot be raised without the customer’s express permission, and the old supplier shall be obliged to inform the customer of the process that will be followed in the event that a co-operative objection is raised.

2)The old supplier should be required to tell the new supplier why they believe the transfer to be erroneous when notifying them of their intention to raise a co-operative objection. In order that this is done in a consistent manner across the industry and to allow for monitoring, we suggest a set of reason codes be adopted which encompass all the typical reasons given for erroneous transfers, as set out in the ET Customer Charter. An example of what these might look like is shown below, and each of these would be linked to a reason code used by Ofgem in their monthly reporting.

  • Customer deceased prior to signing
  • Customer claims never to have signed a contract
  • Incorrect MPAN/MPRN
  • Customer claims they cancelled in the cooling off period
  • Customer was pressured into signing a contract
  • Sale based on misleading general information given to customer
  • Sale based on misleading price information given to customer
  • Customer signed for information only
  • Customer signed for gas only but electricity is being transferred too
  • Customer signed for electricity only but gas is being transferred too
  • Customer claims they were asked to sign a contract by a meter reader
  • Customer has changed their mind

3)The old supplier should notify the new supplier of their intention to raise a co-operative objection either by e-mail or fax (depending on their preference), to a named contact/s provided by the new supplier.

4)It is not practical to expect the old supplier to send a D301 file and/or a RET file when raising the co-operative objection, as producing these files complete with their myriad of data items will impinge on the old suppliers ability to object within the objection window. The old supplier should simply be required to give as much information as is reasonably available at the time of the objection for the new supplier to be able to investigate the claim, which in our opinion constitutes the following data items for each fuel:

  • Customer Name
  • Customer Postcode
  • MPAN/MPRN
  • ET Reason Code
  • Date and time by which a response is required to prevent the co-operative objection proceeding

5)In an ideal world, the date and time by which a response is required from the new supplier to the fax/e-mail would be 15:00 on the last day of the objection window. However, as suppliers have different arrangements and capabilities for sending flows on the MPAS/Transco networks, and as it takes some time for information entered on the networks to reach the gateway, suppliers should be entitled to adopt their own cut off time for these responses, subject only to the condition that they will be required to use their reasonable endeavours to ensure that the cut off time is as late as possible.

6)In the event the new supplier responds before the cut off period stating they have investigated the claim and found it to be false, the old supplier will withdraw the objection and will notify the new supplier that they have done so. The old supplier will then notify the customer that the objection has been withdrawn and that the transfer will proceed. If the customer continues to claim that the transfer is erroneous, they will be encouraged to contact the new supplier and raise an erroneous transfer under the MAP 10/DCoP Returners’ procedure of ET Customer Charter.

7)In the event the new supplier responds after the cut off period stating they have investigated the claim and found it to be false, the new supplier will re-submit the transfer. The old supplier will be required to notify the new supplier that they will not object to the transfer again on the grounds that it may be erroneous, and the new supplier will then notify the customer that they are re-submitting the transfer. If the customer subsequently contacts the old supplier and continues to claim that the transfer is erroneous, the old supplier may not co-operatively object but will raise an erroneous transfer under the MAP 10/DCoP Returners procedure of ET Customer Charter on the customer’s behalf.

8)In the event the new supplier does not respond to the old supplier’s objection fax/e-mail and the transfer does not therefore proceed, but then resubmits the transfer, the old supplier will repeats steps 3-8. However, we do not think it necessary for the customer to be contacted again to confirm they still wish the old supplier to object, although it may be appropriate to put a time limit on this. In the event the old supplier receives a response to his fax/e-mail as described in step 6 or 7 above, the customer will be contacted and informed of what is happening as described in step 6 or 7 above.

9)In the event the customer contacts the old supplier asking them to let the transfer proceed, the old supplier will remove the objection or not object in future, and notify the new supplier that this has been done.

We agree that suppliers should be required to keep correspondence to and from the customer, and the gaining supplier, for 12 months so as to allow Ofgem to investigate any suggested licence breach.

We also agree that taped telephone conversations with customers provide the best way of evidencing customer contact that leads to an objection being raised.

However, as contact with customers can take place at various different points in a suppliers organisation it is not practical to mandate this, and it should be left to a suppliers own discretion as to how they retain evidence sufficient to demonstrate customer consent to an objection in a manner sufficient to satisfy an auditor.

Whilst there is potential that new processes may be abused, providing they are adopted in a consistent manner across the industry and that adequate reporting requirements are defined, Ofgem should be in a position to identify, investigate and take action against suppliers, under condition 48 of the electricity and gas supply licences.

To ensure there is no ambiguity surrounding how suppliers instigate customer led objections we believe there is merit in Ofgem issuing operational guidelines on this subject.

It might also be beneficial to hold a seminar on the proposed licence modification and related issues in advance of the formal consultation. However, as these are also being addressed at the Co-operative Objection Workgroup, which most domestic suppliers now attend, it is too early to say whether such a seminar will add any real value.

In our opinion the proposals contained in your letter will, if implemented, help to improve the customer transfer process in both the gas and electricity domestic supply markets.

Whilst we commend them wholeheartedly, we believe there are still further improvements that could be made. These proposals should not therefore be viewed as a panacea for the problems associated with customer transfer in the domestic market, and we look forward to continuing industry discussions on this subject.

Yours sincerely,

Steve Rose

Economic Regulation

Tel. 01905-340502

Fax. 01905-340488

Registered office: Innogy plc, Windmill Hill Business Park, Whitehill Way, Swindon, SN5 6PB

Registered in England and Wales no: 3892782