Utility Week

UTILITY WEEK | 9TH - 15TH MARCH 2018 | 27 Customers "Where we have concerns that suppliers are failing their vulnerable customers, we stand ready to take action." Comment Meghna Tewari E nergy is an essential service, yet many poorer consumers struggle to afford to heat and light their homes. And the price of energy is critical: being in debt or financial difficulty can exacerbate other vulner- abilities such as anxiety or depression. In 2015, the poorest 10 per cent of households spent an average of 9.7 per cent of their income on energy, compared with 5.8 per cent in 2005 when prices were lower. Consumers who are most likely to struggle to pay their energy bills are the least likely to shop around and so are o„en on the most expensive deals. All these factors put vulnerable consumers at risk of building up unmanageable levels of energy debt. Ofgem was the first regulator to publish a con- sumer vulnerability strategy in 2013. Since then a lot of progress has been made, including in the area of debt management. In the energy industry the number of customers in debt is now at its lowest since we began monitoring in 2006. However, our 2017 vulnerability report revealed that severe debt has grown, with customers owing on aver- age more than £600 before paying debt back. For some suppliers this rises to as high as £800. Under our rules, suppliers must spot issues early, understand their customers' ability to pay the money back, and put them on manageable repayment plans. A few innovative suppliers are doing well on this. Eon, for example, has undertaken comprehensive training to increase staff capability and awareness of financial vulnerability. This has helped it to identify customers at risk of debt early on and provide specialised support for its most financially vulnerable customers. However, it is clear those suppliers that let unmanageable debt build up, simply aren't acting appropriately or fast enough. Protecting and empowering customers in vulnerable situations is a priority for Ofgem. Tackling the way companies handle debt is a crucial part of this. So we have changed the rules to protect all consumers from the shock and financial hardship of "catch-up" bills for beyond 12 months energy use. We've also recently banned suppliers from forcibly installing prepay- ment meters under warrant for their most vulnerable customers. We've also capped the amount suppliers can charge all customers for warrant costs at £150. We are the first regulator to introduce a specific "vul- nerability principle". This overarching rule explicitly requires suppliers to identify customers in vulnerable situations and support them as needed. The rule is broad enough to give suppliers flexibility to come up with new and innovative ways of doing things, while giving us the regulatory he„ to take action if they fail. Highlighting how individual suppliers measure up for their vulnerable customers is an important part of our work to drive suppliers to do better for their vulner- able customers. We play an important role in helping suppliers to understand what they are doing well, and where they should improve as part of our compliance function. For the first time, in 2017 we issued suppliers with performance "report cards". Where we have concerns that suppliers are failing their vulnerable customers, we stand ready to take action. Being vulnerable stretches beyond being in debt. Recently we have introduced plans for price protection in the retail market. So, we have extended our prepay- ment safeguard tariff to almost one million vulnerable households who receive the Warm Home Discount. And we are planning to extend this to a further two million vulnerable households next winter if the government's price cap is not in place by then. It's clear the market is changing, and Ofgem is help- ing drive this spirit of change by opening up the market to new business models and targeted research. For example, we co-sponsored Sustainability First's excellent report on innovation and vulnerability: Project Inspire. This report highlighted some great case studies and provided a toolkit for companies to draw from, like the Accessible in-home displays. Another good example is innovations like the Rate It website, which the Research Institute of Consumer Affairs is piloting, to enable disabled consumers to rate energy products online. We are also co-leading an innovative cross-sector vulnerability data-sharing project with Ofwat through our role on the UK Regulators Network. In 2018, we will be updating our Consumer Vulner- ability Strategy, which will set out how Ofgem will improve the sector for vulnerable consumers, creating a future energy market fit for all consumers. We welcome your views on this important piece of work. Meghna Tewari, head of Ofgem's retail markets policy team

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