On 17 December 2015, Ofgem published its final proposals for the Priority Services Register, considered integral to its consumer vulnerability strategy. The aim is to ensure that existing services relating to safety, access and communication in the energy market meet the needs of consumers in vulnerable situations.
Consultation closes 22nd September 2014. Read more here.
Gas and electricity are essential services. Providing extra services to people who need them to access the market and stay safe remain critically important. This consultation seeks views on proposals that require suppliers, electricity distribution network operators and gas distribution networks to:
•provide additional non-financial services to energy consumers who are more likely than a typical consumer to experience problems with communication, safety and supply;
•take reasonable steps to identify people who would benefit from these services;
•share consumer information with each other and other utility companies, using vulnerability indicators agreed between them;
•raise awareness of services, including developing a single cross-industry brand; and
•conduct annual independent audits of their performance and publish findings yearly
Ofgem has analysed differences in price between different payment methods used by consumers following an information request to suppliers in February 2014. It has found that the gap between prepayment and direct debit has narrowed since 2009. Read more here.
Ofgem rules allow suppliers to charge different prices for different payment methods, but only if the amount reflects the cost of providing those accounts. Some larger suppliers do spread some of the costs of prepayment customers among the whole of their customer base. This is consistent with regulations and guidance, which allow for differences. These result in reduced price differences for vulnerable customers, who often do not have the option of alternative payment methods. Suppliers can also charge the same price regardless of payment method, so they can spread the costs they incur across all customers. However, the majority of consumers pay by direct debit (including half of all fuel-poor households) so any change would mean these consumers would pay more.
Customers who use prepayment meters are now charged around £80 a year more on average compared with direct debit customers for dual fuel. This is a significant fall as the difference was almost £140 in 2009. Ofgem is satisfied that across the market the price on different payment methods reflects the varying costs suppliers face in providing them. The price difference for quarterly payment compared to direct debit has remained at around £80 since 2009.
As part of the Smarter Markets Programme, Ofgem commissioned the Centre for Sustainable Energy (CSE) to undertake analysis of domestic electricity use patterns and to model the potential distributional impacts of time of use (ToU) tariffs (energy tariffs with different prices at different times).
Ofgem has published CSEs report – see here for more. The tariff modelling undertaken by CSE demonstrates the potential impacts of a ToU tariff on different consumers’ bills. It shows that the types of customers that benefit from ToU tariffs will depend on their current usage as well as how they respond and the types of ToU tariffs on offer.
The publication of this research represents a first step in seeking to understand how ToU tariffs may impact on different customers. Ofgem envisage undertaking further distributional analysis as they make progress towards specific policy decisions as part of the individual projects under the Smarter Markets Programme.
Today DECC published the consultation document on the future of the Energy Company Obligation (ECO). The consultation will run from 5th March to the 16th April.
The majority of these proposals were highlighted as part of Government’s announcement on 2 December 2013. As set out in the December announcement we are proposing these changes to reduce pressures on consumer bills and ensure ECO provides value for money for energy consumers; while continuing to help tackle fuel poverty, support the development of sustainable energy efficiency supply chain and improve the energy efficiency of our housing stock.
While it is clearly right that we look to ensure government policies do not unreasonably impact on consumer bills, we also recognise the impact of these proposals on the energy efficiency market. In particular we recognise that the uncertainty created by the proposed changes has had an effect on delivery on the ground and that consequently the supply chain has seen a contraction in demand.
This consultation is a key opportunity to make sure we implement these changes as effectively as possible, taking into account industry needs and the experience of ECO delivery over the last year.
This paper by Citizens Advice summarises the changes to benefits that have already taken effect and those still to come, and looks at what companies can do to identity customers in difficulty. It outlines steps companies can take to understand their customers, to proactively work with them, forbear from taking action that may make matters worse, and refer on those who need help.
It is also important that creditors are proactive in looking out for signs of potential financial difficulty and offering support accordingly. Forbearance and breathing space from their creditors will help customers who are having to adapt to a reduced income or a change in the way that their benefits are paid to avoid reaching breaking point.