Eurogas CONSUMER PROTECTION & SWITCHING IN THE DOMESTIC GAS MARKET ERGEG Customer Focus Group Workshop Helsinki 11 th 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 established focus 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