Utility Week

The Month in Review UTILITY WEEK | AUGUST 2022 | 7 Ofgem slammed over direct debit 'name and shame' Utilita Energy has slammed Ofgem for opting to "name and shame" suppliers over their direct debit practices aer a review by the regulator identified the prepayment meter specialist as one of a number of companies to have flaws with its procedures. A spokesperson for Utilita said it was "shocked and disappointed" that Ofgem had published its findings without waiting for suppliers to respond to a follow-up request for further information and evidence. Ofgem said its published findings represented an "initial snapshot" and affected suppliers would now be able to submit action plans setting out how they will improve. "While we are happy to support Ofgem when the need to act publicly is clear, we disagree that at this early stage in the compliance engagement Ofgem should formally name and shame suppliers without any official finding," the spokesperson for Utilita stated. "This sets a dangerous precedent and goes against two of the very principles of good governance, objectivity and integrity, that public bodies should uphold." Ofgem ordered suppliers to take "immediate and urgent action" aer its review identified a range of weaknesses or failings in the way they charge direct debits to customers. Of the 17 large suppliers in the domestic retail market, seven suppliers were found to have "minor" issues with their direct debit practices, while another six, including Utilita, were found to have "moderate to severe" flaws. The review found that over 7 million customers on a standard variable tariff (SVT) saw a hike in their direct debit between February and April 2022, with the average increase of 62% mostly reflecting the rising cost of gas. However, Ofgem said 8% of SVT customers – around 500,000 households – experienced an increase of more than 100%. Although it has not found evidence of unjustifiably high direct debits, the regulator said it was concerned at the size of these increases and wanted to ensure there was a good reason for them, such as customers coming off an SVT or higher energy use. It is therefore requiring all suppliers that hiked their customers' direct debits by more than 100% to review them. Where appropriate, Ofgem said it expected suppliers to correct any miscalculations, including making repayments if necessary, and consider whether goodwill payments were warranted. Ofgem said it recognised that increases would differ depending on a range of factors, and that some of these, such as recent tariff changes, high debit balances or meter reads, could lead to large adjustments to direct debits. However, the regulator said it was up to suppliers to ensure that direct debits were set correctly based on all relevant information available and that changes were clearly communicated in a way that helped consumers understand their payments. Four suppliers – British Gas, EDF, Scottish Power and So Energy – were found to have no significant issues. Although they generally had robust processes in place, Ofgem said it had nevertheless made some recommendations for improvements and it was still asking these suppliers to review customers' direct debits to ensure they are correct. To read more on this story, go to https://utilityweek.co.uk/suppliers-slam- ofgem-over-direct-debit-name-and-shame The Month in Review 10.8GW Low-carbon generation awarded Contracts for Difference in the most recent round. £3.4bn Cost of an electricity "superhighway" connecting the power girds of Scotland and Ebgland, which was given the green light by Ofgem in July. £10,000 Average increase in a property's value if low- carbon technology is installed, according to research by Scottish Power. 1,400 Reports received by Ofgem about scams relating to the energy bill rebate. Water executives 'should face prison for pollution' The Environment Agency has called on courts to impose much tougher penalties on water company chief executives and boards, including prison sentences for "serious and deliberate" pollution incidents. The stark suggestion came as the EA released its annual Environmental Perfor- mance Assessment (EPA), which showed an overall decline in performance for 2021, with Southern and South West receiving only one star each. The EPA rates English water and waste- water companies from one to four stars for performance on environmental commit- ments such as pollution incidents and treat- ment work compliance. Northumbrian, Severn Trent and United Utilities maintained their four star ratings, while Anglian, Thames, Wessex and York- shire each received a two star rating. The EA described performance on pollu- tion as "shocking". Serious pollution inci- dents rose to 62 – the highest number since 2013. "Company directors let this occur and it is simply unacceptable," said EA chair Emma Howard Boyd. "Over the years the public have seen water company executives and investors rewarded handsomely while the environ- ment pays the price. Companies behave like this for a simple reason: because they can. We intend to make it too painful for them to continue as they are," she vowed. Howard Boyd, whose tenure will end later this year, has previously advocated for fines that "hurt". She said repeat offenders could now expect criminal prosecutions for incidents that the EA would previously have dealt with using civil powers, and that the agency wanted to see prison sentences for execu- tives whose companies were responsible for the most serious incidents. "We would like to see company directors being struck off so they cannot simply delete illegal environmental damage from their CV and move on to their next role," she said. Water firms have increased monitoring and reporting on storm overflows a"er a surge in interest in river water quality that sparked political pressure. Companies have committed to adding monitoring to all com- bined sewer overflow points by the end of 2023 and make that data publicly available.

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