National Energy Action has called for the planned £200 discount on electricity bills to be given as a grant, rather than a repayable rebate, to vulnerable pre-payment meter (PPM) customers.
Following the announcement by Ofgem that April’s price cap will increase by 54% the government unveiled a £9.1 billion package of support. This included the rebate which is to be given to all electricity customers in October and repaid in £40 annual instalments over the following five years.
At a Business, Energy and Industrial Strategy (BEIS) committee hearing this week, National Energy Action’s director of policy and advocacy, Peter Smith, said the charity would “strongly urge” the government to consider not recovering the payment from low-income and vulnerable households.
Speaking to Utility Week following the hearing, Smith further clarified his thoughts and said a grant should be given to both PPM customers as well as those receiving the Warm Homes Discount.
He said: “We are still pushing for the government to consider providing the support as a grant instead of it needing to be paid back.
“This is particularly acute for PPM customers as the government’s current plans seem to be focused on recovering costs via an additional standing charge.
“This would be a regressive approach, not taking into account usage, payment type or household income and we already know that even before the price increases about 1 million PPM customers every year ‘self-disconnect’; instead of being cut off by their supplier, they just stop buying credit because they cannot afford it.”
Matt Cole, chair of the Fuel Bank Foundation, further explained the danger for PPM customers of having the costs recovered from standing charges.
He told Utility Week: “What makes it really hard for PPM customers is that if you add it to a standing charge, there will be some who don’t top up their meters at certain times of the year. It will be alarming for those who top up and also have to suddenly repay back say 5-6 weeks’ worth of the charge to get their meter going.
“Standing charges vary so we have suggested recovering it via another line item on a bill, similar to the climate change levy on businesses. We believe that could be a really straight forward way of recovery.”
Cole said not all PPM customers are in a vulnerable position and therefore Warm Homes Discount recipients are a good proxy for determining who should receive a grant.
He added: “While we agree there should be a grant, I don’t think that’s a battle that could be won.
“The chancellor been clear this is a loan through the energy company and the treasury is providing financing to the sector with the assumption the money will come back.
“Although a grant will be better, I don’t think that is going to happen. What we believe is that if you do want to support people with a grant, it should be targeted at those who really need it.”
Legacy PPM customers
Additionally, Smith said, ‘legacy’ PPM customers – those who have not yet have a smart meter installed – could face difficulties in redeeming the rebate. NEA estimates that out of 4.5 million PPM households, there are around 2 million without a smart meter.
He explained: “Unlike those with smart meters who may be able to automatically have a credit applied to their meter, those with older PPM meters could need to redeem the rebate via a voucher which will need to be sent out to households in the post and then the code provided to a pay zone or pay point vendor.
“Even then, it is likely many could struggle to redeem the voucher with the first top up. It may take a few vends before it works. We have some sense from the government’s previous General Electricity Rebate scheme of the challenges that this could create. Previously, circa 10% of legacy PPMs were not able to get the previous government support.
“This could mean that between 200,000 and 250,000 households with legacy PPM meters could struggle to access the rebate.”
Good practice guide
Meanwhile, Energy UK has issued a good practice guide for using smart meter data to identify and support PPM customers at risk.
The trade body has compiled seven ways in which energy suppliers can support customers with smart PPMs who may be at risk of disconnecting their supply:
- PPM Interface Devices (PPMIDs) can be programmed to send alerts to customers when the credit balance drops below a level deemed safe by the supplier and when the customer dips into emergency credit.
- In addition to sending alerts to customers from the PPMID itself, suppliers can send notifications using other channels.
- Suppliers can ensure that they also receive notifications when a customer is sent a low credit or emergency credit alert so that they can check whether the customer requires extra support to avoid self-disconnecting.
- Suppliers can analyse smart meter data to try to identify customers who may be at risk before they reach the point of self-disconnection.
- Suppliers can approach customers in a considerate and open manner to encourage them to disclose if they are having payment difficulties and feel confident about asking for extra help.
- Suppliers can ensure that their agents (or staff of contractors) are trained to be able to meet the needs of customers on PPMs, who have a higher tendency to be in financial hardship and to have complex additional needs than customers on credit meters.
- Suppliers can switch a PPM to credit mode remotely if they suspect the customer has a vulnerability which will make them unable to vend, such as cognitive decline, learning difficulties or mental health and wellbeing challenges.
Steve Crabb, independent chair of Energy UK’s Vulnerability Commitment programme, said: “Vulnerable customers should not suffer as a result of the current turbulence in the energy market. That’s why the energy industry is taking extra steps to ensure that customers at risk are identified and receive additional support.
“Smart meters provide valuable information on customer consumption patterns, allowing suppliers to provide instant support to their customers through top-up reminders, emergency credit or signposting to the appropriate support.”