Leaving Nobody Behind
Since 2013, Ofgem has been working to deliver its Consumer Vulnerability Strategy to ‘identify and tackle consumer vulnerabilities’ in the energy market. This has come with a number of successes. They have almost eradicated disconnections for debt, returned credit balance, created a new vulnerability principle licence condition and restricted charges for forced prepayment meter installations. All of this, and more, has been great progress in addressing market deficiencies.
To now, the strategy has clearly been a success. But the energy market is rapidly changing and becoming more complex, so Ofgem has determined that a new strategy would be useful to ensure continued progress in helping consumers in vulnerable situations. Good call.
In updating their strategy, there are a number of things that Ofgem chooses to focus on: more smartly identifying customer vulnerabilities; supporting customers with bills; improving customer service; ensuring innovation is inclusive; and working across boundaries. These are all things that NEA is deeply passionate about, reflecting our work training customer advisors, advocating for better customer protections; maximising incomes through benefits entitlement checks; and working with multiple partners across different sectors. Five themes, five ticks…
As governments and regulators regularly find out, the devil is always in the detail. In this case, the detail is commendable.
Firstly, they commit to, in the first year of the strategy, creating an analytical framework to consistently assess the impact of their policies on particular groups of consumers. This is vital in an increasingly changing landscape of rules and regulations and should mean that Ofgem don’t inadvertently, and disproportionately, increase costs for those who can least afford it. This is something that NEA has campaigned for over several years, and we are pleased that it will finally come to fruition.
Secondly, Ofgem will ensure that gas networks do more to help their most in need customers, introducing a requirement for them to adhere to a vulnerability principle, similar to the obligation that has been placed on gas and electricity suppliers.
Perhaps most importantly, they will strengthen protections for customers at risk of self-disconnecting from their prepayment meters. This will hopefully address a huge market failure, where some of the most vulnerable people are unable to heat their homes on the coldest of winter days. Citizens Advice has estimated that over 100,000 households disconnect each year due to affordability issues, so it is crucial that Ofgem address this.
And there is so much more than that in the strategy, more than I can go through here.
It is clear that Ofgem have put together a well thought out strategy, addressing the key areas. But there is, as always, more that can be done. Amongst many recommendations, NEA’s response to the CVS asks for smarter use of the Digital Economy Act to allow better sharing of data between energy networks and DWP; ensuring that vulnerable customers continue to be price-protected after the end of the default tariff price cap; and a greater focus on what electricity networks can do to help those in vulnerable situations.
Ofgem need to continue their excellent focus on vulnerability, and ensure the companies delivering energy services for customers do so in a manner that is reflective of the sentiment of this strategy. The next five years will see rapid change and opportunity – it is of great importance that nobody is left behind.
Read our full response to the draft CVS 25 here.