Jonathan Brearley's speech to Ofgem's Vulnerability Summit
Blog
Jonathan Brearley
Chief Executive
Publication date
Industry sector
Supply and Retail Market
Speech as delivered
Good morning everyone and thank you for spending time to come and talk to us about this incredibly important topic. I just want to say a big thank you to Minister Solloway, and indeed to Iain Coucher, the Chair of Ofwat to spend the time, to come together and really talk across sectors, about what we might do to protect our most vulnerable customers.
Now, the energy crisis, in my view, is entering a different phase. We saw huge turbulence in prices, we saw massive changes in the market but things are changing somewhat that will ultimately lead through to consumers. Prices are easing significantly, and I expect this to be reflected in the price cap and the bills we all pay in the coming months.
However, I also know that it is unlikely prices will return to those seen before 2021. Even if they do, there will always remain a significant group of vulnerable consumers who struggle to get their needs met from the energy market we have today.
Government has, as Minister Solloway has pointed out, offered unprecedented support in the past year – the Energy Price Guarantee alone paying a large part of our household energy bills, and on top of that, there is already a package in place to support vulnerable customers.
Now, we at Ofgem were strong advocates and supporters of this approach and are active in implementation of the schemes put in place to deliver all of this support.
However, now we are entering this new phase, it is time to concentrate our efforts and resources on those who are most vulnerable and who struggle most to get what they need and deserve from our energy system.
There are many dimensions to vulnerability. But in my mind, these fall into three simple categories:
First of all, customers who face financial vulnerability – the inability to pay for the energy they need.
Now clearly, with the market changes we have seen, that is a problem that has grown as prices have changed as dramatically as they have over the past 18 months.
Secondly, we have customers who need help and support to access the services they need: for example, those who are digitally excluded, the visually impaired, or those who need information in the right language, or put to them in the right way.
To give an example, I spoke to someone who had a particular condition which meant they could not read a computer screen, so they had to have everything done by phone because they could not interact with their energy company any other way. We need to make sure we are taking care of these customers as well.
And finally, customers who face severe personal risks without the energy they need, either through medical, family, or wider personal circumstances.
Now it is incumbent that our strategy manages all three of those issues.
So first of all, we do need to find a way that financially vulnerable people – potentially a much wider group than before the gas crisis, and those on low incomes, can afford the energy they need without going into unmanageable debt.
As Minister Solloway mentioned, the government is now developing a new approach to consumer protection in energy markets.
We are working to support the development of all options to tackle this. This includes consideration of a social tariff which as the Secretary of State himself said, could be very helpful.
In terms of support to help vulnerable customers access vital services, Ofgem has a wide range of measures already in place. These are all contained within an overarching principle that requires suppliers to treat vulnerable customers fairly. Suppliers do great work, but I would encourage them to go over and above what is in the rules, which really are laid out as a set of minimum standards.
And it is incumbent upon us all to continue to assess whether these are right, and are sufficient to protect vulnerable customers when the external environment of the energy market has changed so significantly.
For example, as with the recently announced code of practice for prepayment meter installations, we may need more specific requirements over and above the principles we have laid out. And as the Minister said, we are determined this Code of Practice will go into the rules and regulations that apply to the market, and ultimately will become enforceable. Stakeholders will also be involved in that process, to continue to get the balance right for customers.
There is a great deal we can do and should do, to protect vulnerable customers. However, we need the foundations in place. There is one foundation without which all of us cannot act to protect vulnerable customers, and that is having sufficient understanding of the needs of those customers to be able to target our efforts. Right now, we do this through the Priority Services Register.
To start with, companies need to ensure they have the systems and processes necessary to use the information they have today to protect their most vulnerable customers.
Our rules clearly require suppliers and network companies to use their Priority Services Register to provide appropriate support to customers. This is an extremely important part of our licence condition and we will respond robustly if this is not the case.
Further, we need to integrate and improve what we collect across sectors. Now I’m pleased to say having spoken to Ofwat for a number of years that there is great progress between the water and energy sectors . But this needs to go further and greater to tackle these issues around integrating existing registers - as well as thinking about new ways to improve who is joining them now.
For example, our consumer research shows that only one in three consumers are aware of the Priority Services Register, and even among those who have heard of it, a significant minority who could be eligible for the register are not on it. So there are things that need to change today, and there are things that we need to do quickly to make the register better.
But really, today, my question is this.
Is the system we have in place to manage, track and store information on vulnerable customers really fit for the 21st Century?
My view is that we should aim to try to do much better.
We should all consider building towards a joint register, not just between water and energy, but including wider sectors and potentially local and national government, such as the data held by the Department for Work and Pensions.
We could also look at what happens elsewhere where personal information is shared, such as, for example, the financial services sector.
Ideally, this joint register would be based around a single principle: ‘tell us once’ – where families who have vulnerabilities tell one agency about this and, with their permission, this is shared across all others with a single, reliable source of data to anticipate, identify, and respond to the needs of those customers.
Now, I know there are complex issues here, both policy and technical.
Indeed, this ambition may not be possible in the very short term.
However, if we can achieve this, my view is that we will much more effectively serve the needs of the customers who need the most help.
Finally, as the Minister herself said, Spring is here, things are getting warmer but we all know in this room, and indeed all those dialling in online, that the time lags of regulation mean we need to act now. Winter is fast approaching, and, particularly with the consultations involved, if we want to change things we need to start work now.
So, Government, Ofgem and the industry will need to work together now to make sure we are prepared to do the right thing for our vulnerable customers this Winter.
Therefore, really, this conference is about two things and, quite frankly, I hope that it is more than simply big speeches and great networking, as important as those things are.
We have work to do together.
First, that we map out, together, the risks, concerns and issues, that vulnerable customers will face, particularly this Winter.
We will use the outcome from this conference to check and shape our own work programme, and to prepare ourselves and the sector to manage what will undoubtedly be a difficult Winter for many across the country.
Second, given the importance of information, we want to discuss how we should use and evolve the Priority Services Register so that it is fit for purpose and provides the right foundation to meet the needs of vulnerable customers.
So there’s a great deal to do – there’s a great deal to do today, and there’s a great deal to do over the course of this year, and I look forward to working with all of you, in and out of this room, to make sure we give our vulnerable customers the support they need to get what they need and deserve from our energy sector.