Progress or Regress? – The Vulnerability Conundrum

On 25 September Ofgem released its Vulnerable Consumers in the Energy Market: 2019 report. The report shows how well suppliers are doing in supporting those customers who need extra help. The results are mixed, with some good progress being made, but there are clear challenges that still need to be addressed. The positive elements highlighted in the report are interspersed with examples of instances where suppliers could do better, and the report identifies that it is primarily the small and medium suppliers where improvement is required.

To start with the good news, disconnection due to debt has decreased materially. In 2015 there were 253 disconnections due to debt, but in 2018 there were only seven. All of these were for electricity too, so for the first time ever there were no gas disconnections due to debt. Similarly, the number of pre-payment meters (PPMs) force-fitted under warrant to recover debt has also decreased, down 15% on 2017. At the same time, identification of customers eligible for the priority services register (PSR) and the volume of services that are offered has increased. Ofgem has stated that it is “pleased” to see this outcome.

However, it isn’t all good news. Debt has increased, with the number of customers in debt having increased by 4.2% in electricity and 4.8% in gas. Ofgem also pointed out that there was an increase in the number of customers in the red that were without a repayment plan. Not only will this hinder efforts to reduce the number of customers in debt, but Ofgem also warned this indicated that suppliers were not fully engaging with indebted customers. It observed that small and medium suppliers only performed half as well as the large suppliers on this measure, with 28% of their indebted customers on a repayment plan, compared to 56% for the Big Six.

Similarly, the report suggests that more work is needed from small and medium suppliers to close the gap on repayment rates. Only 22% of their customers are on the lowest available repayment plan, compared to 36% for the large suppliers. The number of smart meters remotely switched from credit to PPM mode has also more than tripled to 70,000 in 2018, up from 21,000 the year before (see Figure 1).

Self-disconnection and self-rationing are also some of Ofgem’s biggest concerns and one of the key priorities set out in its Consumer Vulnerability Strategy 2025. Ofgem has since published a consultation on proposals to improve outcomes for customers who are self-disconnecting and self-rationing.

The report identifies that there are clear opportunities for suppliers to improve on the services they provide, especially as Ofgem seems to be taking an increasingly harsh tone on vulnerability. We will be discussing the findings of the report in greater detail at our Vulnerability Viewpoint forum later this month. For more information contact Vicky Simonds on v.simonds@cornwall-insight.com.

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