Ovo says: make energy tariffs cost-reflective to kick-start competition

Ovo’s chief financial officer Chris Houghton talks about pricing in an interview with New Power:

“We make a margin on every customer however small and we don’t believe in some customers subsidising others.

“We don’t think that’s the view throughout the industry and the CMA is investigating effectively two-tier pricing where loss-leading tariffs are subsidised by standard variable tariffs. That’s something that’s not in our conviction – we don’t believe that it should be done. It’s quite possible that at some point the tariffs winning most customers are not do-able in their right.” He says cost reflective pricing would help break the market open: “the big six have legacy systems, huge numbers of properties, masses of staff. It would encourage them to be more efficient and at the moment there is no motivation for that. All that anyone is focusing on is net return, and gross return is more important.

“If every tariff had to be cost-efficient and there was pressure to cut standard variable tariffs that would mean more competition in the industry as a whole.”

Read Ovo’s  submission to the Competition and Markets Authority  here

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