The Big 6 make big promises, but will they keep them?

By Victoria Egerton @VictoriaEgerto2

There are 27 million households in the UK. 90% (or 24 million) of them have their energy supplied by the Big 6. There are more than 4.5 million electricity and over 3.4 million gas pre-payment meter accounts in the UK. From 2012-2014 there was an increase of 299,913 meters – 60% of those meters were installed as a mechanism of debt recovery. 

Pre-payment customers are more likely to be fuel poor than credit customers. Astonishingly, each year they pay on average £226 or 22% more than credit customers. Tariffs and discounts that are available to credit customers are not readily offered to those on pre-payment meters.  

Even when pre-pay consumers have tried to switch suppliers to pay less, they are met with even more obstacles. The Debt Assignment Protocol (DPA) permits pre-payment customers who have a debt of £500 or less (per fuel) to switch supplier. However, in 2014 around 48,000 electricity and 46,000 gas pre-pay customers attempted to switch and only 263 electricity and 361 gas accounts were successful, amounting to a mere 1% of consumers that were able to switch under the DPA.

Having to pay more for your energy results in more and more vulnerable customers self disconnecting from their pre-payment meters. According to the Citizens Advice ‘Topping-up or dropping-out self-disconnection among prepayment meters’ report, each year 1.62 million pre-pay customers self disconnect.

What have the Big 6 promised for vulnerable consumers?

The Big Energy Saving Week is a campaign to raise awareness of energy saving by promoting the Citizens Advice tag line; check, switch and save in order to reduce fuel poverty.

As a Gold Partner, Citizens Advice Manchester hosted an event on 8th October 2015 and invited the Big 6 to answer questions on how they are proposing to offer on-going support to vulnerable consumers. The attendees included representatives from Eon, British Gas, SSE, Scottish Power and Npower.

Self-disconnection of pre-payment meters:

“1 in 6 consumers self-disconnect from their pre-payment meters”

There is a growing concern that vulnerable customers self-disconnect from their pre-payment meters. This could be for a variety of reasons but most commonly; high energy bills and low income, being away from home for some time such as being in hospital and returning to a high standing charge that they cannot afford to pay and finally but not conclusively, the inability to top up due to automatic high debt recovery rates.

What steps are the Big 6 taking to provide assistance to vulnerable customers at risk of self disconnection?

Prevention of self-disconnection:

British Gas’ SMART prepay scheme is similar to Eon’s SMART Pay-as-you-go scheme and Npower’s disconnection communication pilot. The schemes are aimed at preventing self-disconnection.  

British Gas, Eon, SSE and Npower said that they will contact consumers who become low energy users, use emergency credit and those who have not topped up in some time and prevent disconnection by offering inter alia an “emergency wind-on”, credit vouchers and general support.

Scottish Power, British Gas and Eon said they are visiting vulnerable consumers in their homes. Npower’s fuel bank pilot connects food bank users to fuel banks where customers can access fuel vouchers. Eon’s pay-as-you-go scheme enables Eon to put a block on pre-payment meters from disconnecting where vulnerability is identified.

Affordability of energy:

Pre-payment meter customers often pay more for their energy. Discounts such as direct debit, dual fuel, paperless billing and tariffs are not readily available on pre-pay accounts. Pre-payment customers do not often have control over their energy and are most likely to be fuel poor and as a result self-disconnect.

“OFGEM calls for a level playing field for pre-payment customers” (25th June 2015).

Is the Big 6 going to offer tariffs to pre-pay customers?

OFGEM recommended making energy more affordable this coming winter. The responses from representatives were as follows:

What are the Big 6 doing to ensure that your ability to pay is taken into account?

All of the representatives said that their agents always take into account the customers ability to pay. However in reality this is not always the case. Customer call centres are target driven and are not necessarily able to meet the requirements of vulnerable consumers, whereas the adviser lines and vulnerability teams are able to offer support through bespoke payment plans. Unfortunately customers must come through the call centres for talk to an adviser before they are then transferred to vulnerability teams.  

All of the representatives agreed that time must be taken to train front line staff on the options and support available for vulnerable customers to ensure that they are provided with the correct support. Scottish Power said that target driven call centre staff often becomes “desensitised to people who can’t pay” whereas face to face services “humanises” the support available.

Dealing with debt repayment:

Energy call centre staff often recover debt at a set rate, which is unaffordable for many consumers. Pre-payment meters are often set at automatic high recovery rates. If you are in receipt of benefits or receive a low income you can request a lower rate of debt recovery.

The big 6 minimum rate of recovery is £3.70 per week however Npower is £4 for electricity and £4.50 for gas. At the event Npower agreed to look into this and have the rates reduced in line with the government recommended minimum “if this is possible”.

Can the big 6 reduce or suspend debt recovery over the winter period?

Energy is inevitably used more in the winter period. Often this leads to unaffordable energy bills, increased debt and self-disconnection. So will the Big 6 reduce recovery rates over winter?

Scottish Power said that this is something they did for the last 2 years. They are not continuing this year but they did say that the debt recovery can be reduced or suspended for consumers based on “individual vulnerability and need”.

Npower also agreed that this is done on a case-by-case basis. However, Eon said that there are now systems in place where agents can pick up on unsuitability. British Gas has a specialist team of advisers able to support vulnerable customers. They are able to consider debt recovery reduction on an individual basis.

But who decides if you are vulnerable?

Energy company determination of vulnerability will undoubtedly change. However, each supplier has a Priority Services Register. You can ask to be registered on the PSR if there are people with health conditions, young children or anyone above pensionable age living in your property. If you have a power cut you will be your suppliers priority. Suppliers can often offer other support (such as letters in braile) and they will not install pre-payment meters if you are registered on the PRS and are unable to vend your meter.

Big promises, but are they big enough?

The representatives all promised to increase their support for vulnerable customers in various ways such as steps towards prevention of self-disconnection, home visits and cheaper tariffs for pre-pay accounts.

The Citizens Advice report ‘prepay energy customers paying £226 a year more’ shows that even with the prepay tariffs available pre-pay customers are still not offered the same prices. For example, a customer on the British Gas’ cheapest prepay tariff will pay £22.82 more that a credit customer. Customers with Eon will pay on average £104.11 more, Npower £223.80 and SSE £126.91 more.

The promises made at the event are all small but positive steps in the right direction. If the pre-pay self-disconnection rates fall the Big 6 will have made good steps to assist vulnerable customers.