Utility Week

Customers 24 | 9TH - 15TH MARCH 2018 | UTILITY WEEK Conference Utility Week Consumer Debt Conference 27 February 2018, Birmingham Prevention is key Everyone agrees that it is important to help those most in need, but identifying them can be difficult, and the help available can be a postcode lottery. Lois Vallely reports. L evels of debt are on the rise, as eco- nomic uncertainty, rising costs, lower average income, and changes to wel- fare payments put pressure on the average household's ability to pay their bills, and utilities are finding themselves catching the fallout. It was with this in mind that delegates and speakers gathered at Utility Week's 10th annual Consumer Debt Conference, spon- sored by Lowell Group and FICO, to discuss how utilities can recognise and engage cus- tomers in vulnerable circumstances, work with third parties, and streamline their col- lections processes. Debt is a key challenge for the utilities sector, especially as debts owing to them are a relatively low priority payment under the Universal Credit scheme. What's more, it is an issue that won't be going away any time soon. In the energy sector, although there are now fewer customers in debt than there were ten years ago, the average debt for those struggling is higher. Customers now owe on average £628 before they start paying back debt on their electricity accounts – a 7 per cent increase on last year – and gas customers owe £622 – a 5 per cent increase. Meanwhile, in water, bad debt adds around £21 to each customer's bill every year. Inextricably linked to the issue of debt is that of vulnerability, because it is o‹en cus- tomers in vulnerable circumstances who find it most challenging to pay. But how does a utility company manage its core business of making money while also supporting vulnerable people? Both water and energy companies have a variety of ways to help vulnerable customers. Each water company has a social tariff, funded by the bills of everyone else. How- ever, the issue currently is that, because these tariffs depend on how much customers in a water company's area are willing to pay, they vary from region to region. The sector is in dire need of consistency in processes and, at the conference, utilities programme manager at Coventry Citizens Advice, Claire Differ, suggested there should be a standard- ised tariff across all regions, so that the level of support does not depend on where the customer lives. Meanwhile, in the energy sector govern- ment schemes such as the Warm Home Dis- count – which offers a one-off discount on a customer's electricity bill between Septem- ber and March – have been set up to help those less able to pay. Affordability is one of the four pillars of Ofwat's methodology for its next price review, PR19. The regulator's principal of strategy and policy Margaréta Serfozo- Matharu took to the stage to emphasise that affordability and debt are very much inter- linked, and that collaboration and data shar- ing are key to resolving both issues. Shared learning was one of the recur- ring themes at the conference. Companies increase the amount of knowledge and data they share, as well as learning from outside their own industry. Initiatives are under way to make it eas- ier for companies to identify customers in vulnerable circumstances. For example, the Priority Services Register helps energy sup- pliers and networks identify and work with customers in vulnerable circumstances. Some energy companies and network opera- tors have agreed to work together with water companies to jointly signpost the extra help these customers can access for water and energy, and Ofgem is encouraging all energy companies to do this. However, a company is not allowed to put a customer on the register unless they have that customer's permission to do so. Ulti- mately, a customer's willingness to engage depends on the extent to which a company can gain that customer's trust. It is particu- larly difficult to engage customers in vulner- able circumstances, because they are o‹en unwilling to admit, or don't even know, they are vulnerable. Meghna Tewari, Ofgem's head of retail market policy, insisted that talking to cus- tomers is a must. "Dialogue is important no matter what you're selling to the market, whether you're selling bananas or energy, it is an important part of your business strategy." Engagement with customers could allow companies to identify customers who are struggling before they slip into arrears. Pre- vention, delegates concluded, is always better than cure, and this is where utilities should be focusing their attention.

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