Energy companies may be able to better protect customers most at risk of fuel poverty as the government considers introducing new data sharing measures.
Details of customers who receive certain state benefits could be shared with energy companies to ensure they are transferred to the safeguard tariff set by Ofgem.
The government said it is taking “further steps” to tackle fuel poverty as it launched a consultation today (12 February) on new powers to make it easier for consumers to be protected from “unfair” energy bills.
It is seeking views on amending the Digital Economy Act to allow the sharing of information between public authorities and energy suppliers.
The Department for Business, Energy and Industrial Strategy (BEIS) said data sharing would take place under strictly controlled conditions and only with customers’ consent.
Ofgem introduced a safeguard tariff cap in April 2017 for four million consumers on prepayment meters. This month, it was extended to a further one million who receive the Warm Home Discount.
The powers proposed in the consultation will make identifying and protecting vulnerable consumers easier while still protecting their data, BEIS said.
The move comes as the government prepares to introduce a Tariff Cap Bill which will put an end to “rip off” standard variable tariffs.
In November last year, Greg Clark the business and energy secretary was pressed to reveal the government’s plans for data sharing arrangements for vulnerable customers.
Clark said: “The effects of energy price rises are often felt most by those on the lowest incomes, as they are usually on the highest standard variable tariffs. These people are at risk of being plunged further into fuel poverty if they are left at the mercy of a broken energy market. Enabling energy suppliers to establish who should be on Ofgem’s safeguard tariff cap will help these vulnerable consumers.”
He added: “We will shortly be introducing our Tariff Cap Bill which will put an end to rip-off standard tariffs. Our bill, published in the autumn, has been undergoing pre-legislative scrutiny in order to build cross-party consensus.
“We expect a report from the BEIS select committee shortly so that we can begin the process of getting the bill through the House in order to protect millions of consumers as soon as possible.”
On the same day, Ofgem announced it plans to trial its first “hassle free” switching service as part of a package of reforms aimed at making it easier for people to switch as well as protecting those who don’t switch from being overcharged.
Dermot Nolan, chief executive of Ofgem, said: “Our State of the Market report highlighted that more consumers in vulnerable circumstances are on poor value tariffs because they are less likely to switch.
“The proposed amendments to legislation would help Ofgem to extend price protection to those who need it most. Ofgem is committed to protecting all consumers, particularly the vulnerable, from paying too much for their energy, while making it easier for those who switch to get a better deal.”
Lawrence Slade, chief executive of Energy UK, added: “As we’ve said previously, better use of data matching powers could help suppliers identify vulnerable customers. Whilst we’d welcome moves to enable this, we need to be sure that the proposals address concerns over privacy and do not come at a high cost.”
The industry body launched a new commission today as part of its drive to improve customer engagement with a focus on vulnerable customers.