What’s in this guide?
Unless you happen to work within the energy industry or you stay vigilantly up to date with all the changes that occur within it, you may not have even heard of the retail market review (RMR).
The RMR has been in the press a lot over the last few years, but with the typical energy jargon used it leaves many asking this question:
What exactly is the retail market review?
This guide will tell you everything that you need to know about the RMR, including what it is, the changes that it has made and how it affects you.
Let’s dive in!
What is the Retail Market Review?
Ofgem, the energy industry regulator, implemented the retail market review to try and combat the increased energy prices.
In turn, making the energy market more fair for both customers and smaller suppliers.
After the launch in 2010, the regulator had clear goals to make the market fairer, more straightforward and crucially clearer.
This was after so many reports that customers found understanding their bills or switching painful and complicated.
How does this affect me?
If you have ever used a comparison site or tool like EnergySeek for example, the RMR made it easier for you to compare energy suppliers.
In other words, creating a more competitive market that makes it clear which tariffs are cheaper and making it easy for you to switch.
Two primary tools came out of the RMR; the TCR which stands for ‘tariff comparison rate’ and was merely a number that was a standing rate for an energy company, which you could compare against their competitors.
The other tool was ‘personal projection’, which is just your projected energy cost for the year.
Ofgem decided that the TCR was being more of a roadblock for energy suppliers than helping, so that rule ended in 2017.
Meaning that energy suppliers no longer had to provide a tariff comparison rate number.
The first part of Ofgem’s plan for the RMR was to create a ‘simpler’ market for energy customers.
This means no more complex, energy tariffs that are difficult to break down or understand.
If you have recently had a look at the energy market, perhaps by using an energy comparison website you may have noticed that the tariffs that energy companies offer are now transparent, with a clear unit rate and standing charge.
There are also regulations regarding special offers or discounts.
Now you should only see discounts for dual fuel packages or opting to manage your account online.
The reason that they have done this is to ensure that your view of a tariff isn’t distorted due to flashy deals that may or may not make a tariff cheaper for you.
For instance, even with discounts, a tariff from British Gas is usually one of the more expensive tariffs on the market.
Thanks to the RMR, when you had your last energy bill, you may have noticed that it is a lot clearer than it was years ago.
Ofgem had received many complaints from both domestic and business customers that their bills were far too complicated and made it difficult to make decisions about their energy suppliers.
Due to this legislature, energy companies are now legally obligated to tell you which of their energy tariffs are the cheapest and are available to you at the time.
This has to be based on your particular situation, and your energy supplier has to tailor it to your needs.
You will also find that there is far more information regarding your energy consumption, which can further help you not only see where you could be saving money, but it also means that when you compare suppliers, you can use this information.
Should your supplier has to increase their prices for any reason, they are also meant to show you this clearly in finances to make it easier for you.
Perhaps the most important factor in the RMR was to rebuild the consumer’s trust in the energy industry.
This section is what has meant that energy companies have to give you 49 days notice before your current energy plan ends.
Some suppliers have been rolling their customers onto the most expensive tariff that the company offers after their current contract ends, understandably leading to many complaints to Ofgem.
With this notice, customers can shop around for the best deal for them and their home with no problem before they roll onto another contract.
So why compare suppliers? Why not just go for the first deal that you see?
Every supplier is unique in at least one way, whether due to customer service or the services that they offer.
The ‘big six’ energy companies are enormous and reliable, with millions of customers. This attracts many customers, but on the other hand, their ratings on trusted websites such as Trustpilot tends to be more harmful than their independent competitors.
Smaller independent energy companies generally tend to offer competitive pricing and excellent customer service, but they do run more of a risk of going out of business.
This leaves a difficult choice for many customers, but there is a decent solution.
When you compare, you can place these companies next to each other and see how they match up regarding not only price but also customer satisfaction.
How do I compare?
So how do you start comparing?
First, you need to make a decision about what you value most in your supplier, whether it costs, tariff choices, customer service and extra services.
Second, you need to have some information to hand. Ideally your postcode, your annual consumption and details like your email or phone number.
If you don’t have your annual energy consumption to hand, you can use the size of your home or the average use of your home. Is it a low use household, in which you might have only a couple of people living there, or is it a vibrant, busy home with 5 or more people?
Third, compare. This is when you use a comparison tool that will give you every deal available to you within minutes, saving you a lot of time and effort.
It can also ensure that you get deals potentially from companies you’ve never heard of.
Did you know that you could be saving £200 a year on your energy bills?