ASA Adjudication on Viridian Energy Supply Ltd

Ad

A mailing, for an electricity provider to businesses, was headlined “Save up to 15% on your Electricity costs”. Text underneath stated “Energia are delighted to announce that all business customers can now reduce their electricity costs by choosing Energia. We guarantee a 15% saving on your electricity costs NOW and we will supply you with 100% renewable energy … Save 15% on your current NIE electricity bill … Free savings assessment Simply call our customer service team today … and we will provide you with a free, no obligation cost saving assessment. All you will need is a copy of a recent electricity bill as we will require information on your current electricity usage and meter set up … you are dealing with the largest independent energy supply business in Ireland …”. Small print at the bottom stated “*15% saving based on NIE popular option tariff as at 1st January 2009”.

Issue

Firmus Energy challenged whether the:

1. ad was misleading, because the claim "save up to 15% on your Electricity costs" was contradicted by the claim "We guarantee a 15% saving on your electricity costs";

2. claim "We guarantee a 15% saving on your electricity costs" was misleading and could be substantiated;

3. ad was misleading, because it did not give specific details of the price comparison in order to allow it to be verified by consumers;

4. claim "we will supply you with 100% renewable energy" was misleading and could be substantiated;

5. ad was misleading, because it did not mention that NIE tariffs, and therefore any savings claims, were subject to change;

6. claim "the largest independent energy supply business in Ireland" was misleading and could be substantiated.

CAP Code (Edition 11)

Response

1. Viridian Energy Supply Ltd t/a Energia (Energia) said they did not accept that the claims were contradictory. They said they offered up to 15% savings on electricity costs compared to any supplier other than NIE, the regulated supplier, and guaranteed 15% savings versus the NIE popular option tariff. They maintained that that was further clarified in a leaflet accompanying the letter.

2. & 3. Energia said the claim was substantiated by the footnote at the bottom of the letter, which stated clearly that the saving was based on the NIE popular option tariff. They maintained that all customers on that tariff plan would make the 15% saving on their electricity rates with Energia. Energia said the NIE tariff was published and made widely available by the energy regulator. They added that they provided a detailed comparison as part of the costs and savings assessment carried out for all new customers.

4. Energia said they had sufficient off-take contracts with registered renewable electricity generators to supply their customers with renewable energy. They said they allocated the energy from wind farms to customers who had subscribed to a green tariff. They pointed out that they complied with regulations on the use of Levy Exemption Certificates (LEC) for renewable energy, which demonstrated that they had the capacity to supply consumers in accordance with the claim.

5. Energia pointed out that the mailing stated that the saving was based on the NIE popular tariff as at 1st January 2009, the date of the comparison.

6. Energia maintained that the claim could be substantiated by taking each of its component parts separately. They pointed out that the definition of largest used for the purposes of the ad was the industry norm of sales units measured in GWh. They sent supply figures for 2009, which compared all competitors in the market. They said they had a market share of 45% in terms of GWh supplied and that the information was drawn from the regulatory bodies responsible for Northern Ireland and the Republic of Ireland.

Energia said the term independent was used to classify them as they were separate from the existing incumbent suppliers in Ireland, namely NIE in Northern Ireland and ESB in Republic of Ireland. Although they acknowledged that they were a member of the Viridian group, they maintained that they were "ring-fenced" from any group subsidiaries and affiliates in accordance with licence obligations set out by NIAUR. Energia also pointed out that they operated in the Irish Single Electricity Market, which encompassed both the territories of Northern Ireland and the Republic of Ireland.

Assessment

THIS ADJUDICATION REPLACES THAT PUBLISHED ON 10 FEBRUARY 2010. THE VERDICT ON POINT 6 HAS CHANGED, MAKING THE COMPLAINT NOT UPHELD.

1. Upheld

The ASA noted Energias argument that it was clear from the ad that the guaranteed 15% saving related to those customers on NIEs popular option tariff and that the up to 15% saving related to all other recipients. Although we noted the footnote, we also noted it was not linked to any of the claims in the ad. Furthermore, we noted the ad was sent to non-NIE customers who would not necessarily have been able to enjoy savings of 15%. Because we considered that the two claims were not properly explained and qualified, we considered that readers were likely to be confused by the ambiguity of the two claims as they appeared. We therefore conclude that the ad was likely to mislead.

On this point, the ad breached CAP Code clauses 7.1 (Truthfulness) and 19.1 (Other comparisons).

2. Upheld

We noted Energia had based the claim on a comparison with NIEs published prices and sent details of the comparison. However, we noted the ad was sent to non-NIE customers whose savings were likely to have been less than the stated 15%. We considered that the absence of immediate qualification rendered the claim ambiguous and recipients could infer that all customers were guaranteed a saving of 15%. Because Energia could not substantiate that all recipients would be guaranteed a saving of 15%, we concluded that the ad was likely to mislead.

On this point, the ad breached CAP Code clauses 3.1 (Substantiation), 7.1 (Truthfulness) and 19.1 (Other comparisons).

3. Upheld

We noted Energia featured a footnote explaining the basis of the claim. However, we understood that to allow consumers to verify the accuracy of a comparison with an identifiable competitor, the ad had to include information directing consumers to a summary of the data. Because we considered that the footnote was insufficient, we concluded that the ad was in breach of the Code.

On this point, the ad breached CAP Code Clause 18.3 (Comparisons with identified competitors and/or their product).

4. Not upheld

We considered that recipients were likely to infer from the claim that Energia provided energy from certified renewable sources to those customers signing up to their green tariffs. We noted Energia pointed to their compliance with established regulations on the supply of renewable energy and therefore concluded that they had substantiated the claim.

On this point, we investigated the ad under CAP Code clauses 3.1 (Substantiation), 7.1 (Truthfulness) but did not find it in breach.

5. Not upheld

We noted the savings claim was based on an NIE tariff set on 1 January 2009 and understood that the tariff applied until price changes in September 2009. We considered that readers would understand that utility price levels fluctuated over time. We noted the ad appeared in May and considered that it made the basis of the savings claim sufficiently clear to those customers on the NIE popular option tariff. We concluded that the ad was unlikely to mislead.

On this point, we investigated the ad under CAP Code clauses 3.1 (Substantiation), 7.1 (Truthfulness) and 18.1 (Comparisons with identified competitors and/or their product) but did not find it in breach.

6. Not upheld

We noted that there was another larger energy supplier in Ireland, but that Energia qualified their market leadership claim by limiting it to a comparison of independent energy supply businesses. We noted that while they were a part of the Viridian group they were "ring-fenced" within it and were required by the terms of their operating licence both to be independent of the Regulated Businesses and not to represent themselves as anything other than independent of those Businesses in all their dealings with existing and potential customers. We considered that readers would regard that as sufficiently independent and concluded that, because the supply figures for 2009 showed that Energia had the largest share of the market of those companies that could reasonably be regarded as independent, they had substantiated the claim.

On this point, we investigated the ad under CAP Code clauses 3.1 (Substantiation), 7.1 (Truthfulness) and 19.1 (Other comparisons) but did not find it in breach.

Action

The ad must not appear again in its current form.

Adjudication of the ASA Council (Non-broadcast)