Empowering energy consumers – Between vulnerabilities & opportunities in the new markets European Energy Dialogue:  Debating Progress, Challenges, and Civil Society Involvement in Europe's Energy Union Frédérique Coffre NEON Does the Commission proposals truly empower energy consumers in light of old and new vulnerabilities (energy poverty, digital divide) and new opportunities (self-generation, storage) on energy markets? How does those policies need to be adjusted, especially in light of the number and type of complaints to the Ombudsmen received from Europe's energy consumers in recent years? Given that the overarching theme of the conference is the 'Energy Dialogue', how could and should civil society concretely contribute to the vision of putting the consumers/citizens at the heart of the Energy Union and support a strong complaint mechanism? How does civil society need to be involved more generally in EU energy policy-making and implementation processes?

Challenges of the energy policy regulatory trilemma for secure, cleaner, inclusive and affordable energy markets for all consumers Security of supply Climate change Affordability The combination of the three main objectives in energy policy (security of supply, protection of the environment and affordability) creates a “regulatory trilemma” because policies to achieve one policy can undermine the objectives of another policy. Therefore, the Commission’s prioritisation of energy efficiency and the development of renewables is likely to make energy more expensive. There are proposals in the package aimed at ensuring better consumer engagement with the energy market but based on the experience of the UK market, it is unclear that these will work effectively without further policy development. Although the package recognises the position of the energy poor and consumers in vulnerable circumstances there are no supporting proposals which would address their position. (cf. Cosmo Graham)

Empowerment Clearer, accurate energy bills smart-metering roll-out and access to smart meters access to real time information Common data format, interoperability Independent, free-of-charge price comparison tools Switching without penalties The proposal aims to boost empowerment thanks to better information, clearer and more accurate energy bills, a large smart metering roll out and the access to smart meters, access to (near) real time information, interoperability of the data, easier switching thanks to independent and free of charge price comparison tools – but are those tools enough to solve the problem of energy poverty and overall the imbalance between how we would like the market to be and how it is working in reality?

FIGURES

8 members and associate members = 219 millions citizens / 180 millions customers In terms of population, NEON, the network of ombudsmen and ADR bodies, covers almost half of the EU. However, many countries and regions have yet to join the network and/or set up independent, efficient and trustworthy out-of-court dispute settlement schemes. A part of the picture is still missing.

Number of disputes per 100,000 customers (household & non household end-users, electricity and gas) Only 58 out of 100,000 customers actually have lodged a complaint to the ombudsman in NEON’s member countries and regions. According to the British energy regulator Ofgem, only 5% of complaints are brought to the energy ombudsman, suggesting that these figures underestimate consumer detriment in the energy market. This data also shows that if the European Energy Union is to empower all consumers (household and non-household alike), strong, accessible and fair ADR procedures with an empowered independent body are essential. Review of ombudsman services: energy A report for Ofgem lucerna partners July 2015 https://www.ofgem.gov.uk/sites/default/files/docs/2015/09/review_of_ombudsman_services_energy_2.pdf

103,835 energy-related disputes in 2016 Breakdown per dispute (8 members) Despite significant differences between the Member States, data show that the invoicing process and the relationships with market actors such as suppliers or DSOs are at the core of end-users daily concerns. Relationships with companies appear to be far from being smooth, with many issues related to switching and commercial practices.

ENERGY UNION Clean Energy PAckage

Active consumers & prosumers generate store consume sell back to the market Enabled individuals & local energy communities The role of the consumer is changing from passive to active. But overall their (lack of) skills and (poor) interest remain the same! Active consumers and prosumers will be able to generate, consume, store and sell electricity back to the market. They will be able to do so thanks to new products and services providers, such as local energy communities or aggregators. We have to work together to ensure that consumers trust the process enough to engage and stay engaged, and never loose an inch of their rights as consumers.

Reward demand response Phase-out regulated prices aggregators & other service providers near-real time information real time price-signal (dynamic pricing) The ability to answer to demand-response will become a reality, adding complexity to the offers: Member States are asked to get rid of regulated prices; aggregators and other service providers are said to make it easier to consumers; Access to near real time information is supposed to be key to make more sustainable choices Suppliers will have to propose real-time price-signals.  How are consumers going to find their ways in this new environment?

Active consumers: New Product & Service Providers Local energy communities Aggregators All relevant regulation must apply, incl. Right to an energy Ombudsman local energy communities: customer or group of customers acting jointly who consume, store or sell electricity generated on their premises, including through aggregators, or participate in demand response or energy efficiency schemes provided that these activities are not their primary commercial or professional activity Aggregators: legal entities effectively controlled by local shareholders or members, generally value rather than profit driven, involved in distributed generation and in performing activities of a distribution system operator, supplier or aggregator at local level, including across borders. Member States are required to provide an enabling framework for local energy communities which will ensure that participation is voluntary, members or shareholders do not lose their rights as households or active customers and that they can leave a local energy community in line with the rules on switching. We need to make sure that all relevant regulations shall apply, including on the right to out-of-court dispute resolution with the energy ombudsman. Participation of the new product & service providers to the energy ombudsman scheme should be mandatory. Many points still have to be clarified, including on the relationship with the DSOs, solidarity and enforcement of consumer rights in this scheme.

Protection: combat energy poverty Investments in energy efficiency Energy Poverty Observatory Enhanced monitoring To combat energy poverty, the Commission has appointed the University of Manchester to provide an Energy Poverty Observatory which will start operating in late 2017. Its main aim is to provide substantially more information about energy poverty across the EU as well as the measures taken to combat it. This looks to be a step forward because there is a lack of comparable data across the EU. But does the package offer enough to improve the position of consumers? The Commission’s preferred position seems to be to rely on technology (smart meters), active consumers, local energy communities and competition to provide a fair deal for consumers. Yet we can have reasonable doubts about numbers of consumers who will actually engage in the market, and that many of these who will not may be among more vulnerable customer groups. Local energy communities are a relatively small part of the energy market and it is reasonable to be sceptical about how far they can develop. At the same time, the Commission is pushing ahead with the de-carbonisation goal, which will require governmental subsidy, which will be passed onto consumers, thus leading to higher prices.

Clean Energy Package Improvements Shortcomings Better information, better bills Certified price comparison tools Active consumer engagement through new products and service providers without penalising not-engaged users Extension of existing consumer protection to all third party intermediaries and cross-sectoral cooperation between regulatory agencies Shortcomings Complete ban on price regulation & social tariffs Limited support for energy poverty and measures Unclear right to switch (bundled offers) and rules on switching-related fees Unclear definitions (local energy communities) No ‘right to energy’ nor clear reference to solidarity Right to out-of-court dispute settlement (Ombudsman) The right to out-of-court dispute settlement with an energy Ombudsman is challenged by the current wording. This change would limit our role to simply dispute resolution as opposed to being able to provide advice to stakeholders in the market-place which would restore the balance between individual (vulnerable) consumers and the energy companies. We have to consider different types of “consumers’, including the micro businesses or SMEs willing to engage. Furthermore, energy customers may have disputes where they are not “consumers” in the sense of the ADR Directive, that is, in a contractual relationship with a trader. So, for example, there may be a dispute with a distribution company or in relation to a feed-in tariff or over an energy efficiency measure supplied via a government scheme. As aggregators and energy communities become more widespread there is scope for disputes throughout the chain of relationships, some of which may be caught by the ADR Directive, others which may not. The focus is on persons acting as “consumers” which means acting for purposes outside a person’s trade, business, craft or profession. This will exclude micro-businesses and, arguably, active consumers where it is said that the process of active consumption is not their primary professional or commercial activity. In other words, an active consumer in the energy context is engaged in a commercial activity, albeit not a primary one, and so is not a consumer for these purposes under the ADR Directive. If the number of active consumers, as well as micro-businesses, grows, this problem can only get worse. It can be solved by an Ombudsman, or ADR scheme, taking on jurisdiction for these types of energy customers, as has been done in the UK. The 9th Energy forum has acknowledged this issue and called to reinstate the ombudsman scheme as in the 3rd Energy Package, we now hope that the Parliament and Member States will follow.

The solution: better cooperation Consumers Policy makers Universities, research centres Regulators new business models Business DSOs Civil society (including consumer associations, unions, NGOs…) Ombudsmen We need all stakeholders to be involved & take their responsibilities. We all have a part to play. The latest EU Commission’s Market Monitoring Report shows a very low level of performance of the energy markets, and nobody wants this level to worsen.

Thank you! www.neon-ombudsman.org