Lloyd Birkhead, managing director, Grosvenor Services Group Company strategy, Customers, Energy retail, Policy, Policy & regulation, Strategy & management, Opinion

"The fundamental need to identify customer vulnerabilities won’t lessen with the rollout of smart meters"

The smart meter rollout continues to dominate the news agenda, with a steady stream of news and views on everything from consumer attitudes and preferences, to technician shortfall and on-going installation figures.

For us, as a debt collection agency operating in the utilities sector, it’s clear that smart meters have the potential to change the ways energy companies – and in turn their collections agencies – work when it comes to customer arrears. As it stands, however, the impact of smart meters on revenue protection, debt collection, pre-disconnection visits (PDVs), and pre-payment meter (PPM) warrants is an area yet to be widely discussed.

We recently carried out research into the state of debt recovery in the UK, which found that nearly three in four people (70 per cent) have experienced debt recovery procedures. Worryingly, this figure has jumped by 11% since we undertook similar research in 2016, which highlights the importance of discussing how the rollout may affect both energy companies and customers in arrears.

With this in mind, below are some of the key points for consideration.

Remote meter switching

In cases where customers have arrears, and energy companies have been unable to retrieve the outstanding debt, fitting a PPM can sometimes be a necessary course of action. Today, this can require a field officer to execute a warrant of entry to enable an engineer to exchange the meter.

This procedure will, however, have the potential to be changed by smart meters, which will allow providers to remotely switch meters from credit mode to pay-as-you-go (PAYG).

Whilst the requirement to attempt to make contact with customers, via office and field based activity, to notify of a payment changeover will remain, there is a question, given remote switching capability, of whether a warrant of entry will still be needed. However, removing face-to-face interaction at this stage of the process – even if we give the customer notice prior to the switch – brings its own set of concerns.

There is a risk that the customer may not have received the changeover notification (they may have been on holiday, for example), or that the customer has vulnerabilities which have not been identified up to that point, that would need to be taken into further consideration. In addition, understanding meter position and any issues relating to the height of the meter and 24 hour access will be crucial, to ensure the meter is in a suitable position to avoid any potential off-supply incidents due to lack of access.

So, while it may be tempting to reduce resource through lessening field visits – especially given Ofgem’s recent warrant charging cap – many energy companies may still want a field officer on site at the changeover point, to ensure customer engagement is robust and any concerns are carefully handled. It will be interesting to see how viewpoints on this evolve.

Data and insight will enable swifter response

Smart meters will enable energy suppliers to react more swiftly to protect revenues, for example in cases of energy theft or properties recorded as void. This in turn means that field collections teams must be equally agile and responsive to act promptly on these cases once identified.

For example, an empty property showing consumption where contact has been unsuccessful can be quickly handled via a responsive field visit to establish occupancy and arrange payment arrangement. The case of suspected energy theft with an abnormal meter reading or a raised tamper flag could also be more quickly identified by prompt data insight, and subsequently resolved through field response.

Better data and insight can only be a good thing for the industry, however it’s how this data is used to good effect that will be vital. Being able to quickly and effectively act on insight underlines the fact that even in this changing environment, the value of field interactions will remain crucial to protect revenues and to explore and review potential hidden vulnerabilities and meter issues.

Customer vulnerability

The fundamental need to identify customer vulnerabilities won’t lessen with the rollout of smart meters. In fact, given the ability to remotely switch over a customer’s meter, there may be more of a focus for energy companies to assess vulnerability at an earlier stage in the arrears cycle, and experienced, empathetic field teams remain crucial to this process to connect with customers and fully understand their unique circumstances.

A more worrying consideration, however, is around how smart meters may negatively impact upon the behaviours of customers living in hardship. There is a real danger that the immediate and real time visibility of energy usage – designed to help customers save energy – may lead to those already struggling to pay opting to forgo essentials such as heating and warm food because of anxiety over usage costs.

Energy providers will need to bear this in mind and look to improve engagement with customers in hardship and offer robust support schemes that address these worries.

Potential dangers to customer relationships

Being asked for, and providing, a meter reading is a regular touchpoint that many consumers have with their energy companies, and we must ensure that customer relationships are not compromised through remote readings.

This increasingly detached customer relationship may add particular difficulty when a customer’s circumstances change – for example should they fall into debt – potentially requiring energy providers to reconnect with customers they have had no regular contact with. Again, field interactions will be crucial here, visiting customers in their own homes or business premises to build positive relationships and provide up-to-date customer insight.

We anticipate continued steady progress against the government’s roll-out programme and we may well soon start to see energy providers increasingly exchanging meters to the new smart type during the warrant stage, to help meet their smart meter fitment obligations.  And, with Ofgem’s recent £150 cap on warrant charges, combining a smart install with a live warrant execution could help energy providers to offset costs.

While it is not currently compulsory to have a smart meter fitted in your home, should the government change its stance on this, additional questions are then raised in terms of the necessity of pre-meter exchange visits and warrants of execution where customers are resistant to the change.  Also, we mustn’t forget that there will still be a requirement to support legacy infrastructure with current field based activities.

Overall, the smart meter roll-out will bring noticeable change to current customer arrears and debt collection processes. Energy companies and their external partners must start to navigate these changes now and make decisions on how their processes and operations might need to evolve. Field services teams will remain a crucial element of this, connecting positively and sensitively with customers in the field in order to protect revenues and customer relationships.