The number of energy customers forced to install prepayment meters has risen for the first time in five years, chiefly driven by British Gas, according to a new report by Ofgem.
The regulator’s annual consumer vulnerability report for 2017, published today, shows that the volume of warrants to force the installation of PPMs has increased for the first time since 2012, bucking a ‘slow decline’ in their use by utilities.
Ofgem says in the report that it is “very concerned” about the increase in the use of warranties, which it says should only happen when other options have been exhausted, such as engaging with customers.
“Suppliers are not doing enough to explore alternatives”, according to the report, which says the overall increase was ‘mainly driven’ by British Gas.
Of all medium and large suppliers, the report finds that British Gas, OVO and Utility Warehouse have the highest numbers of PPMs under warrant installed per 1,000 newly-indebted customers.
It says that OVO stopped installing PPMs under warrant last September and that while Utility Warehouse has the highest rate of forced installations, it has reduced the number of warranties.
Ofgem also expresses concern over how smaller and medium suppliers deal with indebted customers.
It says that 24 per cent of indebted gas customers of small and medium suppliers are on repayment plans compared to 60 per cent of those with their larger counterparts.
Some smaller and medium suppliers have ‘considerably fewer’ customers on their Priority Services Register (PSRs) than larger suppliers, prompting concerns they may not be identifying eligible customers adequately.
And, according to the report, customers of some small and medium suppliers are repaying three-times more per week towards their debt than those with large suppliers.
The report expresses concern that “suppliers are not assessing thoroughly whether or not customers can afford the repayment rates’”
Ofgem says in the report that it is “particularly concerned” about Co-operative Energy and Solarplicity (formerly LoCO2), both of which have a “larger percentage” of customers in arrears and a “very small percentage’ of customers on repayment plans”.
It also flags up that First Utility has a “very large number” of customers in arrears.
However, the total number of customers having a PPM installed for debt continues to fall. And the report shows that fewer customers overall were repaying a debt to their supplier in 2017, although the number of those in debt without a repayment plan in place had increased from the previous year.
Suppliers disconnected just 14 electricity and three gas customers for debt in 2017, the ‘lowest number ever’ continuing a ‘long-term reduction’. Only five suppliers disconnected customers.
And the report shows that total number of consumers on a PSR has increased to the highest level since monitoring began in 2006, which it says means more consumers are getting the support they need to engage in the market effectively.
British Gas did not respond to a request for a comment from Utility Week but according to the Ofgem, said its increased use of forced PPM installations reflected a focus on harder-to-reach customers in the last year.
Responding to the report, Gillian Guy, chief executive at Citizens Advice, said: “It’s troubling to see the numbers of forced prepayment meter installations creeping up.
“Energy suppliers have a responsibility to support vulnerable customers and should only install prepayment meters under warrant as a last resort. Clearly, many suppliers could do more to get customers in debt onto repayment plans and signpost them towards support.”
Utility Week will look at these issues and vulnerability more broadly at the Consumer Vulnerability Conference in London on 5 July. To book a place or for more information visit our events website.