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.

Related thinking

Low carbon generation

Latest developments in the TPI space

We recently published our 2023 Annual TPI report which provides an independent review and analysis of the market for TPIs, and the services provided by them. The report also looks at the current challenges and opportunities for TPIs, such as regulatory changes, competition with suppliers, and diversification of services. 2023...

Regulation and policy

What’s going on with REGOs?

Renewable Energy Guarantees of Origin, more commonly referred to as REGOs, are certificates issued to accredited renewable generators for every MWh of electricity they produce over a year period. The initial intentions of these certificates were to provide suppliers a means to prove the level of renewable generation they received...

Home supply and services

Ofgem strives to improve consumer experiences across both the domestic and non-domestic sectors

Over the last week, a number of anticipated publications were issued by Ofgem that hold the potential to make a significant change to the requirements on both domestic and non-domestic suppliers. The findings of Ofgem’s non-domestic market review were revealed, alongside a policy consultation on the options available to address...

Energy storage and flexibility

Waiting to connect: the problems and solutions for network connection queues (Part 2)

Network connection queues continue to be a notable topic of interest as many generators face significant delays to project development – an issue that is directly conflicting with net zero ambitions and recent focuses on strengthening domestic energy supplies. In Part 1 of our two-part series on connection queues we...

Home supply and services

Addressing consumer harms in the non-domestic market

In recent months, Ofgem has shone a light on areas across both the domestic and non-domestic market where suppliers could improve their practices for customers and go beyond what they are obligated to do in the licence conditions. In a time of significant and extended volatility, the regulator has brought...

Energy storage and flexibility

Waiting to connect: the problems and solutions for network connection queues

The number of grid applications has risen significantly in recent years, resulting in increased pressure on the electricity networks to facilitate new connections. In its Energy Security Strategy, the UK government set out ambitions for 95% of electricity to be sourced from low carbon generation by 2030, and for the...

Energy Market Design

Are prices going to rise in Contracts for Difference Allocation Round 5?

A number of factors may be about to put an end to the trend for falling energy prices in the Contracts For Difference (CfD) scheme. The CfD scheme has provided strong subsidy support whilst also providing consumers robust levels of protection. High investor confidence and steady reductions in capital costs...

Business supply and services

What happened in 2022 in the energy market?

The GB energy market never stands still and 2022 was no different. In this infographic, we look back at some key happenings from the past year in different segments of the GB energy market.  Click the image below to see our snapshot.