Many people will face a tough winter, especially those in financial hardship, as many people spend more time at home and energy bills go up.
At the beginning of COVID-19, the Government announced an emergency package with energy suppliers to help protect consumers, especially those on prepayment meters. Alongside this, we issued guidance to suppliers making it explicit that customer protection must be their first priority.
I want to thank the industry for stepping up to safeguard their customers during this national crisis.
Strengthening consumer protections
Ofgem sets the price cap which ensures those on defaults deals and prepayment meters- about half the population - pay a fair price for their energy. On October 1, Ofgem cut the cap by £84 to £1,042 a year until the end of March following a drop in wholesale energy prices after the outbreak of the pandemic, which means significant savings for millions of households this winter.
Wholesale energy prices have started to recover in recent months and, if this trend continues, the cap would rise again in April. Although those protected by the cap always pay a fair price for their energy, they could get a cheaper deal by shopping around and save a household hundreds of pounds a year.
We already have rules requiring suppliers to treat their customers fairly, especially the vulnerable. If customers are struggling to pay for energy bills they should contact their energy supplier as soon as possible to get support.
Today we announced our plan to strengthen protections for these customers, by making it a licence requirement that suppliers put customers in debt on a realistic and appropriate repayment plan based on their ability to pay.
In addition, we plan to require suppliers to also offer emergency credit to customers struggling to top up their prepayment meter. This would help customers who temporarily cannot afford to top up or get to their local shop to do so because of a mobility issue or, for example, because they are self-isolating. Many suppliers already offer this support, but making it a formal licence requirement will ensure more customers are helped this winter.
These extra protections are in addition to the support already available to customers. For example, suppliers and network operators maintain a Priority Services Register (PSR) of customers in vulnerable situations and provide extra help to those on the register free of charge. Currently, there are around six million customers registered, who receive a range of help from advance notice of planned power cuts to priority support in an emergency.
We know that many gas and electricity suppliers too face a difficult time and we are working with them to help them support their customers and ensure the market continues to run smoothly.
In my new role as Director of Retail at Ofgem, my team and I will continue to work closely with the energy industry, government, other regulators, consumer groups and charities to understand what support consumers need and make sure they get it.
We’re pleased by the response of the industry this far, with many of them doing the right thing by their customers by helping them through these unprecedented times. For instance running specialist support teams, using smart systems to better target support to consumers who are in vulnerable situations.
Throughout the pandemic, we will also monitor suppliers’ behaviour closely to make sure they provide the required protections to their customers.
We expect and call on the whole energy sector to keep demonstrating this spirit of collaboration in responding to COVID-19 to make sure consumers stay protected this winter and beyond.