Improving the energy market for vulnerable people

Meghna Tewari

Meghna Tewari

Head of vulnerability and consumer policy
13th June 2019
Areas covered:
Consumers
Improving the energy market for vulnerable people
Supporting and protecting customers in vulnerable situations is a key priority for Ofgem.
 

We know that being in vulnerable circumstances can make it more of a struggle to manage the everyday of energy and deal with bills, switching and contracts.

Energy is changing, and it is expected that digitalisation, decarbonisation and decentralisation are likely to radically change the way consumers interact with their energy suppliers. We are determined that everyone is able to benefit from these changes and are protected, particularly those least able to look after themselves.

That’s why we’re launching a new Consumer Vulnerability Strategy (CVS 2025), and starting a conversation on the priorities and outcomes we think are needed to support vulnerable consumers looking ahead to 2025.

Vulnerabilities are changing

In 2013 we published our first vulnerability strategy. It recognised that vulnerability can take many forms. Some vulnerabilities can be long-lasting, such as being poor, mentally or physically ill, or disabled. But others can be temporary, such as becoming unemployed, or being bereaved.

Since then we have increasingly improved outcomes for these consumers, such as nearly eliminating disconnections due to debt, creating incentives and obligations on network and supply companies to connect customers to cheaper and more efficient household heating, and introducing price protection on poor value default and prepayment meter energy tariffs. We have also introduced new rules to support the most vulnerable, and undertaken strong compliance and enforcement activity to make sure energy companies stick to them.

Industry is also increasingly focussing on vulnerability, and much progress has been made, including the recent Energy UK Commission report on vulnerable consumers.

However, we are aware of the gaps in consumer support, and it is unacceptable today that people struggle to meet their energy needs and face a ‘heat or eat’ dilemma. 

We are especially concerned suppliers aren’t doing enough for people in debt. We are looking at putting in place rules that ensure a customer’s ability to pay is properly considered when setting repayment plans, monitoring repayments and ensuring consumer understanding of arrangements.  

Energy is changing

We are at an important juncture in energy.

Many changes will be initiated in the next few years to make the energy system more flexible and cost-reflective, and the energy market more dynamic and competitive.

While this presents opportunities, it also has the potential to exacerbate or create new types of disadvantage, particularly with the greater expectation it may place on consumers' abilities to engage with their energy. For example, with smart meters – some consumers in a vulnerable situation may self-ration their energy as usage is more visible, or might not have access to more competitive tariffs like time-of-use tariffs due to their specific circumstances or inability to move their consumption. Furthermore, some technologies that may help to reduce bills may be out of reach due to initial upfront investment costs (such as solar panels).

Identify and empower: A 5-point-plan

It is essential that consumers at risk are properly identified and empowered. To set out our strategic goals for consumers in vulnerable situations, we’ve outlined five key areas with outcomes that we want the energy industry to focus on. We also propose ways to measure these once finalised:

  • Improving identification of vulnerability and smart use of data.
  • Supporting those struggling with their bills.
  • Driving significant improvements in customer service for vulnerable groups.
  • Encouraging positive and inclusive innovation.
  • Working with partners to tackle issues that cut across multiple sectors.

Addressing the challenges of vulnerability requires collective action from policy makers, industry and consumer champions. We’re asking important questions on affordability and the potential role of different organisations to address it, relative to the role of Ofgem and government.

In the last few months we have engaged with many stakeholders in England, Scotland and Wales to inform the priorities of the strategy. We continue to value their commitment to helping people in vulnerable circumstances, and are grateful for their input so far. We look forward to receiving responses to our new strategy and working with everyone to create a fair energy market for today and the future.

View the strategy: CVS 2025.

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