Utility Week

18 | 13TH - 19TH MARCH 2020 | UTILITY WEEK Operations & Assets 200 400 600 800 1000 1200 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Electricity Gas Water Council Tax Source:– Stepchange Yearbook 2009 - Event Remote switching, whereby consumers are switched from credit to prepayment via smart meters, was flagged up as a con- cern by Ofgem's Dennis Berg. "In 2017, we had about 21,000 people being remotely switched; by 2018 it was about 70,000. "There are two problems with this. One is that it's much easier for suppliers to move to prepayment, and there's a big risk that suppliers don't check whether prepayment is suitable for a customer – someone with medical equipment, for example. "The second is that while we've seen disconnections come down over the past 15 years, we're seeing a shi‡ towards more self-disconnection. If there's an increase in remote switching with more people being put on prepayment, you're shi‡ing that problem to the consumer, which is great for managing money, but can be detrimental for consum- ers who can't afford to top up their gas meter or heat their home adequately," Berg added. Martyn Cladingbowl, head of debt at Ecotricity, said the situation had been brought home to him recently during a talk he gave at a school, which touched on the subject of prepayment. "Hearing kids talk- ing about not having TV or not being able to have a hot shower – that's when it hit me that there are real circumstances out there affecting our consumers, and they are self- disconnecting, and they are going without energy and hot water." Berg added: "We're working on changes to the licence to make it easier for consumers to get additional credit when they are self- disconnecting. We're thinking of mandating that across the sector to make sure every sin- gle consumer will get that additional service in their hour of need. "On the other end, you have to try to miti- gate some of the costs that people will have for their energy bills, and that's where we're trying to work with price caps." Deven Ghelani asked why those on pre- payment couldn't be offered a discount, given they were paying for energy in advance. "Because then you're shi‡ing the behaviour towards staying connected, stay- ing topped up," he said. Cladingbowl responded that it was because the cost to serve pay-as-you-go cus- tomers has historically been higher, but the rollout of smart metering should solve that. All panels in the first session agreed that zero-hour contracts were taking their toll on income, together with the uncertainty of Brexit. Mark Wilkinson of Northumbrian Water highlighted the need to consider flex- ible payment options in the light of income no longer being fixed. "We're potentially treating people as though they have fallen into debt, when really they're just managing their finances in a different way with zero-hour contracts," he said. "One of the real challenges for us as a water utility is a lot of our historic processes are based on fixed incomes and payments, and you'd typically end up in a debt recovery situation if you missed an instalment. "A lot of people want to do transactions online now, but building the para meters for doing that online is quite difficult. Then picking out when someone is falling into debt within that, rather than just being in a normal timeframe… so we're offering that much more on a face-to-face basis, rather than online." ARREARS ON ESSENTIAL HOUSEHOLD BILLS AVERAGE ARREARS ON HOUSEHOLD BILLS (STEPCHANGE CLIENTS) Source: Stepchange Yearbook 2019 (via Deven Ghelani presentation) In the first half of 2019, 41% of new clients had fallen behind on at least one household bill. The latest stats show the average arrears amount per client. Household bill Percentage Number Average by type of clients in arrears amount in arrears Council tax 31% 39,990 £1,089 Water 24% 28,688 £765 Rent 22% 26,414 £1,042 Hire purchase 22% 7,343 £969 Electricity 18% 25,297 £769 Mortgage 18% 4,872 £3,005 Secured loan 18% 1,274 £3,154 CCJ 16% 2,965 £1,950 Gas 13% 13,210 £612 TV licence 8% 9,661 £87 Talking point 3. Remote switching to prepayment is a major issue Talking point 4 Payment flexibility needed to help those on zero-hour contracts

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