Utility Week

UTILITY WEEK | JANUARY 2023 | 21 Energy He said: "Over the course of the last months and weeks, we have provided Ofgem with extensive additional information related to this review and we are disappointed that Ofgem has proceeded on the basis of incom- plete information, and in a manner that may now cause vulnerable customers unneces- sary concern." Good Energy chief executive Nigel Pock- lington concurred. He said: "It is disappoint- ing that once again Ofgem have published a verdict part way through the evidence-gath- ering process. Despite providing Ofgem with extensive information which addressed their concerns, it is regrettable that this publica- tion does not account for this. "Good Energy has an excellent record of taking care of vulnerable customers – including being independently assessed before joining Energy UK's Vulnerability Commitment, which aims to continually improve support – and we will be consider- ing our actions off the back of this report." Dhara Vyas, deputy chief executive at trade body Energy UK, said "identifying and supporting vulnerable customers is already a top priority for retail suppliers", adding that many go "above and beyond". She continued: "Our members have responded swi‰ly to Ofgem's review – including providing additional documenta- tion to demonstrate where processes were already in place, and will continue to look at all the ways they can make sure people get the help and support they need." Speaking to Utility Week in the wake of the regulator's review, Ofgem director of retail Neil Lawrence said: "We are trying to drive standards up by undertaking this series of deep dives … so that when customers con- tact their energy supplier, they can be confi- dent in a consistent service. "We're very pleased with the response that we're getting from the energy commu- nity; suppliers are taking proactive steps, listening to what's being said, agreeing those action plans and working practically to deliver that." He added: "If suppliers fail to take those steps and fail to make those agreed changes, then our further sanctions do include fines, further enforcement action and ultimately licences can be taken away. This is an essen- tial service, energy, and customers need to be treated fairly when they contact their energy provider." On the naughty list Utilita boss Bill Bullen aired his concerns with Utility Week about a number of deci- sions made by the regulator recently, saying Ofgem "decided we were bad" and unfairly placed the supplier "on the naughty list". The challenger brand's founder stressed that relations between Utilita and Ofgem were not all negative but he described the current situation as "very frustrating". He said: "I can understand the sensitiv- ity. They've obviously taken a lot of criticism about their management of the market over the last decade… they're being a little bit subjective and selective about exactly what they're going about doing. "And it's very frustrating. We always seem to be one of the bad ones. But actually, objec- tively, if you look at it, I think we're doing really well." Bullen was specifically referring to two incidents which have occurred over the past year. Although Utilita is predominantly a pre- payment meter (PPM) specialist supplier, it does serve a small number of direct debit customers and in July was highlighted by Ofgem as having inadequate direct debit pro- cesses in place. Furthermore, the supplier was recently ordered by Ofgem to stop telling people they are not required to provide additional sup- port credit to vulnerable PPM customers who are thought to be self-disconnecting. Bullen explained that Utilita already had processes in place to issue additional support credit before it became an official licence condition. A feature on the supplier's app, called Powerup, allows customers to top up their credit up to £100 to ensure they do not go off supply. He said that a‰er Ofgem made providing additional credit an official licence condi- tion, Utilita was deemed not compliant with the new rules because it would not allow customers with outstanding additional credit to top up until this was paid off. It was there- fore issued with a provisional order, despite the fact Powerup was used 1.3 million times in the past 12 months. The supplier has since changed its so‰- ware to allow customers to top back up to £100 without first paying off the credit. He said: "So that's the resolution to the problem. But we feel that Ofgem made an absolute meal out of it, as they have done on the direct debit issue earlier in the year. That was just absolutely farcical. "The objective analysis showed that of the 500,000 customers who'd seen a more than 100% increase in direct debits follow- ing the 54% increase in prices, only three of them were Utilita customers. Yet we were put on the naughty list of businesses that had non-compliant or insufficient controls around direct debits. "The reality is, all we were missing was a little document that said 'this is our process'. The fact that we coded a computer program so that the whole direct debit thing is com- pletely automatic and follows a set of objec- tive rules, which is why we were such a small part of the objective analysis, meant nothing to Ofgem. They decided we were bad." Elsewhere, Bullen accused Ofgem of "constantly increasing the burden on us from a regulatory perspective", as well as "constantly snipping away at the money we have to invest in business and have to oper- ate the business because of the way that price capping works". "They pretty much ensure that there's zero chance of making money out of supply- ing prepay customers," he added. An Ofgem spokesperson said in response: "Ofgem's priority is to protect consumers and we continue to hold suppliers to account to ensure they are delivering the best possible service for their customers. "We work closely with suppliers and we also understand the pressures they are facing as a result of high energy prices. We believe our decisions deliver the right bal- ance and both protect consumer interests while also being fair for suppliers." Adam John, senior reporter Factbox In November Ofgem made a series of proposals for the retail market, including: • Introducing a minimum capital requirement for all domestic suppliers, to be phased in over a number of years. • Ordering suppliers to ring-fence renewa- bles obligation receipts from April 2023. • An enhanced financial responsibility principle, to embed the minimum capital requirement and "introduce a positive obligation" on them to evidence that they have sufficient business-specific capital and liquidity to meet their liabilities on an ongoing basis. • Dropping plans to ring-fence customer credit balances. • An extension of the Market Stabilisation Charge and the ban on acquisition-only tariffs. • A review of the profit margin under the price cap. For a full rundown of all of the proposals see https://utilityweek.co.uk/ofgem-rows-back-on- ring-fencing-credit-balances/

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