Ofgem says Energy firms should take better care of customers in debt
Energy firms are under the spotlight again. After being called out for making too much money last week, now the energy regulator Ofgem has issued a statement slapping the wrists of energy firms who are too quick to force prepay meters (PPMs) on customers struggling to pay, saying that energy should do “all they can to support customers” and to “protect” vulnerable customers who are in danger of self-disconnecting.
Of course, energy firms are always cast in a villainous light, but given the “increase in the number of PPMs installed for non-payment of debt”, Ofgem are now going to “investigate” why the numbers are rising. Ofgem have today stated, very clearly, that “installing pre-payment meters under warrant should be used as a last resort by energy suppliers when consumers get into debt. It is a way to prevent a customer from being disconnected. Suppliers can only install a prepayment meter where it is safe and reasonably practical for the consumer to use.”
It seems that Ofgem suspect that energy companies are not using PPMs as a way to help their customers out of a sticky situation, but are instead leaning on people in order to get their money faster. Ofgem have also said that energy firms might not currently be doing “all they can to support customers struggling to pay” and recommend that, before resorting to PPMs, firms should offer energy efficiency advice and signposting to social support, in line with Ofgem’s own commitment to work with Citizen’s Advice to help identify and protect vulnerable customers. They also want to see common sense applied when setting outstanding debt repayments on the meter, making sure these are at an affordable level “taking into consideration the customers' financial circumstances.”
In addition, Ofgem note that some energy firms seem to be making it difficult for PPM customers to switch suppliers, even where switching would help customers who are struggling with bills. Ofgem want PPM switching to be easier and they are formalising energy suppliers’ current voluntary practice of allowing PPM customers with a debt of up to £500 per fuel to switch, by making it an obligation.
But of course, it’s easy for Ofgem to say these things and the energy companies to nod sagely and agree, without actually doing anything differently. However Ofgem is also going to require firms to evidence their practices and the actions they have taken to protect customers, particularly where there is additional ‘vulnerability’. For example, if customers are relying on energy for medical reasons, or have mobility problems that limit their ability to access the prepayment meter or top up the meter, the supplier will not be allowed to install a prepayment meter.
So what do you think? Should energy customers do more, or should customers take more responsibility for paying their own energy costs or face the punitive PPMs? Does it make a difference if we’re talking about a pensioner in a freezing cold home, or a working-age family?