High Pressure Energy Selling

When there are only six major sellers of domestic energy, which is a product that cannot be improved or changed, the sellers of energy can only compete for market share. There are a number of ways of competing for market share. You can advertise, send mail shots to potential customers, or put a sales person in front of the customer.

Recently, I was invited by a sales person at Marks & Spencer, which I thought sold everything but energy, to sign up for Marks & Spencer’s energy. It turned out to be energy supplied by Scottish & Southern. I was assured by the sales person (a) that the Scottish & Southern supply would always be cheaper than any other supply (b) fixed tariffs were wicked and should not be allowed and (c) Marks & Spencer would not put their name to the offering if it was not the best value.

It is amazing what you can hear from a sales person whose main income from selling depends upon commission. It is, of course, always hard to control this species of direct sales person, especially no doubt after a long day with few sales.

If I believed the sales person at Marks & Spencer I would imagine that Marks & Spencer has spent long nights, in the public interest, trying to figure out the best energy deal, longer nights negotiating with Scottish & Southern too ensure, in the interests of their customers that the Marks & Spencer offering would always be the cheapest, and that a special study had been commissioned by Marks & Spencer has proved that tariffs for fixed periods of time (which I have signed up for to my profit for a number of years) were always more expensive.

Scottish & Southern is a British based company. Recently it was successfully prosecuted for mis-selling bySurreytrading standards officers.

I have never had a door knock from an energy sales person but I have no doubt that if I gave the door knocker the opportunity he or she would not provide detached impartial advice and would almost certainly make whatever misleading statements it took to get me signed up.

Parliament’s Energy & Climate Change Committee has been looking at mis-selling of energy and after much study come up with statements of the bleeding obvious namely (a) vulnerable people were misled by mis-selling (b) cold calling should be banned (c) the huge amount of different tariffs issued by energy companies serve to confuse the public and disguise prices and (d) many people who switch suppliers (40%) end up paying more than they were paying before.

This is terribly important; large companies should not seek to confuse and mislead the public with anything, especial with a commodity that is essential. Unfortunately, if there is money to be made, probity is found too inconvenient because it restricts the money that can be made. The energy companies are regulated by OFGEM, who do not seem to have made a good fist of door step selling by certain energy companies. Perhaps the resources of the energy companies are so large that they can dominate the regulator. Perhaps the regulator is over burdened.

Whatever of the reason’s for OFGEM’s failure, successive governments must take some responsibility. This is how virtual monopolies behave and if there are a mere six energy suppliers they constitute a virtual monopoly.

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