Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
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"I urge all consumers to consider switch- ing, because the power of com- petition is one of the best ways to get energy bills down." Direct financial help to customers struggling to pay their utility bills is one of the ways the most vulnerable in society can be helped to avoid getting into arrears. In energy, there are a number of government-run and financed schemes such as the Warm Home Discount, the winter fuel allowance, and cold weather payments. These are funded directly from taxation and are provided to those who sign up and are identified as vulnerable. Energy secretary Ed Davey often boasts about the coalition government's achievements in helping the more vulnerable in society with their energy bills. "One family living in a cold home is one too many. That's why this government is spending more than before to help over two million families and pensioners heat their homes for less." Of the major energy suppliers, only EDF Energy runs its own social tariff, Energy Assist, which offers a discounted rate to customers in fuel poverty. Other supplier-run social tariffs have been phased out, as a result of Ofgem's Retail Market Review (RMR) reforms, which limited the number of tariffs each supplier could offer to four per fuel type, per payment type. British Gas's Essentials Combined, Npower's Spreading Warmth, Scottish Power's Fresh Start and SSE's Energycare Plus tariffs have now all closed to new applicants. In October 2013, Eon linked the RMR reforms to its withdrawal of the Staywarm tariff, which was available to the over-60s. In a statement at the time, Eon said the decision was made "to comply with Ofgem's new rules". The regulator responded that it was up to the suppliers which tariffs they offered, and that "we have been clear with all suppliers that they would have been allowed to keep social tariffs under our rules". In the water world, each company can pro- vide a social tariff to its customers, rather than a government-led social benefits scheme – though it must first get approval from the entire customer base in the region. Before the last price review period, only seven of the water companies offered a social tariff. This since increased to 14 out of the 18 companies, and the remaining four are set to introduce one by April 2016 or are consulting on plans to do so. Currently, 27,000 water customers are on social tariffs and this is predicted to rise to 370,000 by 2020. These are all funded by the water companies via addi- tional levies placed on water bills. Labour wants to dispense with the individual social tariffs being offered by the water companies, and replace it with one, centrally run national affordability scheme. Shadow environment secretary Maria Eagle has said Labour would design "a mandatory national affordability scheme, ending the current postcode lot- tery" by changing water company licences and forcing them to put vulnerable customers on cheaper tariffs. Rather than these being cross-funded, as they currently are, via levies on other people's bills, Eagle wants to clamp down on bad debt losses and use these savings to fund the scheme. This has been met with a mixed reaction from the industry. Some claim it would be unfair on customers who do not want to pay extra to support a particular group, and that a uniform, one-size-fit-all solution is not the best way forward. Sutton and East Surrey Water head of customer service Jeremy Downer said "it is unfortunate we are where we are" with each company having differing social tariff schemes, but each company created its own scheme best suited to its own customers' requirements. Others believe this would help to circumnavigate some of the problems the current patchwork system has created. South East Water asset and regulation director David Hinton said "all the customers are not that dif- ferent" and voiced support for a national social tariff, such as the one proposed by Labour. With living standards a central theme of the election campaign, how the next government will help custom- ers pay their bills, and what roles and responsibili- ties are added to (or taken away from) the utilities is important, especially as the water companies have their social tariff offering at the heart of their newly approved five-year business plans. by Mathew Beech Smart meter deployment in the UK • 1.5 per cent of all domestic meters operated by the larger suppliers are operating in 'smart mode' (671,200) • A total of 764,800 domestic smart meters have been installed (31 December 2014) • 6.2 billion net benefits to the UK - the programme will cost £10.9 billion and provide £17.1 billion in benefits • 53 million meters by 2020 deadline 18 | 17TH - 23RD APRIL 2015 | UTILITY WEEK "There's nowhere to hide as regards the coalition parties and their energy poli- cies." HOW TO HELP THE POOREST? Matthew Hancock, energy minister (Conservative) Caroline Flint, shadow energy secretary (Labour) prior to Q3 2012 Q3 2012 Q4 2012 Q1 2013 Domestic smart meters (Electricity) Domestic smart meters (Gas) Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q2 2013 Q3 2013 Q4 2013 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 Number of meters installed UTILITY WEEK LOBBY POLL TRACKER 12 April 2015 – YouGov poll Party Share Change (from 1 Apr) Conservatives 33% -3 Labour 36% +2 Lib Dems 7% -1 Ukip 13% 0 Green 5% +1 Other 6% +1