- Vulnerable customers get record 1.5 million additional services to help manage energy, as more helped through suppliers’ priority service registers.
- Suppliers install 15% fewer prepayment meters by force to collect debt following Ofgem’s intervention.
- However suppliers still too slow to put indebted customers on repayment plans, as number of consumers in debt rises by almost 5% for gas customers.
Suppliers are getting better at helping vulnerable customers manage their energy day to day, Ofgem’s research shows, but are still too slow at helping rising numbers of customers deal with debt.
Ofgem has published its annual report on how suppliers treat their customers in vulnerable situations, including those in debt and at risk of being disconnected. (1)
Over 850,000 and 650,000 free services were provided by suppliers respectively to vulnerable electricity and gas customers in 2018, through their priority service registers – an 8.5% increase for electricity and 4.4% for gas services from the previous year. These customers benefitted from additional support to help them manage their energy day to day, for example through braille or large print bills for visually impaired people.(2)
The number of disconnections for debt also fell to a record low last year, with just 6 electricity disconnections and no gas disconnections. (3)
The number of prepayment meters installed forcibly by suppliers under warrant to collect a debt fell by 15 percent to 71,000 in 2018, after Ofgem introduced new rules to encourage suppliers to cut down on this practice. The drop was mainly driven by British Gas, whom Ofgem engaged with as part of last year’s report. (4)
Ofgem is concerned about a high number of forcible meter installations carried out by First Utility (now Shell Energy) and Utility Warehouse in 2018. (5) First Utility did not carry out any forcible installations in the last quarter of last year, and Shell has pledged to improve performance.
At the same time, however, there was more than a threefold rise in the number of smart meters switched remotely by suppliers from credit to prepayment mode to repay a debt (from 21,000 in 2017 to 70,000 in 2018).
Suppliers are bound by Ofgem’s rules to only install prepayment meters to collect debt where they have checked that it is appropriate for customers to pay by this method. Installing meters by force must be a last resort for suppliers.
Ofgem is concerned that some suppliers may be remotely switching smart meters to prepayment mode to collect debt inappropriately and without the customer’s active choice.
Ofgem expects all suppliers to use the remote switching facility fairly and appropriately, and will monitor industry performance closely in this area.
Last year saw the overall number of customers in debt rise by 4.2 % to 1.31 million for electricity, and 4.8 % to 1.05 million for gas customers. (6)
Suppliers are bound by Ofgem’s rules to help their customers manage debt, including by putting them on an affordable repayment plan.
Yet, whilst the numbers of indebted customers on repayment plans rose slightly last year – 1% for electricity and 0.4% for gas – this was far outweighed by the increase in the number of those who owed money but were not put on any plan - a rise of around 8% for electricity (648,000) and 10% for gas (505,000) customers. (7)
This suggests that suppliers are not moving quickly or efficiently enough to put customers who owe money on repayment plans, potentially pushing them further into debt or hardship.
Ofgem is proposing to strengthen its rules around how suppliers manage their customers’ debt. This includes making it a licence condition that suppliers contact indebted customers, and check their understanding and ability to pay before setting up a debt repayment plan. (8)
Mary Starks, Executive Director for Consumers and Markets at Ofgem said: “Energy is an essential service, and suppliers must take particular care with those customers who are less able to manage and pay for their energy.
“We are pleased that suppliers are making such good progress on getting extra help to vulnerable customers that need it, for example by making their bills easier to access or read.
“However, some suppliers are simply not keeping up with the rising numbers of customers who owe them money. It’s imperative that suppliers move quickly and efficiently to help struggling customers manage paying back their debts, or risk pushing them further into hardship.”
Notes to editors
- Ofgem’s report ‘Vulnerable consumers in the energy market: 2019’ gives an annual overview of suppliers’ and network companies’ performance on vulnerability, analysing supplier data on debt, disconnections, PPM and warrant installations, and on the non-financial services that suppliers and network companies offer customers under the Priority Service Register.
- Suppliers have a duty to keep a priority service register, and offer vulnerable customers free non-financial services around safety, access and communications to help them manage their account. These include, for example, a nominee scheme so other nominated household members can receive bills, meter readings carried out at agreed intervals for people who struggle to access or read a meter, and tailored, accessible bills. In 2018, the number of customers on suppliers PSRs continued to increase across all suppliers. There are now in total 6,703,753 (24%) electricity consumers and 5,646,740 (24%) gas consumers on the PSR. It is positive to see that suppliers are getting better at identifying vulnerability and registering customers on the PSR. The total number of services provided rose to 873,082 services for electricity consumers and 659,650 services for gas customers, up from 804,976 services for electricity consumers and 631,821 services for gas consumers the previous year.
- There were only six electricity disconnections for debt and for the first time since we started recording data on disconnections there have been no gas disconnections for debt in 2018. This is again a considerable decrease compared to 2017 when 17 customers were disconnected for debt. There have been no disconnections for debt in either Scotland or Wales. This continues a long-term downward trend from a peak of 8,300 annual disconnections a decade ago, following a crackdown by Ofgem.
- In 2017 suppliers installed 84,424 prepayment meters under warrant to recover customers’ debt prompting intervention by Ofgem. The total number of force-fitted PPMs decreased overall to 70,981 in 2018 driven by British Gas.
- First Utility (now Shell Energy) installed 89 and 104 PPMs under warrant per 1,000 customers for electricity and gas respectively and Utility Warehouse installed 85 and 99 PPMs under warrant per 1,000 customers in 2018. The average of PPMs installed under warrant per 1,000 customers across all suppliers was 44 for electricity and 52 for gas in 2018. Utility Warehouse has reduced these values from 2017 but it still remains one of the highest of suppliers. First Utility did not install any PPMs under warrant in the last quarter of 2018 and Shell will be looking to do this again in December 2019 – January 2020 in order to reduce the impact on customers during the winter period.
- The total number of customers in debt, which includes customers repaying a debt and customers in arrears (not yet on a repayment plan), has increased. This is 1,309,768 for electricity and 1,048,8344 for gas, which represents a 4.8% increase for gas and 4.2% increase for electricity compared to 2017.
- For the first time since we started collecting data the overall number of indebted customers on a repayment plan increased slightly (661,339 for electricity; 543,520 for gas) last year. This represents a 1% increase for electricity and 0.4% increase for gas compared to 2017. However, there is a far greater increase in the number of customers in arrears (without a repayment plan) from 601,795 in 2017 to 648,429 in 2018 (an increase of 8%) for electricity and from 459,450 to 505,314 (an increase of 10%) for gas. This would imply that more customers are falling behind on their bills and are not being engaged with effectively, or that there might be a delay in contact.
- Ofgem sets out five point plan to help vulnerable consumers.