Ofgem’s Market Compliance Review into customers struggling with bills
Following from their review, Ofgem, the energy regulator, has published its Market Compliance Review of how energy suppliers assist customers experiencing financial difficulties, and it discovered issues ranging from minor to severe weaknesses or failings.
The detailed report revealed that while good practices are widespread in the sector and one supplier had no problems, most needed to improve their processes and governance to fulfil their obligations. Three suppliers were found to have “severe” weaknesses, with two of those suppliers receiving immediate enforcement notices.
Given the gravity of these worries, Ofgem has already sent Provisional Orders to Utilita and ScottishPower requiring specific and immediate actions, and the regulator will also determine whether enforcement action for other suppliers is necessary.
– 1 supplier was discovered to be free of any serious problems. (British Gas)
– 8 suppliers (Ecotricity, EDF, E.ON, Octopus, OVO, Shell, UW, and SO Energy) revealed to have “minor” problems.
– 5 suppliers were identified as having “moderate” weaknesses (E, Good, Green Energy, Outfox, and Bulb.)
– 3 suppliers (TruEnergy, Utilita, and ScottishPower) were found to have “severe” flaws in how they handle clients who are having financial difficulties; Utilita and ScottishPower were given enforcement notices as a result.
Among the findings were that some businesses had no policy in place for dealing with clients who were having financial difficulties, that there was no management oversight of the level of their customer engagement, and that they lacked sufficient training resources.
Energy suppliers have faced demands of their own over the past year, but it is crucial to give vulnerable customers who are having a hard time paying their bills this winter priority.
Jonathan Brearley, Ofgem CEO, said:
“This winter will be challenging, especially for those struggling to pay their energy bills. Although the government’s package of support will provide some welcome relief, it’s critical that, going into this tough winter, energy companies prioritise the needs of vulnerable customers struggling to pay their bills.
“We have reviewed suppliers on how they help customers who are having trouble paying their bills, particularly those who are vulnerable, and found some suppliers have fallen short of the standards Ofgem expects. We accept that there are many pressures on energy companies in the market this Winter, but the needs of vulnerable customers must be part of their top priorities. We will now work with companies on where they can improve, and I all urge all suppliers to step up to the challenge.”
Weekly Market View – w/c 19th September, 2022
Government Announcement on Energy Bill Relief Scheme
The Government has today announced the energy bill relief scheme for UK businesses, charities and public sector organisations.
The key points of the scheme are as follows:-
• The scheme applies to UK businesses, charities and public sector organisations.
• It applies to fixed price contracts, flexible contracts and default, deemed (out of contract) and variable contracts.
• The scheme will run for an initial six month period from 1st October 2022 through to 31st March 2023
• The government has set a supported wholesale price – expected to be £211 per MWh (21.1p per kWh) for electricity and £75 per MWh (7.5p per kWh) for gas.
• This is a wholesale price cap only and non-energy costs will still apply.
• Customers on fixed price contracts that were agreed after the 1st April 2022 will be eligible for the scheme (providing the wholesale element is above the supported price) No action will need to be taken and unit costs will be reduced from October 2022.
• Those on default and deemed contracts will receive a per-unit discount up to a maximum of the difference between the supported price and the average expected wholesale price. Suppliers are being encouraged to offer customers fixed price contracts for the duration of the scheme.
• The maximum discount is anticipated to be £405 MWh electricity and £115 MWh gas, subject to market price fluctuation.
• For businesses on flexible contracts the level of reduction will be calculated by the supplier and is subject to the maximum discount above.
• A similar scheme is being established for businesses in Northern Ireland.
• Equivalent support will be offered to businesses who use alternative heating oils.
• The scheme will be reviewed in 3 months with particular focus on identifying the most vulnerable businesses.
Further clarity on the scheme is required particularly around non-energy cost and also the impact on clients on default tariffs and businesses on flexible contracts.