Energy retailers are frustrated with business secretary Grant Shapps’ failure to meet with them despite publicly criticising the sector on multiple occasions, the industry’s trade body has told Utility Week.
Energy UK’s deputy chief executive Dhara Vyas was speaking after Shapps berated retailers over the growth in the number of customers being switched to a prepayment meter (PPM), as well as naming suppliers with low redemption rates of Energy Bills Support Scheme vouchers among their PPM customers.
The Department for Business, Energy and Industrial Strategy (BEIS) hit back at Vyas’ claims and said they were “misleading”, but admitted energy and climate minister Graham Stuart hosted a roundtable with suppliers last week rather than the secretary of state himself.
One retailer, Good Energy, has gone as far as accusing the government of “lashing out” at suppliers, and Vyas has confirmed the sense frustration being felt by the sector.
She said: “The industry is frustrated at the way the Secretary of State is choosing to engage with suppliers. This is the third Sunday letter (referring to 22 January) they’ve had from the secretary of state, and he hasn’t yet met with them.
“It’s worth noting that industry has willingly, absolutely cooperated with government to get really big new bill support schemes designed and off the ground in very short timescales during times of quite extreme political turmoil.
“That’s to the credit of the officials in government and the people who work in our member supplier companies because it’s not been easy, but the focus has been on making sure that customers get the support they need.”
While Shapps has not yet met with the sector’s representatives, the roundtable hosted last week by energy and climate minister Graham Stuart included suppliers, Ofgem, Energy UK and Citizens Advice.
Energy prepayment has been in the spotlight for most of January, following a Citizens Advice report which found 3.2 million people across Great Britain ran out of credit on their PPM last year because they could not afford to top up, the equivalent of someone being cut off every 10 seconds.
A number of organisations including Citizens Advice have called for a total ban of forced PPM installations until new protections are introduced that ensure households can no longer be fully disconnected.
Vyas stressed the value of prepay for many customers and warned against undoing the work the sector has done to destigmatise this particular payment method.
She continued: “Prepay is not a bad thing. Lots of prepayment meter users really like it because it helps them to monitor what they’re using, avoid an unexpected bill and also manage their spending.
“One of the worst outcomes from this current public conversation would be stigmatising prepay when actually, as an industry for the last decade, there’s been a real drive to destigmatise it and to really consider the benefits of smart prepay, how much more control it gives and how much easier it is to top up and manage what you’re spending.”
Beware more prescriptive regulation
Vyas also discussed the nature of vulnerability and the increasing assumption from some that those with any form of vulnerability cannot in any circumstance be placed onto a PPM.
Against this backdrop she warned against more prescriptive regulation in the wake of concerns about PPMs.
“We have been on a real journey with vulnerability in this industry. We went from having quite a narrow definition, to really encouraging the industry to take a broad look at how different circumstances can make people vulnerable at any different point in their life.
“It’s really important that through the regulator’s actions, through market compliance reviews, through looking at process, we don’t drive ourselves unknowingly back to a more prescriptive regulatory framework.
“That doesn’t encourage innovation, it doesn’t encourage tailored support. Principles based regulation in the retail market is a result of the journey that we’ve been on opening up the market and trying to encourage innovation and different ways of doing things and encouraging suppliers to perhaps think about competing on things other than price – like customer service and innovative tariffs.”
A BEIS spokesperson said in response: “This is misleading. The government has been engaging directly with energy suppliers on prepayment meters, including letters from business secretary Grant Shapps and a face-to-face meeting with energy minister Graham Stuart that Energy UK attended.
“We are clear that suppliers should stop moving customers over to prepayment meters without taking every step to support those in difficulty.
“Ofgem agreed last week to investigate the practice of forced switching to make sure suppliers are complying with their strict rules.”
Also responding to Vyas’ comments was Ofgem, which pointed to an upcoming market review which will look in more detail at PPMs, the issue of forced installation and remote switching.
A spokesperson added that current legislation gives energy suppliers the right to install a PPM where a customer is in debt, and that it cannot enforce a complete ban on installations unless there is a change in legislation.
They added: “However Ofgem does have statutory powers to protect consumers, and so we have imposed various requirements to control how suppliers can exercise this right, particularly around the checks and processes they must follow before installing a prepayment meter.
“We also carry out regular compliance work to ensure suppliers are following these rules.”