Commission for Regulation of Utilities Spot Check of ...

An Coimisiún um Rialáil Fóntais Commission for Regulation of Utilities

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Information Paper

Reference: CRU/20032R Date Published: 11/03/2020 Closing Date: n/a

An Coimisiún um Rialáil Fóntais

Commission for Regulation of Utilities

Spot Check of Energy

Supplier Compliance Q3, 2019

www.CRU.ie


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Executive Summary The CRU conducts quarterly spot checks upon energy supplier’s compliance with the requirements

set out under their licences. The Q3 2019 Spot Check was conducted on 26th September 2019

and focused on domestic suppliers’ compliance with Requirements 2.3.1 and 2.5 of the Domestic

Code of Practice on Marketing and Advertising within the Supplier’s Handbook1 (‘the Handbook’).

These requirements relate to the presentation of the Estimated Annual Bill (EAB) figure and the

presentation of tariff information. The spot check also involved performing calculations to ensure

that supplier EAB and tariff calculations were correct and accurate. This paper provides an

overview of the methodology used to conduct the Spot Check and the findings from it.

A summary of the findings and issues identified is set out below.

• 52 breaches were identified in the calculation or presentation of tariff information across all

suppliers who were subject to this spot check.

• For one supplier (Flogas) no breaches were found.

• For the remaining suppliers, there were two or more identified breaches of compliance in

a range of categories.

• There were six breaches across three suppliers which were considered to require

prioritised remedial action from suppliers.

• The need for clarification in relation to the definition of ‘marketing and advertising’, as per

the Handbook, was identified.

Overall, this Spot Check found that most EABs were calculated correctly. However, several

examples of out-of-date Public Service Obligation (PSO) Levy amounts and incorrectly calculated

or omitted EAB figures were identified. In addition, there were a number of other breaches

identified across a variety of areas. The main concern highlighted by the CRU is a lack of accuracy

in the calculations, especially regarding the incorrect or omitted EAB or PSO Levy figures.

1 This spot check was conducted on the requirement from the 2017 version of the Handbook (CER/17060 – Electricity and Gas Suppliers’ Handbook 2017). An updated version has recently been published (CRU/19138 – Electricity and Gas Suppliers’ Handbook 2019).


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All suppliers were notified of any breaches found against them and provided with a set time in

which to remedy the issues. At of the time of publication of this Information Paper, all suppliers

have either remedied the breaches or are working with the CRU to take remedial actions.

The CRU will continue to conduct compliance Spot Checks on a quarterly basis to ensure a high

standard of protection to all energy customers. The results of the 2019 Annual Supplier Audit are

intended to be published in March 2020.


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Public/ Customer Impact Statement

It is a function of the CRU to ensure that there is a high standard of protection for final customers in

the electricity and gas markets.

The Supplier’s Handbook contains the minimum service requirements that all licenced energy

suppliers must adhere to in their dealings with energy customers. The minimum requirements are

set out in a number of Codes of Practice (CoPs) which describe all aspects of the customer journey

from advertising and customer sign up to billing, complaints and disconnection, for both non-domestic

and domestic customers, including vulnerable customers.

In line with its Compliance Policy Statement2, the CRU conducts quarterly spot checks on the

supplier’s compliance with these Codes of Practice to ensure energy consumers are adequately

protected in all their dealings with energy suppliers.

This Q3 2019 Spot Check focused on the following: How suppliers presented tariff information to

customers and the calculation and presentation of the EAB figure. These key pieces of information

should be provided to customers in a manner that is complete, transparent and accurate.

Overall, this Spot Check found that most EABs were calculated correctly. However, there were a

number of other breaches found in suppliers’ customer-facing websites. The CRU is addressing

any breaches directly with the relevant suppliers. By continuing to monitor supplier compliance,

the CRU is ensuring that customers are protected in all their dealings with energy suppliers.

2 CRU/19134 – Compliance and Enforcement Policy Statement


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Table of Contents

Table of Contents ...................................................................................................... 4

Glossary of Terms and Abbreviations .................................................................... 5

1. Introduction ........................................................................................................ 6

1.1 Background ........................................................................................................................ 6

2. Methodology ...................................................................................................... 7

2.1 Scope ................................................................................................................................. 7

2.2 Approach ............................................................................................................................ 7

2.3 Follow Up ........................................................................................................................... 8

3. Findings .............................................................................................................. 9

3.1 Summary of Findings .......................................................................................................... 9

3.2 Specific Issues ................................................................................................................... 11

3.3 Other Issues ..................................................................................................................... 12

4. Remedial Actions & Next Steps ...................................................................... 13

5. Annex ................................................................................................................ 14


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Glossary of Terms and Abbreviations

Abbreviation or Term Definition or Meaning

CoP Code of Practice

CRU Commission for Regulation of Utilities

EAB Estimated Annual Bill

kWh Kilowatt-hour

PSO Public Service Obligation

VAT Value Added Tax


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1. Introduction

1.1 Background

The CRU is Ireland’s independent energy and water regulator. The CRU was established in 1999

and has a wide range of economic, customer protection and safety responsibilities in energy. The

CRU is also the regulator of Ireland’s public water and wastewater system. Our mission is to protect

the public interest in water, energy and energy safety.

The CRU (in its 2019-2021 Strategic Plan3) has committed to continue in strengthening its

compliance and enforcement framework to ensure best regulatory practice in all areas of the

organisation’s remit. This is achieved whilst following the CRU’s core values of integrity,

professionalism, openness and accountability.

The CRU has developed the Supplier’s Handbook which sets out minimum requirements to

promote high standards of consumer protection across all interactions which may arise between

suppliers and consumers. The Handbook contains Codes of Practice which cover all aspects of a

consumer journey, from advertising to switching supplier. These CoPs include Marketing and

Advertising, Customer Sign-up, Billing, Disconnection, Vulnerable Customers, Complaint

Handling, Pay-as-you-Go Metering and Budget Controllers, and Terms and Conditions of Supply

for Household customers. The CRU undertakes annual, quarterly and ad-hoc audits on these CoP

to ensure compliance is being maintained by all licenced suppliers. The Q3 2019 Spot Check

focused on Requirements 2.3.1 and 2.5 of the Handbook’s Domestic Code of Practice on

Marketing and Advertising.

3 CRU/19030a and CRU/19030b – CRU Strategic Plan 2019-2021


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2. Methodology

2.1 Scope

The aim of this spot check was to review several requirements spread across the Supplier’s

Handbook. The requirements which were selected to be reviewed were ones that could be checked

on a supplier’s website or in their publicly available Codes of Practice. The requirements which

were reviewed came from the following sections of the Handbook:

• Section 2: Code of Practice on Marketing and Advertising

A matrix was developed to identify each of the individual requirements which were being assessed

to review compliance with the requirement. The matrix and audit assessments are shown in the

Annex to this Information Paper.

2.2 Approach

The spot check was initially undertaken by an analyst from the Compliance & Enforcement Team

on Thursday 26th September 2019. On this day, each supplier’s website was reviewed by the CRU

with follow up investigations undertaken over the following week.

The Q3 2019 Spot Check was conducted to review suppliers’ compliance with certain requirements

within the Domestic Code of Practice on Marketing and Advertising; in particular, Requirements

2.3.1 and 2.5 which refer to the presentation of the EAB figure and the presentation of tariff

information, respectively. The spot check considered two main areas:

1. The calculations and presentation of individual tariff/EAB figures – tariff calculations were

checked using a simple calculator created in Excel to ensure that supplier calculations

(e.g. of EAB figures) were correct and accurate. 224 tariffs were identified and checked

across all suppliers.

2. Compliance with other requirements of the Handbook – the presentation/display of

information on supplier websites was checked for compliance against the Handbook.

The following suppliers of domestic customers were subject to the spot check:


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o BE Energy

o Bord Gáis Energy

o Electric Ireland

o Energia

o Flogas

o Iberdrola

o Panda Power

o Pinergy

o PrePayPower

o SSE Airtricity

Iberdrola were subject to a spot check for the first time since entering the Irish market in June

2019. Some smaller suppliers were excluded from this spot check, but are subject to other aspects

of CRU’s compliance oversight.

2.3 Follow Up

Following completion of the spot check,

1. Letters detailing CRU’s finding and potential breaches were emailed to each supplier on

the 29th November 2019.

2. Suppliers were then required to remedy the breaches; some breaches were required to be

remedied within one week, others within a month, depending on the level of customer

impact.


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3. Findings

3.1 Summary of Findings

Breaches were identified for all suppliers except for Flogas who the CRU considered demonstrated

compliance with all requirements that were reviewed as part of the Q3 2019 Spot Check. All other

suppliers subject to the check were requested to undertake remedial action of some description.

A summary of the findings and issues identified is set out below.

• 52 breaches were identified in the calculation or presentation of tariff information across all

suppliers who were subject to this spot check.

• For one supplier (Flogas) no breaches were found.

• For the remaining suppliers, there were two or more identified breaches of compliance in

a range of categories.

• There were six breaches across three suppliers which the CRU requested to be prioritised

for remedial action.

Figure 3.1, on the following page, shows the number of breaches identified for each supplier,

including those which were requested to be prioritised for remedial action to be undertaken upon.

Figure 3.2 provides a visual representation of the numbers of each type of breach identified. As

can be seen the main areas identified were in relation to the dates/validity periods/durations of

contracts, Nightsaver tariff calculations, and the monetary units used (i.e. euros per kWh).


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Figure 3.1 - Number of Breaches Identified per Supplier

Figure 3.2 – Number of Breaches

0 1 2 3 4 5 6 7 8 9 10

SSE Airtricity

PrePayPower

Pinergy

Panda Power

Iberdrola

Flogas

Energia

Electric Ireland

Bord Gáis Energy

Be Energy

Breaches Breaches Requested to Prioritise

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2 1

1

7

88

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2

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Unit Rates/Discounts in euro perkWh

Ommitted EAB

Fixed Charges Shown Inc. & Excl. ofVAT

Tariffs Shown Inc. & Excle. of VAT

Duration of Contract

Validity Periods

Dates Tariffs Presented

Nightsaver Tariff Calculations


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3.2 Specific Issues

The different types of breaches are listed below. Numbers 1 to 3 list those breaches where there

was an inaccurate or incorrect display of monetary values or where the EAB was omitted. Suppliers

were requested to prioritise remedial actions on these breaches. Further details are provided in

the Annex to this paper.

1. Displayed out-of-date PSO Levy amount. Two out-of-date PSO Levy figures identified.

2. Displayed incorrectly calculated EAB figure Two incorrectly calculated EAB figures identified.

3. EAB omitted from tariff information.

Two omitted EAB figures identified.

4. Tariff information displayed in euro per kWh

Tariff unit and discount information provided in euros per kWh as opposed to cent per kWh.

5. Fixed charges not shown inclusive and exclusive of VAT

Carbon Tax and PSO Levy not shown both inclusive and exclusive of VAT.

6. Tariffs not shown inclusive and exclusive of VAT

Certain tariff not shown both inclusive and exclusive of VAT.

7. Missing information in regard to how Nightsaver tariffs are calculated

Method of calculation for Nightsaver tariffs not provided.

8. EAB Not Displayed in Main Body Text

EAB only displayed in footnotes and not in the main body of advertising material.

9. Missing information regarding dates/times/validity periods/duration of offers

The dates that tariffs are presented, validity periods for offers, or the duration of contracts was

missing.

10. Other

i) Certain tariff information not included in tariff information pages.

ii) Lack of clarity on what element of the tariff the discount applies to.


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iii) A technical issue resulting in tariff information table being displayed differently in different

internet browsers.

iv) Lack of clarity on monetary units used (i.e. euros/cents).

3.3 Other Issues

In the course of the spot check two other issues were identified which merit further comment:

1. Marketing & Advertising

Comments were received from suppliers regarding what constitutes ‘marketing and

advertising’. Certain suppliers contended that webpages displaying tariff information do not

constitute marketing and advertising as they are only providing information. However, as per

the definitions provided in the Handbook, the CRU does consider these pages to contain

marketing or advertising material. A General Clarification on this matter is published alongside

this Information Paper.

2. PSO Levy

In addition to the out-of-date PSO Levy amounts mentioned above, the spot check identified

that slightly different figures for the 2019-2020 levy were being used in supplier documentation.

Clarification was provided to all suppliers what the correct domestic PSO Levy amount is4, so

as that this figure would be used in all advertising and marketing materials and would be

charged to the customer.

4 See CRU/19094 – PSO Decision Paper 2019-2020, p.15 (€2.84 per customer per month)


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4. Remedial Actions & Next Steps Each of the suppliers were notified of these findings by letter on 29th November. Prioritised

breaches were requested to be remedied by no later than 6th December 2019. All other breaches

were requested to be remedied by 3rd January 2020. Responses had been received by all suppliers

by 16th January 2020, at the latest.

This was deemed to be sufficient time for the suppliers to remedy the identified beaches, as the

majority of the remedial actions identified in this spot check were considered to be relatively easy

to implement in order to restore compliance. At time of publication, the following actions remain

outstanding:

• One supplier being required to change their unit rates and other related information into

cents per kWh instead of euros per kWh.

• One supplier to display calculation of Nightsaver tariffs.

The CRU are following up directly with all suppliers regarding any outstanding actions.

As noted in section 3.3, the CRU also identified further issues regarding the CoP on Marketing and

Advertising and the presentation of the PSO levy. The CRU has published a separate General

Clarification on this alongside this Information Paper.

The CRU intends to continue to conduct compliance Spot Checks on a quarterly basis to ensure

a high standard of protection to all energy customers. The results of the 2019 Annual Supplier

Audit are intended to be published in March 2020.


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5. Annex

Section in Handbook

Requirement

2.2.2 Suppliers must adopt a fair and transparent approach to the marketing and advertising of their products and services. Suppliers must take all reasonable steps to ensure its marketing material is easy to understand, accurate, specifies clearly the product being marketed and the period it covers.

Supplier Breach

Be Energy ‘Advantage Tariff’ information not included on the EAB pages.

Be Energy Lack of clarity on monetary units used (i.e. euros/cents).

Be Energy Clarification required on what elements of the tariff the discount applies to (i.e. applies only to unit rate and not PSO Levy or Standing Charge)

Bord Gáis Energy

Technical issue resulted in tariff information table being displayed different in different internet browsers and how understandable presented tariff information is.

Electric Ireland Clarification required on what elements of the tariff the discount applies to (i.e. applies only to unit rate and not PSO Levy or Standing Charge)

Energia Lack of clarity on monetary units used on ‘Phone Exclusive’ tariffs (i.e. euros/cents).

Panda Power Clarification required on what elements of the tariff the discount applies to (i.e. applies only to unit rate and not PSO Levy or Standing Charge). Also, to provide context to “Total Estimated Savings” figure.


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Section in Handbook

Requirement

2.3.1 The EAB must be based on updated average consumption figures approved by the CRU.

Supplier Breach

n/a No breaches identified

Section in Handbook

Requirement

2.3.1 The EAB must include all energy costs such as unit rate, standing charge, PSO levy, etc.

Supplier Breach

Energia PSO Levy figure incorrect for ‘Phone Exclusive’ tariff.

Panda Power PSO Levy figure and valid from date incorrect for ‘1 Year Dual Fuel’ tariff.


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Section in Handbook

Requirement

2.3.1 The EAB must not include monetary value attributed to non-energy related elements by suppliers, their representatives or third-parties e.g. loyalty points, non-cash vouchers, cash-back offers, etc.

Supplier Breach


Section in Handbook

Requirement

2.3.1 Where a specific tariff is presented / referenced, the EAB must be calculated based on that tariff.

Supplier Breach

Energia ‘Gas’ tariff EAB calculated incorrectly

Panda Power ‘Cashback Dual Fuel’ calculated incorrectly


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Section in Handbook

Requirement

2.3.1 Where a specific tariff is not presented / referenced, the EAB must be calculated based on the most relevant standard tariff to the consumers that can avail of the offering.

Supplier Breach


Section in Handbook

Requirement

2.3.1 The EAB should be displayed in the main body of the advertising or marketing material, in a prominent position, and is not to be displayed only in footnotes.

Supplier Breach

Panda Power EAB displayed only in footnotes

Section in Handbook

Requirement

2.3.1 The font of the EAB figure should be no smaller than the second largest font in the main body of the advertising or marketing material.

Supplier Breach



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Section in Handbook

Requirement

2.3.1 Details of the definition of the EAB, method calculation, etc. can be displayed in footnotes or a reference can be made to more information located on the supplier’s website.

Supplier Breach

Be Energy Did not provide method of calculation for Nightsaver tariffs

Bord Gáis Energy

Did not provide method of calculation for Nightsaver tariffs

Electric Ireland Did not provide method of calculation for Nightsaver tariffs

Iberdrola Did not provide method of calculation for Nightsaver tariffs

Panda Power Did not provide method of calculation for Nightsaver tariffs

Pinergy Nightsaver calculation was set at 70/30 Day/Night

PrePayPower Did not provide method of calculation for Nightsaver tariffs


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Section in Handbook

Requirement

2.3.1 Suppliers are required to display the date when tariffs were presented.

Supplier Breach

Be Energy Date when tariffs were presented not always displayed.

Bord Gáis Energy

Date when tariffs were presented not always displayed.

Electric Ireland


Energia


Iberdrola


Panda Power


Pinergy


SSE Airtricity



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Section in Handbook

Requirement

2.3.1 Suppliers are required to display validity periods for offers. If end dates are unknown, the 'valid from' date should be included.

Supplier Breach

Be Energy Validity periods not always displayed.

Bord Gáis Energy

Validity periods not always displayed.

Electric Ireland Validity periods not always displayed.

Energia Validity periods not always displayed.

Iberdrola Validity periods not always displayed.

Panda Power Validity periods not always displayed.

Pinergy Validity periods not always displayed.

SSE Airtricity Validity periods not always displayed.


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Section in Handbook

Requirement

2.3.1 Suppliers are required to display the duration of fixed term contract (if applicable).

Supplier Breach

Be Energy Duration of fixed term contract not always displayed.

Bord Gáis Energy

Duration of fixed term contract not always displayed.

Electric Ireland Duration of fixed term contract not always displayed.

Energia Duration of fixed term contract not always displayed.

Panda Power Duration of fixed term contract not always displayed.

Pinergy Duration of fixed term contract not always displayed.

SSE Airtricity Duration of fixed term contract not always displayed.


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Section in Handbook

Requirement

2.3.1 Suppliers are required to reference early termination fees, where applicable.

Supplier Breach


Section in Handbook

Requirement

2.3.1 Suppliers are required to reference that T&Cs apply and how to access them.

Supplier Breach


Section in Handbook

Requirement

2.5.1 Suppliers are required to display tariffs inclusive and exclusive of VAT on a per unit basis.

Supplier Breach

Energia ‘Phone Exclusive’ tariff not shown both inclusive and exclusive of VAT


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Section in Handbook

Requirement

2.5.2 Suppliers are required to show all fixed charges, including but not limited to standing charges and pre-payment charges that apply to that tariff as an annual amount inclusive and exclusive of VAT.

Supplier Breach

Bord Gáis Energy

Carbon Tax and PSO Levy amount were presented only inclusive of VAT

Section in Handbook

Requirement

2.5.3 Suppliers are required to present all energy related charges (variable and fixed charges) alongside any discounts on unit rates in the same text and font size. Footnotes may be used for details of the offer e.g. unit rate, standard charge, PSO levy, etc.

Supplier Breach



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Section in Handbook

Requirement

2.5.4 Suppliers are required to show the EAB associated with each tariff, as shown in the Suppliers’ Handbook.

Supplier Breach

SSE Airtricity EAB for electricity ‘Moneyback’ tariff not provided on literature

SSE Airtricity EAB for gas ‘Moneyback’ tariff not provided on literature


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Section in Handbook

Requirement

2.5.5 Suppliers are required to clearly set out discounts in cent per kWh. Discounts offered off the standard rate must be calculated and displayed incrementally or shown as a cumulative discount.

Supplier Breach

Electric Ireland Unit rates and discounts shown in euro per kWh

Energia Unit rates and discounts shown in euro per kWh

Panda Power Unit rates and discounts shown in euro per kWh

Pinergy Unit rates and discounts shown in euro per kWh

PrePayPower Unit rates and discounts shown in euro per kWh

SSE Airtricity Unit rates and discounts shown in euro per kWh


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Section in Handbook

Requirement

2.5.6 Where a supplier also wishes to present their tariff information on a full year basis, the annual industry agreed consumption figures as approved by the CRU should be used.

Supplier Breach


Section in Handbook

Requirement

2.5.7 Where a supplier is displaying day/night tariffs on a full year basis, the number of day and night units must be clear.

Supplier Breach


Section in Handbook

Requirement

2.5.8 Suppliers must also separately display any additional levy or charge which applies to the account; inclusive and exclusive of VAT.

Supplier Breach



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Section in Handbook

Requirement

2.5.9 Where a supplier is offering a dual fuel bundle, the gas and electricity tariffs should be shown separately with details provided on the additional components of the tariff.

Supplier Breach


Section in Handbook

Requirement

2.5.10 Where a supplier offers a ‘green tariff’ the supplier must set out the credentials of the tariff (for example, explain how the tariff is green and differs from its other tariffs).

Supplier Breach


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