Ofgem confirm protections for energy customers this winter

21 October 2020   By Dr Lucy Brown, Editor

Regulator Ofgem has outlined protections for vulnerable energy customers over the winter, with rules set to come into force on 15 December 2020.

Energy suppliers will be required to give more support to customers struggling to pay their bills, including pre-payment customers unable to top-up.

These new licencing requirements are designed to limit the number of customers who voluntarily self-disconnect their energy supply because they can't afford to pay.

Ofgem reiterate that, while support will be offered, all energy customers will be expected to pay for the energy they use.

cold house on window

Customer support

The new requirements to be introduced by Ofgem from 15 December onwards will compel energy suppliers to offer the following support:

  • Provide emergency credit to customers struggling to top up their pre-payment energy meter due to self-isolation, mobility problems or other similar issues
  • Offer extra credit to pre-payment households in vulnerable circumstances while working with the customer to find alternative arrangements for payment
  • Put customers in energy debt on realistic and sustainable debt repayment plans

Ofgem say these measures are designed to give customers some breathing space this winter, although all outstanding energy debt must ultimately be paid.

Vulnerable households

At the beginning of the coronavirus outbreak, energy suppliers in the UK signed up to emergency measures to protect four million pre-payment customers who were in danger of disruption to their energy supply.

This was followed by Ofgem writing to suppliers and warning them not to disconnect customers due to debt issues.

These measures were put in place to stop customers self-disconnecting their energy supply. According to Ofgem's Consumer Survey 2019, one in seven households on pre-payment meters had self-disconnected in the previous 12 months, and Ofgem are keen to limit this number over the winter.

They cite research from Citizens Advice published in June which found self-disconnection had occurred for financial reasons in half of cases:

  • 29% of customers did not have enough money to top-up
  • 11% couldn't top-up due to self-isolating
  • 10% couldn't top-up because the top-up shop was closed

So, Ofgem is introducing new licence requirements to ensure suppliers identify those customers at risk of self-disconnecting and offer them support in the form of friendly hours credit, emergency credit and payment plans.

This includes removing the expectation that customers pay for any emergency credit they used when they next top-up, with suppliers instead instructed to help customers come up with a repayment plan instead.

Protecting customers over winter

It's positive news that Ofgem are extending protections for vulnerable customers over winter, expanding on the lessons learned from the difficulties faced by energy customers at the height of the lockdown.

With many people living in areas with heightened restrictions and those suspected of having Covid-19 required by law to self-isolate, the regulator is ensuring suppliers continue to treat customers fairly as we move into the coldest months of the year.

Yet the research by Citizens Advice mentioned earlier also has some stark warnings about the level of fuel poverty experienced by energy customers with a pre-payment meter:

  • 14% of those surveyed turned their heating down to uncomfortable levels daily, with another 37% having done so at some point in the previous year
  • 7% had cold meals daily to avoid using energy, with 27% more having done so in the previous year
  • 34% turned off lights in a room they were using everyday while another 18% reported having done it at some point in the previous 12 months

These statistics are sobering, and Ofgem has attempted to address the problem by requiring energy suppliers to stay in contact with those customers most at risk of self-disconnecting and self-rationing their energy supply to excessive limits.

However, with the added stress of coronavirus restrictions hitting families already struggling financially, it remains to be seen how many customers will face heating troubles over the winter.

Ofgem has already warned bills for all could rise in 2021 as a result of coronavirus bad debt.

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