Utility Week

Customers UTILITY WEEK | 15TH - 21ST JUNE 2018 | 27 What it is: Launched in 2013 and designed with two aims in mind: for the industry to better understand vulnerability; and then improve consideration when developing and deliv- ering products and services effectively. Under the umbrella of the strategy, Ofgem now has seven sub-sections and sub- sequent reports: Affordability; Debt and disconnection; Free essential non-financial support services; Inclusive markets and off-gas consumers; Prepayment meters; Social obligations reporting; and The Vulnerable Customer Safeguard Tariff. Where we are now: When approached on the subject, an Ofgem spokesperson said: "In the next 12 months we intend to update the strategy. This will build on the existing work and set our expectations for this next 5-6 years as the market becomes more dynamic." What it is: The Warm Home Discount (WHD) is a govern- ment voucher scheme that helps eligible consumers pay for energy bills between Sep- tember and March. Where we are now: Suppli- ers with fewer than 250,000 customers are not subject to the Energy Company Obliga- tion (Eco) or the WHD, and therefore do not have to pass the cost on to their customers. The ethics surrounding whether customers realise they are benefiting from what is effectively a tax loophole, rather than from greater efficiency or a willingness to take lower profits on the part of their new energy supplier, are questionable. Especially as there's a risk vulnerable customers may switch to a smaller supplier not realising the cheaper tariff means they stand to lose their WHD benefit and will ultimately lose out. Indeed, a recent survey by First Utility found half of vulnerable customers are put off from switching energy sup- pliers because they are afraid of losing their WHD. There could be a minimum threshold on the number of customer accounts signed up to the supplier. This might ensure the basket includes most of the policy costs incurred by larger suppliers, but could reduce the extent to which the basket reflects the most competitive tariffs in the market. There also is a policy question around whether it is appropriate to have multiple safeguard tariff levels to reflect the costs of different payment methods, or whether to have a common level based on a "blended" upli. HOW THE INDUSTRY CAN RISE TO THE CHALLENGE "2018 is the year in which energy suppliers will have to demonstrate they are being more proactive than ever before in addressing vulnerability. That means more investment in staff capacity and a review of evidence, policy and frontline practice," says Nathan Doron, head of operational policy at Energy UK. This theory is supported by the fact that research carried out over the last year or two by regulators, companies, consultancies, academic institutions and trade organisations means that – for the first time – energy, water and telecoms firms now have access to a more detailed, complete view of the vulnerable customer population in the UK through the aggregated data. The challenge now for companies is to be more proactive in the use of that data when it comes to dealing with a vulnerable customer. In response, firms are starting to recognise compliance and conduct as an opportunity to better connect with customers. "Getting digital right" is a key aspect of achieving good outcomes for customers, and one that utilities, if committed to moving forward in an innovative (yet compliant) way can gain significant commercial advantages from. But it's clear there are still hurdles to face before the industry is in a position to demonstrate fair treatment of customers in vulnerable circumstances. The principal challenge is the ability to identify and deal with vulnerability in a way that recognises individual needs. Factors including organisational objectives and the operating model structure will drive how capable front and back office staff are at identifying and dealing with vulnerability. As though to affirm this, the results of a digital transformation survey conducted by Utility Week in May showed a sector torn between a desire to be ambitious in the pursuit of digitally-enabled opportunities and the realities of a tough business environment in which investment is hard won and key policy and regulatory frameworks are in flux. The outcomes suggested policy interventions and regulatory change put digital transformation at risk, which in turn negatively impacts vulnerable customers. In answer to one particular question, government intervention in the utilities market was identified as an "extremely high risk" that could derail digital transformation plans by 38 per cent of respondents. In the same question, regulatory change was identified as an extremely high risk by 31 per cent. Regulation must be careful not to adversely affect those it is designed to protect, which is why the need for flexibility is so key. Or as Matthew Cole, head of vulnerable customers at Npower, puts it: "It's essential that any definition of the minimum standards doesn't lead to a race to the bottom and that policymakers and regulators encourage and incentivise innovation that makes a real difference to the right people." continued from page 25 to repay them. Some suppliers are also providing customers on meters with "friendly credit" to keep gas and electricity running when people forget to top up. However, it says the number of prepay customers repaying much larger bills is not decreas- ing fast enough, because some gas and electricity suppliers are allowing customers to accrue debts of more than £1,000 before taking action. This applies in particular to small and medium suppliers, which it says are not as well- equipped to prevent debt build- up, some of which is not the fault of the customer, such as inaccurate billing and problems with billing systems. Small suppliers are currently under the glare of Ofgem's spotlight. Their sustainability has been called into question, as has the service their custom- ers receive. As part of this it has launched an investigation into Utility Warehouse, and how it manages customers who are in debt. The market agrees uni- versally that smaller suppliers should be called to account and be subjected to the same obliga- tion as their larger counterparts. THE CONSUMER VULNERABILITY STRATEGY THE WARM HOME DISCOUNT Prevent and deal with debt:

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