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Regulator to Make Suppliers Inform Customers of Lowest Offer Across Brands, Including White Labels

September 10,2014



The U.K. Telegraph reports that Ofgem will propose ending an exemption provided to "white label" retail energy suppliers that exempts these white label providers' suppliers from having to inform customers of cheaper options available under the white label.

Currently, U.K. energy suppliers must inform customers of their cheapest plan across their family of brands, even if that plan is offered by a brand not currently serving the specific customer.

However, Ofgem did not originally extend this requirement to white label providers supplied by other retail suppliers. For example, according to the Telegraph, Sainsbury's Energy is a white label of British Gas, and M&S Energy is a white label of SSE

Ofgem, the Telegraph says, will soon propose ending this exemption.

Stepping back from the specific white label issue, as greater market segmentation occurs in the U.S. retail market, we wonder if similar requirements for suppliers offering multiple brands to inform customers of their lowest rate across brands will gain traction, especially in a post-vortex Northeast.

Texas has seen the most market segmentation through multiple branding of either the same REP, or separately certificated REPs with the same owner, and from time to time consumer groups or reporters note the strategy, and pricing disparity in media reports, but the issue has not gained any traction.

However, the Northeast mass market has seen an increased amount of market segmentation via multiple brands from the same corporate parent.

NRG, when including a legacy brand, has at least 5 brands in the Northeast (NRG Residential, Green Mountain Energy, Energy Plus, Energy Rewards (the Comcast partnership most analogous to a U.K. white label), and Independence Energy (which at least still serves some load under its certificate). Direct Energy also has 5 Northeast brands: Direct, Gateway Energy Services, Bounce Energy, NYSEG Solutions, and Energetix. Crius Energy uses the Viridian, Public Power, Fairpoint Energy, FTR Energy, and Cincinnati Bell Energy brands. Just Energy uses its Just Energy and Commerce Energy brands in the Northeast. Genie Energy has just launched Residents Energy to target a different segment from its IDT Energy brand.

As Northeast regulators increase scrutiny on simplicity and transparency in the retail market, we wonder if U.K.-style brand disclosure requirements are next.



Tags:
U.K.   Branding   Market Segmentation   Polar Vortex  

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