Consumer Vulnerability Strategy: Social obligations reporting (SOR)

At-a-glance summary

There has been an increasing trend in the average level of remaining debt for domestic customers who have a debt repayment arrangement. In the last few quarters the debt for electricity and gas customers has continued to rise at a steady rate from Q2 2016 to Q2 2017, reaching £419 in gas and £438 in electricity.  Since then the average level of remaining electricity debt has continued to rise while the average remaining gas debt has slightly decreased.

Methodology

This is a snapshot figure of the average debt that remained owing on the last day of the reporting period for customers repaying a debt. It only includes the outstanding amount of debt that the customer is paying as part of a repayment plan and does not include any debt incurred for consumption since the start of the repayment plan.

At-a-glance summary

The proportion of domestic customers repaying debt who are paying via a prepayment meter has stayed broadly static in the last three years. Gas customers continue to be more likely to repay a debt via a PPM than electricity customers.

Relevance and further information

From 1 April 2017 a cap on the amount suppliers can charge domestic PPM customers came into force. Suppliers must set their prepayment prices at or below this level.

Methodology

When a customer is in debt to their supplier they can repay this debt via they payment method they had previously, or a PPM can be installed to collect payments. Some customers may choose to have a PPM installed, while others may have a PPM installed to repay debts at the request of their supplier or may have a PPM installed under warrant. A debt repayment arrangement is an arrangement to repay debts which lasts more than 91 days/13 weeks.

At-a-glance summary

There has been a long term reduction in the number of domestic customers disconnected for debt. Between Q4 2016 and Q1 2017 the number of disconnections for non-payment of debt decreased to 17 for both gas and electricity from 210 disconnections in the same period the previous year.

Relevance and further information

During winter (October to March) suppliers are prohibited from knowingly disconnecting customers of pensionable age (where they live alone, with other pensioners or with children). Suppliers must also take all reasonable steps during winter to avoid disconnecting premises where the occupants include a person who has a disability or a chronic sickness or a person of pensionable age.

Members of Energy UK also adhere to a voluntary code of practice known as the ‘Safety Net’. Among other protections, signatories have committed to not disconnecting customers in vulnerable situations at any time of year and to reconnecting customers who are subsequently identified as vulnerable as a priority and usually within 24 hours. Compliance with the Safety Net is independently audited. Further information about the code can be found on Energy UK’s website.

At-a-glance summary

This chart shows the number of domestic customers who are repaying a debt to their supplier on their gas or electricity account. Taking account of the total numbers of domestic customers this equates to a fall from around 5% in 2006 to around 2.4% in 2[AP1] [EW2] 017 for both electricity and gas customers.

Relevance and further information

The number of customer accounts repaying an energy debt has been decreasing since 2006, when in percentage terms, nearly 5% of electricity customers and over 4.5% of gas customers were repaying a debt. There was a peak in Q2 and Q3 2013, but the downward trend continued after this, reaching around 650,000 customers for electricity (2.4% of customers) and 540,000 customers for gas (2.3% of customers).

Methodology

This data reports the number of customers who have a debt repayment arrangement with their supplier on the last day of the quarter. These are customers who have entered a formal arrangement with their supplier to repay outstanding debts, including all prepayment (PPM) customers repaying a debt, and non-PPM customers on debt repayment arrangements extending beyond 91 days/13 weeks. It does not include those customers with a debit at the end of a payment scheme that will be rolled into a new payment scheme and those who have had their payments increased because previous payments were set too low. All customers on payment schemes (including direct debit) are excluded once the initial debt has been repaid.

At-a-glance summary

Customers in arrears are customers who owe a debt to their supplier, but do not yet have a debt repayment arrangement in place. The number of customers in arrears grew slowly from when we started collecting data in 2012, to a peak in 2014 (at over 2% of electricity and gas customers). Since then it decreased slowly, and, started to edge back up towards the 2014 peak.

Relevance and further information

There continues to be a seasonal pattern to energy debt. Debt generally falls towards the end of the year, when customers are billed for the warmer months. It then rises in the spring when customers fall into arrears following higher energy usage during the winter months.

Methodology

These are accounts that have had a bill issued which remains unpaid for longer than 91 days/13 weeks where a formal arrangement to repay the debt has not been agreed.