Utility Week

16 | 29TH MARCH - 4TH APRIL 2019 | UTILITY WEEK Operations & Assets Consumer Debt Conference Birmingham, 28 February 2019 J ust as delegates took their seats for Utility Week's 11th Consumer Debt conference in Birmingham last month, they were back up on their feet as the conference chair tried to gauge how long people had been involved in "consumer credit of any sort". Philip King, chief executive of the Char- tered Institute of Credit Management, started by asking delegates to remain standing if they had been involved for five years or more. Very few people sat down. Ten years or more? Still most were stood up. Twenty years or more? A fair few were still on their feet. Finally, 30 years on more? One person remained standing. The exercise showed just how important consumer debt is and that it is by no means a new problem for utility companies. Forward-thinking credit, debt, billing, collections and customer service profession- als in the electricity, gas and water sectors come together at the conference to share best practice, learn from mistakes and explore the technology being used by companies to tackle bad debt and risk management. The regulators' viewpoint Representatives from the energy and water regulators joined Utility Week's Lois Valley on stage to discuss whether it is realistic to improve customer service and resilience while reducing costs and making bills more affordable. Meghna Tewari, head of retail market pol- icy at Ofgem, suggested there has been some "great work" between industry, regulators and consumer bodies to support customers in need, but she stressed the importance of regulators holding "entities" to account. Over the past few years, she has observed a "genuine effort" from energy companies to collaborate more and try to find "more con- textual solutions to problems". Ofgem has been encouraging energy companies to develop a "culture of under- standing customers better" – the regulator's strategy is to move away from the "vulner- able" label. And he said the water industry should look at payment flexibility to reduce bad debt, and that water companies should use data to better predict when customers are likely to get into debt. He said great work is being done to make it easier for water and energy companies to share "non-financial vulnerability data on their customers", but he said it would be good to see if "financial vulnerability data" could be shared in the same way. The supplier obligation spiral Speaking a˜er the regulators, Chris Harris, head of regulation at Npower, told delegates that "regulation has pushed the industry hard" but by working together the sector is getting better at debt management. He said: "I see big challenges in the credit landscape on the consumer and supplier side, big changes in the debt landscape, evolving technology in metering, the use of credit references and the near cessation of disconnection for non-payment." "Credit has many virtues, for example in enabling us to buy homes, reducing the cost of corporate equity that flows to consumer bills, and enabling continuity of consump- tion of essentials whilst incomes and expen- ditures fluctuate. "However, debt can be tyrannous, unfair, inefficient and has been the cause of finan- cial crises and recessions." Harris went on to highlight some of the For Ofwat, affordability is a major theme for PR19, and it said it is pleased to see "encouraging signs" the sector is rising to the challenge. Dan Walker-Nolan, principal of strategy and policy, pointed out that the Consumer Council for Water (CCWater) has reported that about three million households in England and Wales cannot afford their water charges. "Water is an essential ser- vice – you can't choose not to use water and [domestic] customers can't choose their sup- plier. Affordability has to be a priority in the sector," he said. Walker-Nolan said Ofwat has challenged companies to think "really carefully" about how they can cut bills and do things more efficiently. "Having been locked away in a dark room" studying the business plans for PR19, he was pleased to report there is a "good news story" around affordability and tackling consumer debt emerging from water companies' proposals for 2020-25. The energy sector provides a warning to water companies, he suggested. "You only have to look at the CMA [Competition and Markets Authority] review and things like the price cap to see that society, media and politicians are concerned that affordability hasn't been front and centre with suppliers." He encouraged water professionals to engage with customers on things such as behaviour, water efficiency and metering to get the message across that customers will spend less if they use less. Face up to the tyranny of debt Customer service professionals gathered in Birmingham last month to compare their experiences of dealing with customer debt – and to share best practice. Katey Pigden reports.

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