Tag: Ofgem

Advice workers and charities could benefit after new Ofgem rules

Energy suppliers must prioritise enquiries from vulnerable customers and their representatives, under new rules announced by Ofgem. 

A recent report [paragraph 36] by the House of Commons Select Committee on Energy Security, called for firms to set up a priority access line for charities working with households in fuel poverty. This would enable advice workers to access enhanced customer service and enable them to help more people in the long run.

Roni Marsh from South West London Law Centres gave evidence [Q42] to the Committee in September and told MPs:

“I would like to ask for us to have priority access to some of the energy firms, not so that we can spend less time with people but so that we can see more people with the time we have with a priority support route.”

Now under the new Ofgem rules [p8], energy firms have an obligation to “prioritise vulnerable customers who need immediate support, or their representatives acting on their behalf.”

Energy firms now have until the 14th December to put these measures in place.

A spokesperson for the End Fuel Poverty Coalition, whose members include front line community organisations, commented:

“Thousands of hours of advice time is wasted each year by charities waiting on hold to speak to energy firms about the problems faced by the people they support. We expect energy firms to make good on the promises they made to MPs on the Commons Energy Select Committee before this winter.”

The requirements also require suppliers to contact customers if they miss two monthly or one quarterly payment, check to see if they are struggling with bills and, if so, offer support such as affordable payment plans or, if appropriate, repayment holidays. 

Recent research by a price comparison website found that almost one in seven people say they have gone from being in credit to their energy firm a year ago to owing money now.

And as a first step, suppliers will also need to publish the ratings of their customer service. Ofgem will also begin work with the sector to develop new measures of customer service with a view to publishing next year.

Warm This Winter campaign spokesperson, Fi Waters said: 

“Suppliers need to get their act together and give customers the service they deserve. Our Tariff Watch Report revealed companies are charging £242 on average per customer on operating costs.

“Instead of spending the same amount on customer service as they do on marketing, which includes football sponsorship, they should plough that back into providing a proper and effective service for the ordinary people they are making millions from. 

“Whilst we welcome any move from Ofgem to make suppliers more accountable, what Warm This Winter is demanding is an end to our broken energy system and current government inaction that is costing lives, damaging health and wasting money.” 

Jonathan Bean of Fuel Poverty Action said:

“Ofgem’s proposals are a weak response to the awful treatment that many customers suffer.  Vulnerable people are forced to battle for months, causing enormous harm. 

“Rather than punishing them for their failures, Ofgem may even allow energy firms to increase their already bloated operating cost allowances.”

The End Fuel Poverty Coalition spokesperson added:

“It’s not enough for energy firms to just pick up the phone to customers struggling with their bills. With soaring energy debt levels, people need to have their concerns dealt with efficiently and in a sympathetic manner.

“We hope that as the new guidance is implemented, Ofgem will expand the measures it uses to assess energy firms’ performance. As well as ‘contact ease’ being measured and published, the regulator should also consider ‘contact success’ and ‘contact empathy’ as measures of performance for energy firms.”

The new standards – developed following a statutory consultation this summer – aim to make it easier for customers to contact their suppliers, ensure households who are struggling with bills are supported and improve overall customer satisfaction. The End Fuel Poverty Coalition’s response to the consultation can be read online [pdf].

The introduction of the new rules into supplier license conditions means Ofgem claims it will be easier for the regulator to take action where there is evidence of suppliers failing to meet these requirements. 

Consumers need help to repay energy debt, not higher bills

Proposals to increase energy bills further in response to surging levels of household energy debt have been criticised by campaigners.

While energy suppliers made more than £2bn in profits in the first half of 2023 alone, new figures from Ofgem found energy debt reached a record £2.6 billion due to soaring wholesale prices and cost-of-living pressures on households.

A one-off increase to customers’ energy bills of up to £17 a year is now being considered by Ofgem, which the regulator argues will protect firms from customers running up large debts.

But charities and campaigners have called for the introduction of a “Help To Repay” scheme instead of passing the cost of debt onto all households.

The coordinator of the End Fuel Poverty Coalition, commented:

“Households are struggling under the huge weight of energy debt – which has been caused through no fault of their own, but by record energy bills.

“All this time, energy firms have continued to profit from the misery of people racking up debt and living in cold damp homes.

“Rather than pass on more increases to energy bills, the Government needs to work with energy firms to introduce a ‘help to repay’ scheme to help get Britain’s households back onto an even keel.

“Given that the Government is due to hand Norwegian oil giant Equinor a massive tax break for the controversial Rosebank fossil fuel field, there’s an obvious source of money for this support plan.”

Adam Scorer, chief executive of National Energy Action, said: 

“This is the highest level of energy debt we have seen, it is growing quickly and concentrated in the poorest households.”

In June, a range of organisations including the End Fuel Poverty Coalition, Money Advice Trust, StepChange Debt Charity, Scope and National Energy Action wrote to the Secretary of State for Energy Security and Net Zero [pdf] with proposals to set up a ‘Help To Repay’ repayment-matching scheme.

David Cheadle, acting chief executive of the Money Advice Trust, the charity that runs National Debtline, told Press Association: 

“With energy debt at a record high, now is the worst possible time to increase bills further, as Ofgem is proposing.

“Instead, the Government must step in and act now to help households facing unaffordable debt repayments by introducing a Help to Repay scheme to offer payment matching and write-off.

“Doing so would help tackle the record levels of energy debt we are now seeing, without the need to increase energy bills for all customers.”

Fiona Waters, spokesperson for the Warm This Winter campaign, said: 

“The fact Ofgem is considering a £17 additional bill on all households is appalling. They say it’s to cover £2.6 billion of energy debt, but that enormous debt just proves ordinary people cannot keep footing the bill for our broken energy system. 

“The government needs to put the public’s need for an affordable energy supply ahead of the demands of energy giants. 

“Why not use the billions that its giving in tax breaks to Norwegian oil giant Equinor for the Rosebank oil field, which will do nothing to lower fuel costs, to write off this debt that people have through no fault of their own. ”

Ofgem price cap change sets sky high energy bills for winter

People will still feel the pain of high energy bills this winter as a new Ofgem price cap comes into force from 1 October 2023. 

Decreases in the unit costs of energy are offset by higher standing charges, the wider cost of living crisis harming people’s ability to pay high energy bills and a lack of financial support from the Government compared to last winter.

The latest Cornwall Insight predictions are that energy bills will increase from 1 January 2024 and stay high throughout the rest of next year.

A spokesperson for the End Fuel Poverty Coalition, which is part of the Warm This Winter campaign, commented:

“From 1 October, all households in every part of the country will pay more on energy standing charges, more into the profits of energy firms and many are more in debt to their suppliers.

“Average energy bills are still almost double what they were three years ago and Government help for households, which was available last winter, has been axed. This means this winter will feel worse for many households.

“If Members of Parliament on the House of Commons Energy Security Committee can see problems households will face, why can’t the Government? The MPs’ recent report on tackling the energy bills crisis sets out sensible recommendations to help vulnerable households and Ministers need to implement these ideas immediately.”

Paying MORE on standing charges

  • Standing Charges are paid by customers every day they are connected to the grid – and they are a postcode lottery with customers in Merseyside and North Wales paying significantly more than those in London.
  • Compared to winter 2020/21, daily standing charges for gas are up 8% and for electricity up 119%. The cost of every unit of energy used is also significantly higher:
Daily standing charges and unit costs in pence. 

Based on what the average customer paid (on a standard variable tariff, paying by direct debit).

 Ofgem Price Cap from 1 Oct 21 Ofgem Price Cap from 1 Aug 22 EPG Rate from 1 Oct 22 EPG Rate From 1 Jan 2023 EPG Rate From 1 April Ofgem Price Cap from 1 Jul 23 Ofgem Price Cap from 1 Oct 23
GAS UNIT (kwh) 4.07 7.37 9.9 9.84 10.3 7.51 6.89
GAS Standing Charge 26.12 27.22 28.49 28.49 29.11 29.11 29.62
ELECTRICITY UNIT 20.8 28.34 32.36 32.42 33.2 30.11 27.35
ELECTRICITY Standing Charge 24.88 45.34 46.36 46.36 52.97 52.97 53.37
Source: End Fuel Poverty Coalition records of Ofgem and BEIS/DESNZ data
  • Analysis of Ofgem data by the End Fuel Poverty Coalition, suggests that customers on standard credit terms pay substantially more for their energy than those on direct debit – with gas standing charges 18% higher, electricity standing charges 13% higher and unit costs also c.5% higher:
Uplift from direct debit cost to Standard Credit cost for customers on the standard variable tariff. Ofgem Price Cap from 1 Oct 21 Ofgem Price Cap from 1 Aug 22 EPG Rate from 1 Oct 22 EPG Rate From 1 Jan 2023 EPG Rate From 1 April Ofgem Price Cap from 1 Jul 23 Ofgem Price Cap from 1 Oct 23
Gas Unit Uplift 3.44% 5.29% 7.58% 8.74% 0.00% 5.33% 5.22%
Gas Standing Charge Uplift 27.07% 17.56% 17.73% 17.73% 17.97% 17.97% 18.13%
Electricity Unit Uplift 5.34% 5.33% 7.97% 10.55% 0.00% 5.35% 5.27%
Electricity Standing Charge Uplift 18.53% 12.84% 13.03% 13.03% 12.35% 12.35% 12.48%
Source: End Fuel Poverty Coalition records of Ofgem and BEIS/DESNZ data

Paying MORE into profits of energy firms

  • Ofgem has changed the rules on energy firms profits. This means suppliers are likely to earn 2.4% profit on every average customer’s bill from 1 October – up from 1.9% currently.
  • These new arrangements include a fixed component and a percentage component on top of that, rather than the whole value being a larger percentage of the total bill. Experts from the Warm This Winter campaign calculate that customers will only pay less profit to energy firms than before if their bill is above a staggering £4,000 a year.
  • The Warm This Winter Tariff Watch report estimated that energy firms will rake in almost £2bn in profits over the next 12 months. In addition to the record profits already announced in 2023. 

Many people are MORE in debt to their energy firms

  • Figures from Ofgem revealed that almost 1.2m customers disconnected from their energy supply in the first three months of 2023, while the average household energy debt for homes not on a payment plan is £1,214 on electricity bills and £965 on gas bills. Figures from the Money Advice Trust suggest that this “bad debt” is just the tip of the iceberg.
  • Customers on prepayment meters are especially hard hit by energy debt levels, with data secured under freedom of information requests by 38 Degrees showing that PPM customers are £1bn in debt on their meters, making them more likely to disconnect as their top up amounts are deducted to pay off their debts.
  • Citizens Advice data found that in the first 6 months of 2023, 7.8 million people have had to borrow money to cover their energy bills and 1.2 million children live in households which have had to go without heating, hot water and electricity. The charity has issued a warning that if the Government doesn’t step in, these numbers will rise this winter.
  • The Money Pensions Advice Service also found that nearly one in five buy now, pay later (BNPL) customers have used this payment method for essentials. Case study evidence from the Fuel Bank Foundation reveals that energy customers are also turning to high-interest payday loans to cover their energy costs.

Price cap history chart (source: End Fuel Poverty Coalition records using Ofgem, BEIS / DESNZ and Cornwall Insight data)

Cap change date Average annual household bill change (GBP) Average annual household energy bill (GBP) % change from last period YOY change Change from Pre-Energy Bill Crisis Change from Pre-Ukraine Invasion
01-Oct-20 -120 1042 -10.33% -11.62%    
             
01-Apr-21 96 1138 9.21%      
01-Oct-21 139 1277 12.21% 22.55% 22.55%  
             
01-Apr-22 693 1971 54.35%      
01-Oct-22* 129 2100 6.54% 64.45% 101.54% 64.45%
             
01-Apr-23* 400 2500 26.84%      
01-Jul-23 -426 2074 -17.04% 5.23% 99.04% 62.41%
01-Oct-23 -151 1,923 -7.28% -8.43% 84.55% 50.59%
01-Jan-24** 9.24 1,932 0.48% -7.99% 85.44% 51.31%
01-Apr-24 -64.55 1,868 -3.34% -25.29% 79.24% 46.26%
01-Jul-24 -45.6 1,822 -2.44% -12.15% 74.86% 42.69%
01-Oct-24 52.05 1,874 2.86% -2.54% 79.86% 46.76%

* Figures from 1 Oct 2022 include EPG and EBSS. Figures from 1 Apr 2023 include EPG. 

** Figures from 1 January 2024, the figures use a new “average household” usage calculation. Using the old estimates indicate even more significant increases throughout 2024.

Figures in italics taken from Cornwall Insight and are predictions.

Price cap sees energy costs double in three years

The latest Ofgem price cap announcement has set energy prices for 29m households for October, November and December 2023. 

In the detail of the figures it shows that, when compared to winter 2020/21, the cost of every unit of energy used is around double what it was. Daily standing charges for gas are up 8% and for electricity up 119%.

Compared to last winter, unit costs are down 30% for gas and 15% for electricity, but daily standing charges are up 4% for gas and 15% for electricity, while the Energy Bills Support Scheme has been withdrawn (which was worth about 16% of an average bill).

Ofgem has also confirmed that energy firms can increase the amount of profit they make through the price cap by c.£2 a year for every average customer on the standard variable tariff.

A spokesperson for the End Fuel Poverty Coalition, commented:

“When you look at the details of this price cap, the reality is that every unit of energy a customer uses costs double what it did a few years ago. The daily standing charges customers pay have also increased – doubling in the case of electricity.

“The Energy Bills Support Scheme has also been taken away this winter, while energy firms have been allowed to increase the profits they make per customer and vulnerable households have been left wondering what will happen this winter and beyond.

“Meanwhile the cost of living crisis continues to hit households hard and everyone now has less ability to pay these high energy prices. Energy debt levels continue to surge and reports from several charities and think tanks in recent days have set out just how dangerous this winter will be – especially for the most vulnerable.”

Tessa Khan, Director of Uplift, which is part of the Warm This Winter campaign, commented:

“The government seems to think the energy crisis has gone away, but for millions of households this autumn will be as hard as the last.

“People are still paying double what they were just a few years ago, and for some households their bills will be more than they were last year because of the lack of government support and rising standing charges. Levels of energy debt are also soaring.

“People will rightly ask what this government has done over the past year and a half to fix Britain’s broken energy system and lower bills for good.

“Instead of bowing to the wishes of profiteering oil and gas giants for more drilling, which won’t lower our bills, it needs to help people save money with more support for insulation and get on with ramping up cheaper renewables. That’s the only way we’re going to see permanently lower energy bills.”

Jess Ralston from ECIU commented:

“Unfortunately we’re not out of the woods yet as gas prices are expected to stay at least 2x higher than pre-crisis levels in the longer term, and while lots of Europe has moved away from gas altogether we’re still reliant on it. Last year the IMF said that this reliance is why we were hit harder than other countries.

“Those in the most inefficient homes could pay around £720 more on bills over the next year than those in energy efficient ones. We could have spent the last year insulating houses to shield them from future gas price spikes, and building more British renewables so we need to buy less expensive gas on the open market. Instead there seems to have been a focus on the North Sea, which won’t bring down bills.

“The Government’s flagship insulation scheme has flatlined this year, so getting it back up and running could help people in time for this winter and fulfilling pledges to tighten energy efficiency regulations for private renters and lifting the ban on onshore wind could help in time for next winter. Using less gas is the key to lower bills and energy security.”

National Energy Action (NEA) have warned that 6.3 million households could be trapped in fuel poverty this winter. It is somewhat less than last year, but far ahead of the 4.5 million in October 2021. Chief executive Adam Scorer commented:

“The price cap does not protect those who simply cannot afford the cost of keeping warm. The UK Government can still act – by directly reducing energy bills via targeted energy discounts or a more targeted Energy Price Guarantee for low-income and vulnerable households.

“It knows how to do it. It has millions of pounds unspent from previous schemes. It is aware that failing to act will consign millions to another winter of despair and suffering.”

The End Fuel Poverty Coalition recently wrote [pdf] to the Speaker of the House of Commons and the chair of the Commons Energy Security & Net Zero Committee to highlight the five occasions in 2023 when leading members of the Government, including the Prime Minister, promised to consult on the introduction of a social tariff.

In the recent policy paper, “Delivering a Better Retail Energy Market”, there is no mention of social tariffs or the introduction of discounted tariffs for the most vulnerable.

While there are some references to vulnerability and tariff innovation in the recently published consultation “Towards a more innovative energy retail market”, there is no mention about how the retail market needs to be reformed to provide vulnerable households with access to the energy they need and additional protections they may need in a market-led approach to energy supply.

The End Fuel Poverty Coalition has urged MPs to hold the Government to account and ensure that the introduction of a form of “social tariff” from April 2024 (or alternative consumer protection for vulnerable customers, such as “energy for all,” the National Energy Guarantee or a Energy Costs Support Scheme), will be considered by the Government as a matter of urgency.

The End Fuel Poverty Coalition spokesperson continued:

“Ministers had promised to consult on tariff reform to help the households most in need and who most rely on energy to keep themselves safe. Sadly, they have abandoned plans for a social tariff consultation.

“The Government seems to be running out of enthusiasm to help people get through the energy bills crisis, and it is also now running out of time to act to keep people warm this winter.”

Notes:

Data available: End Fuel Poverty Coalition unit cost increases

Trading firm fine highlights role of markets in energy bills

The energy regulator has handed out its first fine to an energy market trading firm under new rules.

Morgan Stanley has been fined £5.4m by Ofgem for breaching rules that require firms to record messages linked to energy trading. The records are expected to be kept due to transparency rules that help protect consumers against market manipulation and insider trading.

But Ofgem found that between January 2018 and March 2020, energy traders discussed business over WhatsApp on private phones which went against the rules. Ofgem bosses said that this represented a “significant compromise of the integrity and transparency of wholesale energy markets.”

Wholesale energy markets underpin the nation’s energy bills and so anything which impacts on these prices is of concern to all households and businesses. Under the current system, units of energy are traded on financial markets – or churned to use the industry language – by firms such as Morgan Stanley.

The latest available Ofgem data (June 2023) shows that every unit of gas is churned on the markets 13 times and every unit of electricity is traded three times.

Churn shows how often a unit of energy is traded before it is delivered to end consumers – it is calculated by dividing the total volumes traded by the total amount of energy delivered.

A spokesperson for the End Fuel Poverty Coalition which is part of the Warm This Winter campaign, commented:

“It’s welcome that Ofgem has taken action against this type of behaviour. But action on this particular case should remind us about wider concerns about the role of energy market trading.

“Every act of trading energy on the markets usually results in profit for the traders and ultimately adds to our bills. Units of energy can be traded several times before reaching our energy suppliers.

“We need to continue to ensure we have as much transparency as possible about all the firms who contribute to Britain’s broken energy system.”

Price cap warning as Ofgem set summer bills

Millions of domestic energy customers will see their energy bills stay at near record highs.

The latest Ofgem Price Cap announcement has set new prices for what consumers will pay for energy from 1 July 2023, with the average household seeing an energy bill of £2,074. If customers use more than the average consumption, they will still pay more than this figure as the cap limits the unit cost, not the total bill. 

Up until as recently as March, the average household energy bill stood at £2,100 due to the impact of Government support programmes. Last summer, average bills were £1,971 meaning energy will be 5.23% more expensive in summer 2023.

Predictions are that future price caps will set average energy bills at £1,976 from 1 October and rising back to £2,045 from 1 January 2024.

According to End Fuel Poverty Coalition records, this means that energy bills will be roughly: 

  • DOUBLE what they were in 2020.
  • 60% ABOVE what they were before the invasion of Ukraine.
  • At a similar level to last winter, but with people having less ability to pay as the crisis continues.

Anne Vivian-Smith, a disabled former community worker from Nottingham, said:

“Last winter I couldn’t keep myself warm as energy bills soared. To learn that I might have to face the same level of energy bills again is a frightening prospect. Other bills have gone up and the cost of living has soared – we’re less able to pay our bills now than we were last winter.”

Junnie Braithwaite is 56 and lives in northeast London. Her socially rented apartment is split over two floors, and she needs to use a stairlift because of fibromyalgia and arthritis. She said: 

“It’s give with the one hand and take with the other, I might get a few quid off my energy bill but that’s swallowed up by food prices going through the roof. I still don’t have peace of mind and I am already dreading next winter when my energy bills will go up again.”

A spokesperson for the End Fuel Poverty Coalition commented:

“The sting in the tail to this announcement is that customers are still going to be paying roughly the same for their energy as last winter. 

“And after months of inflation and the wider cost of living crisis, people are even less able to afford these high energy bills.

“The government needs to use the summer to fix Britain’s broken energy system, because for millions of people the energy bills crisis is far from over. This means ramping up energy efficiency programmes, helping the public with energy debt and reforming energy pricing arrangements so people don’t suffer again this winter.”

Research for the Warm This Winter campaign found that over 9 million adults lived in cold damp homes in winter 2022/23 and official figures showed cases of hypothermia surged by 36%. 

Tessa Khan, Director of Uplift which is part of the Warm This Winter campaign, commented:

“Britain’s broken energy system is set to cause another winter of misery, with fuel poverty affecting many of the most vulnerable. But as people continue to struggle through the energy bills crisis, the energy producers will continue to reap record profits.”

Fixed term deals which may now come onto the market may not be the solution, with recent figures from Future Energy Associates show that these may boost energy firms’ profits and be more expensive to consumers than the standard variable tariff.

The Government has announced funding to help with the cost of living, but it will not help around 1.7 million households in fuel poverty and represents a real-terms cut in support compared to last year.

Other inequalities in the energy market will remain with customers paying by standard credit (i.e. paying by cash, cheque or bank transfer) hit with a significant price premium.

Meanwhile some regions, such as Merseyside and North Wales will pay substantially more than others, such as those in the East Midlands.

Bethan Sayed from Climate Cymru said:

“The regional inequalities are deeply unfair, with people in North Wales paying substantially more than other parts of the UK for their energy. This is compounded by people living in old, leaky homes or off grid, and those on prepayment meters getting less energy for their money. This needs to change.”

Jonathan Bean from Fuel Poverty Action added:

“As people sink deeper into debt, basics like washing your clothes are becoming unaffordable luxuries for many. We need long-term solutions to fix Britain’s unfair energy system, such as providing a free ‘energy for all’ allowance for those that need it.”

PPMs code of practice does not go far enough

Energy firms have signed up to a new code of conduct to govern the forced installation of prepayment meters.

The code has been described by Ofgem as a “new voluntary code of practice [which] is a minimum standard that clearly sets out steps all suppliers must take before moving to a PPM which will place a voluntary ban on forcibly installing prepayment meters in the homes of customers over 85 and will make representatives wear body cameras as part of a new code of conduct.”

However, a spokesperson for the End Fuel Poverty Coalition, commented:

“This code of practice simply does not go far enough and the fact it is voluntary undermines its objective.

“There are really vulnerable groups which have been omitted from its full protection and we have serious concerns about how it will be implemented, such as how people will prove their medical conditions without being humiliated by an energy firm health inspection.

“The plans also fail to deal with the elephant in the room – the growing household energy debt mountain. According to figures from the Warm This Winter campaign 29% of the population is in debt to their energy firm.

“This was the Government’s opportunity to take meaningful action and introduce targeted debt relief for those most in need. It has failed to do so and seems to have given in to energy industry demands to let them go back to the bad old days of forcing prepayment meters onto customers in distress.”

Rachael Williamson, head of policy and external affairs at Chartered Institute of Housing responded to the announcement, commenting:

“This new code of practice is an important step forward in ensuring that some of the most vulnerable residents cannot have a prepayment meter installed in their home against their will. CIH welcome the code and Ofgem’s parallel focus on tighter enforcement and oversight, but we would like to see it go further and forbid forced installations in the homes of all vulnerable residents, not just those defined in the code as high risk.

“This is especially important for renters, who are more likely to be financially vulnerable or living with a cold-related illness, and who have borne the brunt of the cost of living crisis. We now need to see these changes incorporated into suppliers’ license conditions as soon as possible.”

Caroline Abrahams, Charity Director at Age UK, said:

“It’s good to see some regulation coming in to begin to rein in the practice of forcibly installing pre-payment meters (PPMs), which has previously been something of a Wild West, but these new rules do not go far enough.

“We don’t think any older person should be subjected to this treatment, not only the over-85s and the over-75s who are deemed vulnerable in some way, partly as a matter of principle but also because of concerns about how effective the assessment of vulnerability will be. The risk is that some older people – and younger people too – who should definitely not be on a PPM end up on one.

“Today marks an important first step but ultimately the sooner the practice of forcibly installing PPMs ends the better. In the meantime PPMs should only ever be used as a last resort.”

The Centre for Sustainable Energy also agreed that the moves do not go far enough, writing in a blog post:

“CSE advisors are hearing from more and more people in absolutely desperate circumstances every day. Keeping healthily warm is a basic human right and it’s wrong that so many people are struggling with cold homes and seriously worried about money.

“We urgently need a long term plan to fix our broken energy system. We need targeted support for people on low incomes. We need a strategy to improve homes so they so they don’t leak heat.”

Outreach to understand prepayment meter scandal launched

A nationwide call for evidence has been launched to ask energy customers to share their experiences of moving to a prepayment meter (PPM).

People can submit their experiences through an online form which is being hosted on Citizens Advice’s website and is open until Thursday 4 May 2023. A phone line (0800 464 3374) is also available to take evidence and consumers can also submit evidence via charities they may already be in touch with.

The eight-week programme of outreach is part of Ofgem’s market review of prepayment meters and remote switching, to ensure suppliers are meeting their legal obligations in protecting customers.

As part of the wider review, the End Fuel Poverty Coalition has also submitted a response to Ofgem’s consultation on protections needed to help protect energy customers.

In its response, the Coalition re-iterated its call for a legally enforceable ban on the forced transfer of homes onto a PPM (by court order or smart meter transfer) as the only acceptable solution to this abuse of power.

Despite the current voluntary ban being put in place by Ofgem and the Chief Justice, there are still reports of energy firms using the threat of a court order imposed PPM to intimidate households.

Until Parliament can legislate for such a ban, the Coalition argued in its consultation response that Ofgem must ensure that there is no return to forced transfer to PPMs until:

  1. The full PPMs Market Compliance Review has concluded and suppliers have implemented all recommendations. 
  2. Revised licence conditions have been implemented (to extend more protections to vulnerable households and extend the definition of vulnerability).
  3. Confidence is regained that suppliers have in place processes to follow the existing and updated rules set by Ofgem.

A spokesperson for the End Fuel Poverty Coalition, commented:

It is vital that anyone with experiences of using a prepayment meter responds to Ofgem’s call for evidence.

Only by telling our stories of the abuses that have taken place are the regulators and MPs able to take action to demand compensation from energy firms and reform Britain’s broken energy system.

Next week the House of Commons Business and Justice Select Committees will hear evidence from key players in the prepayment meter scandal including a former magistrate, British Gas contractors and Ofgem.

Customers to see energy bills soar from 1 April

Despite the Ofgem price cap falling today, customers will see energy bills rise by 43% for the average household from 1 April 2023.

Under the Government’s Energy Price Guarantee, the level of support for all households will fall at the same time that the Energy Bills Support Scheme also comes to an end.

Over 70 charities and campaign groups have now called on the Government to scrap the energy bills hike, paid for by the estimated £11bn underspend in the Energy Price Guarantee budget.

The Ofgem energy price cap was £4,279 in January but it will drop to £3,280 in April because of falling wholesale prices. Under the Government support packages, the average household bill has been £2,100 but this will rise to £3,000 from 1 April.

And contained in the small print of the Ofgem announcement is further bad news for some consumers.

A spokesperson for the End Fuel Poverty Coalition, explained:

Not only will people’s bills actually go up from 1 April, but the Ofgem announcement today contains a sting in the tail for some households who do not pay by direct debit.

Households on pre-payment meters will continue to pay more for their energy with those on standard credit and Economy 7 tariffs also being hit. [1]

In addition, we have seen some regions pay significantly more for their electricity than others [2] and standing charges will increase for everyone by almost 10% [3] caused by the complex nature of Britain’s broken energy system.

This means some people will still pay even more, even if they use less energy.The Government must act to ensure that bills don’t go up, while also setting out a path to reform the energy market.

As prices soar, Greenpeace has also warned typical UK home could miss out on savings of £1,800 every year on their energy bills by the end of this decade unless the government ramps up plans to roll out insulation, and heat pumps. [4]

To help the public understand more about their potential savings, the charity has launched an Affordable Energy Calculator in partnership with Cambridge Econometrics at https://affordableenergycalculator.org/.

Georgia Whitaker, Climate Campaigner for Greenpeace UK, said:

Britain’s homes waste more heat than any in Western Europe. We can’t afford to carry on wasting energy like this in a cost of living crisis. Greener homes would keep communities warm and healthy and save us all money.

We need the government to support home improvements like insulation and heat pumps to lower bills, boost the economy, and help the UK reach our climate goals. Heating our homes really shouldn’t cost the earth.

Our Affordable Energy Calculator shows how much individuals and communities across the UK could save if the Government commits to invest in our homes in the upcoming Energy Bill.

Ruth London from Fuel Poverty Action, commented:

Public anger is intense and support is growing for a whole new system, Energy For All.

This would mean no standing charges, a free band of essential energy so that no one freezes to death with excess energy use charged at a premium.

This would be funded by windfall profits and end to fossil fuel subsidies with accelerated energy efficiency and renewables expansion to reduce cost of the proposals.

ENDS
[1] Standard credit +6.2%, Economy 7 +4.1%, PPM +1.4% (source Ofgem letter p3)
[2] For example, electricity in North Wales & Mersey is 6.7% more expensive than in the East Midlands (Ofgem default tariff cap level document, based on direct debit payment and standard average use on single point meter).
[3] Based on dual fuel, direct debit increase 9.7%, Standard Credit 9.4% and PPM 7.8% (Ofgem default tariff cap spreadsheet table 1b, column BO compared to BP)
[4] This figure was calculated using the most common dwelling type (owner-occupied, three bedroom, semi-detached) in England and Wales, according to ONS data*, with the most common characteristics (eg condensing gas boiler central heating) for that type of dwelling. This type of dwelling would see a £1,832 reduction per year, or 64.7%. The number is not a mathematical average of all UK homes. Other dwelling types show similar savings in percentage terms, so a one bedroom council flat would see a £606 reduction (59.5%) and a four bedroom detached house would see a reduction of £3,579 (64.9%).

 

 

3.2m pre-payment meter customers left without heat

New research has found that one person every 10 seconds ran out of credit on their pre-payment meter last year because they couldn’t afford to top up.

The findings put more pressure on the Government to act on the pre-payment meters scandal as a total of 3.2 million people across Great Britain were left without heat or light according to Citizens Advice.

In debates in Parliament this week, the energy and justice ministers were put under pressure on the issue of forced transfer of homes onto pre-payment meters. Caroline Lucas MP and Rachael Maskell MP both raised the issue in debates, while a Bill to ban the practice has been put forward by Anne McLaughlin MP.

Previous research for the Warm This Winter campaign found that a third of pre-payment meter customers are now living in a cold damp home.

The energy regulator, Ofgem, has rules that means certain groups, such as disabled people and those with long-term health conditions, should not be forced onto a prepayment meter. In October, Ofgem warned suppliers that not enough was being done to identify customers in vulnerable circumstances before installing a prepayment meter.

But Citizens Advice data reveals that in the month following Ofgem’s intervention more than more than 470,000 struggling households including a disabled person, or someone with a long term health-condition, were cut off from their energy supply at least once.

Citizens Advice also found that more than one in five (19%) prepayment meter customers were cut off in the past year then spent at least 24 hours without gas or electricity, leaving them unable to turn the heating on or cook a hot meal.

The End Fuel Poverty Coalition has been calling for a ban on the forced transfer of homes on to pre-payment meters. A spokesperson for the Coalition commented:

The staggering extent of the prepayment meters scandal is now clear. Energy firms and the Government should hang their heads in shame.

Magistrates who approved court warrants in bulk for energy firms to install prepayment meters should also reflect on their role in this injustice.

A full ban on the forced transfer of customers to prepayment meters, including via smart meter mode switching, is now the only acceptable course of action.

Citizens Advice has now joined the calls for a total ban on forced prepayment meter installations until new protections are introduced, ensuring households can no longer be fully cut off from gas and electricity.

The charity reports it has seen a 229% increase in the past year in the number of people coming for help who can’t afford to top up their prepayment meter.