Long-term protection planned for struggling energy customers

Consumers facing unmanageable energy bills could be in line for long-term help after Ofgem announced plans to boost support, as lockdown has seen gas and electricity use spike.

In March, energy suppliers agreed to support vulnerable customers through the worst of the pandemic, including those in financial distress and customers on prepayment meters – already more likely to be in vulnerable circumstances – who then faced difficulty topping-up while self-isolating.

The energy regulator now wants to convert a range of those stronger emergency protections into permanent requirements for domestic energy providers.

Under these proposals, suppliers would have to offer emergency and “friendly hours” credit to all prepayment customers so their energy supply isn’t cut off simply because top-up facilities aren’t open over evenings, weekends and bank holidays.

Suppliers will also need to offer additional credit for consumers in vulnerable circumstances to provide extra breathing space while working out alternative arrangements to pay.

The plans, which would come into force in time for the coming winter, come as the regulator has become increasingly concerned about the growing number of people who go without energy or “self-disconnect” after running out of credit on their meter.

Of the 4 million households using prepayment meters, around one in seven had self-disconnected their supply in the past 12 months.

For anyone struggling to pay bills – regardless of whether they are on a prepayment meter or not – Ofgem is also proposing to set repayment rates based on a customer’s ability to pay and is monitoring these arrangements.

Many suppliers already offer these lines of support, but making it a formal licence requirement will ensure more customers are helped, says Jonathan Brearley, chief executive of Ofgem, who adds: “These permanent protections will reduce the number of prepayment customers temporarily going without energy because they cannot afford to top up.

“It is always best for customers to keep up with their energy bills, if they can. But at this time, when many may face financial hardship, these proposals mean those who are struggling to keep up are assured of some breathing space.”

The news may come as some relief for just under a fifth of UK households who aren’t confident they will be able to pay their bill in the coming weeks, as a result of the pandemic’s economic fallout. For households with children, the figure rises to almost a quarter, warns Peter Earl, head of energy at comparethemarket.com.

“Britain’s suppliers deserve credit for responding swiftly in March to assure those struggling with the cost of their gas and electric that, in the event they are unable to pay, their supply of energy would not be cut off. Yet while lockdown restrictions are set to be relaxed early next month, the financial hardship faced by millions of struggling households is far from over,” he warns.

“It was heartening to see the industry rally round when the coronavirus pandemic struck,” agrees Dame Gillian Guy, chief executive of Citizens Advice.

“A series of measures was put in place to help people struggling with their energy bills – whether that was because they were shielding and finding it difficult to top up; or they’d seen a sudden and dramatic cut in their income.

“It’s even more welcome to see the protections we’ve been arguing for made permanent. It’s a recognition that, as we move out of this first phase of the pandemic, many people will still need a more flexible approach to keeping up with their payments.”

Those struggling to cover the cost of energy, especially while spending more time at home, are urged to make small changes to reduce their usage, including only boiling the kettle with the amount of water required, drying clothes on a line or clothes horse rather than a tumble dryer, and switching electrical items and lights off every time they leave a room.

Turning items off at a wall plug rather than leaving them on standby alone could save as much as £450 in the “phantom load” cost of always leaving things on and ramping up background energy use, according to home energy saving business Loop.

Once bills are under control, it is vital to switch deals. Roughly speaking, those who have been on the same tariff for more than a year should be able to save money. Average savings come in at around £300 annually, according to some estimates.

“Energy is an essential service – we all need it for basics such as home heating, and cooking and washing,” adds Dame Gillian.

“At a time when more people are building up debts, everyone should be confident they’ll be given time and support to get their finances in order without the risk of disconnection.”