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Help customers take control of their finances

Upset Senior man sitting at the table and calculating finances. Old man checking bills. Man counting coins on the table. Pension calculation concept

More than 5 million people across Great Britain are now in debt to their energy supplier, according to Citizens Advice. Its report, published last week, validated the dark outlook on affordability of essential services that industry commentators speak to Utility Week about on an almost daily basis.

The report flagged a conservative estimate that 2 million prepayment customer will disconnect their meters this winter because they cannot afford to top up. It said one in 10 households have had to borrow money to pay their energy bills in the past six months and reiterated calls for a long-term plan to be developed by government to tackle spiralling debt in the energy sector – a move Utility Week has also backed via it Action on Bills campaign.

There’s no doubt that systemic change is needed – not just in the energy sector but in water too where there was an almost 20% rise in applications for social tariff support in 2023.

But meaningful political engagement on the affordability of utilities has waned since the height of the energy price crisis and, in the shadow of an election, there’s little expectation we’ll see implementable solutions brought forward for some time.

What practical action can utilities take in the meantime? In forums like Utility Week’s Consumer Vulnerability and Debt Conference and at the many private debate events we host around this topic, something which is often focused on is identification of vulnerability. A huge hurdle here has been data sharing and visibility across the priority service registers (PSRs) held by water companies, energy networks and energy retailers. Happily, after many years of pondering over this challenge, some big strides forward have recently been taken, including the adoption of a public interest stance on data sharing by energy retailers – soon to come into effect.

What is less often talked about is the difference that investing in better payments experiences and flexibility could have on the debt problem facing energy and water utilities. But according to contributors to a recently published report from Utility Week, created in association with PayPal, this is a high potential area which could not just help ease debt challenges, but also elevate customer satisfaction and engagement in the process.

Through engagement with a panel of senior customer service, billing and debt leaders across the sector, we found that well over half of those we talked to have “imminent” plans to invest in diversification of payment offerings.

The primary motivations behind this were long term and linked to “meeting the needs of a new generation of customers” as well as improving general customer satisfaction. But beyond these broad ambitions, reducing bad debt was also a strong driver.

What utilities are looking for in new payment technologies is an improved ability to offer customers personalised payment – and sometimes savings – plans which fit their financial situation and give them more control over how much and when they pay for the energy and water they used.

Andy Sage, Eon Next’s head of proposition and partnerships, told us that helping customers gain this control is essential in the current economic climate – where customers are becoming increasingly sensitive and “attuned” to their budgets and alert to the idea they may be entitled to support.

We had a similar view from the water sector. Claire Sharp, customer director at Northumbrian Water, said the affordability crisis has directly driven an expansion in the company’s payment options, including adoption of digital wallet platforms. She suggested that offering payment flexibility to those that are struggling is a gesture of trust in customers which is frequently met with a higher propensity to pay. She also said she sees increasing the range of payment options offered to Northumbrian Water’s customer as playing an important role in achieving Northumbrian Water’s commitment to eliminate water poverty in its licence area by 2030.

Clearly, offering payment flexibility is not going to resolve a national cost of living crisis. For all too many customers, paying their bills will remain an insurmountable challenge no matter how much technology enabled flexibility is offered to them. It’s also critical that new payment options come hand in hand with more accurate consumption data – so renewed focus on smart metering in energy and water is a must.

But, as Eon Next’s Sage put it, utilities should now focus on “helping customer in any way we can”. Those utilities who sat outside our forward-thinking group with clear plans to diversify payments should think urgently about how new, more flexible and digitally enabled payment options fit into the tapestry of their response to the affordability challenge.

Read Utility Week’s report Digital Experiences: the direction of travel in energy and water utilities, created in association with PayPal, here.