Following extensive engagement, we’ve outlined a new Consumer Vulnerability Strategy to improve help and support to vulnerable energy customers. As we invite views on the strategy, we’ll be featuring comment and opinion from industry and the consumer frontline on the key priorities. Last week we heard from Adam Scorer, CEO of fuel poverty charity NEA on smart data. This week, Gillian Guy, chief executive of Citizens Advice, shares their experiences of helping those struggling with their energy bills, and the challenges the new strategy must tackle.
Ofgem’s Consumer Vulnerability Strategy will be an important opportunity to set the energy sector on a path to better supporting its customers.
In 2018, Citizens Advice helped more than 43,000 people with energy debt problems and around half of these people had a long term health condition or disability. This unique insight allows us to identify – and propose solutions for – some of the key challenges that the energy sector needs to tackle in the coming years, particularly around energy debt and supporting customers in vulnerable circumstances.
The experience of the people we help shows that a secure and affordable energy supply is more important than ever. People need energy to carry out basic activities like washing and cooking, and keeping warm in the winter months. But they also need it to stay connected in an increasingly digital society.
Energy is a large cost for many, often taking up as much as 10% of household income. This can be hard to manage at the best of times, but life shocks such as a bereavement or loss of employment, can mean people fall behind on their bills.
Our research has found that customers in these situations often don’t contact their supplier for help, and unfortunately when people do seek help from their supplier, they don’t always get the right level of support. The costs of getting this wrong can be far more than just financial.
The Citizen’s Advice Extra Help Unit (EHU), a specialist support service, often helps people in debt who have not received the support they needed from their suppliers. Recently the unit helped Lauren* who suffers from both physical and mental health conditions. She’d fallen behind on her bills and her supplier had insisted that she make repayments of £260 per month – an unmanageable amount based on her income.
Lauren tried to contact her supplier multiple times, but they failed to get back in contact with her. She then started to receive text messages stating her energy was at risk of disconnection. This caused Lauren a lot of distress and exacerbated her mental health conditions. The EHU was able to contact her supplier on her behalf to agree a more manageable payment plan of £160 per month, which included her debt repayment and ongoing usage.
It is really important that suppliers provide a comprehensive package of help for customers in debt. Our research has found that people are far more likely to engage with their energy supplier about their debt when they are made aware of the practical benefits of doing so. Suppliers therefore need to communicate with customers in a consistent and supportive way, using their preferred methods. As part of this support, suppliers also need to involve customers in their decisions around affordable payment plans. We’re pleased to see that Ofgem’s vulnerability strategy has responded to our call for the ‘ability to pay’ principles to be strengthened.
We know that prepayment meters (PPMs) are also often used to manage customer debt. These can be useful for some, as they allow people to closely monitor their energy usage and regulate their energy costs. However, our research has shown that 140,000 people using PPMs are ‘self-disconnecting’ each year because they cannot afford to top up. Customers repaying debt on PPMs were more likely to ’self-disconnect’ – 40% of those whose meters were used to collect debt had ‘self-disconnected’. These customers are sometimes disconnected for days at a time, and the vast majority of the households that ‘self-disconnect’ contain a child or a person with a long term health condition. This is even more worrying when we know that being without light or heat risks making people’s physical or mental health problems worse.
In the past, it has been difficult for suppliers to identify people at risk of ‘self-disconnection’ and offer appropriate help. But the smart meter rollout – which will be completed in the period covered by the new strategy – will enable proactive monitoring and support for consumers who are at risk.
One of the greatest achievements during the period of Ofgem’s last Consumer Vulnerability Strategy was effectively eliminating disconnection for debt. The new strategy should be equally ambitious, by not only ensuring the best support possible for customers in debt and in vulnerable situations, but also setting a target to end ‘self-disconnections’.
It takes collective action to support people in vulnerable situations, and in setting out our views on how the Vulnerability Strategy can make a difference, we’ve also outlined our own work in this area.
Energy is an essential service and not something that any household should have to do without. A fair, modern energy market should guarantee people a reliable energy supply, and not leave them in cold, dark homes.
*Names have been changed to protect identity.
Ofgem is consulting on the Consumer Vulnerability Strategy until 8 August 2019, and will launch our first consultation on how we propose to address PPM self-disconnection this summer. View and respond to the strategy here.
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Our series of guest blogs represent the views of the authors writing with a view to encouraging debate about important energy topics. They do not represent the views of Ofgem, nor should they be construed as an endorsement or commitment by Ofgem to take any particular course of action.