NEA responds to Ofgem proposals to strengthen support for struggling energy customers

For immediate release
Contact: Mike Potter (Communications and Campaigns Officer), 07595410756 / michael.potter@nea.org.uk

Fuel poverty charity National Energy Action (NEA) has today welcomed Ofgem’s proposals to ensure all energy suppliers across Great Britain identify pre-payment customers who run out of credit as a result of financial pressures and offer appropriate support; increase access to short-term credit and take into account all customers’ ability to pay when contacting them in relation to debt issues. The charity is calling upon the regulator to ensure these basic protections are in place in advance of this winter and  has underlined the importance of further steps to address a ‘gathering storm of debt’ and to avoid millions continuing to ration their energy use which can shorten lives. 

Adam Scorer, Chief Executive of NEA comments:

“We know the desperate strategies people use day in day out to save money on essentials like energy. We know people who have gone through many winters without heat or who rarely top up their meters. Even before Covid-19, this has shortened too many lives. It is welcome to see Ofgem setting out these basic, yet vital, steps to address these issues and have them in place before winter.”

The charity says a key first step is to overcome current challenges to monitor and accurately identify the scale of these issues in a consistent way and welcomes Ofgem requiring all suppliers to take all reasonable steps to identify pre-payment customers who are self-disconnecting and offer appropriate support in line with existing and new obligations. Another key element is ensuring all pre-payment customers continue to access energy when they run out of credit.

Scorer continues: “These proposals can make a positive difference to people’s lives. For those unable to charge a mobile phone and make an emergency call. For those who use candles for lighting or sit in the dark until the morning. For those who must wait for a relative or neighbour to go to the shops and top up for them.”

The charity also highlights that despite the welcome proposals set out today and existing agreements with suppliers to protect domestic energy customers during the COVID-19 crisis, there continues to be a lack of consistency in debt recovery practices, debt relief or referring customers for debt advice.

Scorer concludes: “There is a gathering storm of debt. Millions may ration their energy use, leading to more misery and ill-health. These proposals and existing protections are vital but need to complement a wider Government response to household debt and fuel poverty”.

-ENDS-

Notes to editors

  1. National Energy Action (NEA) works across England, Wales and Northern Ireland to ensure that everyone in the UK can afford to live in a warm and safe home. We aim to improve access to energy and debt advice, provide training, support energy efficiency policies and co-ordinate other related services which can help change lives. NEA’s campaigning and policy work seeks to channel the in-house expertise gained from our delivery and research work in order to better inform national policies and policy makers to end fuel poverty across the UK.
  2. Even before the crisis energy debt was a significant issue for customers and the energy industry. In 2019, Ofgem reported that 1.3 million electricity customers and 1 million gas customers are repaying a debt to their energy supplier or are in arrears, figures that rose from the preceding year. Addressing the immediate impact of the crisis for pre-payment customers by improving their ability to vend and access emergency credit will help some indebted customers resolve some immediate issues they are facing. The underlying issue of growing levels of fuel debt is however not being addressed by the actions Ofgem has proposed and is also very significant for millions of standard credit customers whose economic circumstances will have also been badly impacted by the crisis.
  3. In response and as part of the Government’s agreement, NEA welcomed that suppliers agreed to help customers access professional debt advice, review bill payment plans, introduce possible payment breaks or potentially help reduce how much customers are asked to pay or conversely spread debt repayments over a longer period. In some cases suppliers are also providing support to access hardship funds to have debts written off. This activity is welcome but again there is a large variance in what different suppliers are providing for customers. Coupled with low level of awareness that these options exist there are concerns that energy debt will spiral.
  4. In other sectors, namely the water sector (where debt issues are equally acute), this has started to be addressed by suppliers proactively contacting indebted customers to highlight assistance or offering additional support such as money matched repayment schemes. Some energy suppliers may already be taking some of the aforementioned proactive steps but the lack of consistency and the lack of aggregated information on what each supplier can do to help customers manage their energy debt is causing big challenges in signposting the most indebted customers for this support.
  5. Over the longer term, whilst existing debt write-off schemes and debt advice (in both energy and water sectors) are welcome, without Government support this assistance is unlikely to be sufficient. Unless addressed in a more co-ordinated way, the on-going impact of utility debt will not just impact on customers and companies’ financial viability but it is also likely to be an on-going drag on the economy, with money that could normally go towards paying for other goods or services to boost the economy, instead being used to pay off household debts. These issues and the solutions were recently explored in an NEA policy paper, The Gathering Storm: Utility Debt and COVID-19. One of the key short-term recommendations was for Ofgem to strengthen the monitoring and support arrangements for those at risk of self-disconnection.

 

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