Tag: Ofgem

Energy debt soars 57% in 12 months

Households’ combined energy debt has soared again in figures released by Ofgem.

The total energy debt (which is 91 days or more overdue) had risen to £3.3bn by end Q1 2024.

The figure is up from £3.1bn at end Q4 2023 and up 57% (from £2.2bn) at the same point in 2023.

The End Fuel Poverty Coalition previously revealed that one in five (18%) of households in energy debt are turning to illegal money lenders to pay for their bills and everyday essentials.

For many in energy debt, energy firms will suggest moving to a prepayment meter (PPM), which enables customers to pay off their debt every time they top up their meter.

But Warm This Winter research indicates that the suffering of households in debt on prepayment meters is even worse than for those on direct debit. The numbers turning to illegal money lending are also significantly higher for PPM customers (36% PPM / 13% DD).

A spokesperson for the End Fuel Poverty Coalition commented:

“Millions of households have fallen into energy debt due to the record high prices.

“The next Government must now make tackling energy debt a priority. It should do this by introducing a universal, consistent, nationwide, debt matching programme. This could be funded in part by the £1.3bn customers are paying through bills for energy debt costs this year.

“The average household has had to find £2,500 in the last few years just to keep their energy usage where it was. When combined with the ongoing cost of living crisis, this is a figure well beyond people’s means and it is no wonder that people are now getting deeper into debt.

“While the energy industry has pocketed the profits, struggling families have been abandoned with many turning to illegal money lenders.”

Experts have also recommended a ban on energy firms from selling on debt to debt collectors, better regulation of energy debt with energy debt and debt collection agencies used by energy firms to be subject to Financial Conduct Authority rules and more training for energy firms’ staff in recognising illegal money lending.

Steve Vaid, chief executive of the Money Advice Trust, the charity that runs National Debtline said:

“The fall in the Price Cap will alleviate some of the pressure many households are under, but many more will continue to struggle as energy bills remain high.

“As millions of people worry about keeping up with their energy payments, arrears levels have continued to increase and many have been left with unaffordable debts as a result.

“What we need to see from the next Government is urgent action through a Help to Repay scheme to help people trapped in energy debt access a safe route out.

“Anyone struggling with their energy bills, or worried about their finances, should contact National Debtline as soon as possible – our advisers are here to help.”

£1,071.98: The energy price cap households could have had

Energy bills are set to fall by 7% on 1 July as the new Ofgem price cap comes into force, but campaigners have claimed the figure could be £500 lower if measures had been taken to mend Britain’s broken energy system.

Insulating homes, reducing standing charges and removing VAT from energy bills would have significantly reduced household’s costs, according to analysis by the End Fuel Poverty Coalition. [1]

With the Ofgem price cap expected to rise again by around 10% in October 2024, the next Government has been urged to implement proposals to bring down the cost of energy from day one.

Chief among the asks for new ministers are to launch a comprehensive plan to bring down standing charges, provide more support for vulnerable households this winter and create more energy efficient homes (by strengthening minimum energy efficiency standards in the private rental sector and laying the statutory instruments needed for the Future Homes Standard and the Clean Heat Market Mechanism).

A majority (57%) of the public also back a social tariff, designed to offer cheaper energy to vulnerable households. 

A social tariff is a discounted energy bill for people in greatest need, such as those people that have low incomes and are elderly, have young children or rely on energy for medical needs. It could be paid for by the £427bn in profits that have been generated by the whole energy industry since the start of the energy bills crisis. [2]

Campaigners have also called for the next Government to introduce a universal, consistent, nationwide, energy debt matching programme funded by the £1.3bn customers are paying through bills for energy debt costs this year. 

A spokesperson for the End Fuel Poverty Coalition commented:

“Throughout the energy bills crisis we have seen sluggish progress on insulating and ventilating our homes, bringing down standing charges, moving to cheaper energy sources and bringing in comprehensive support for vulnerable households with their energy bills.

“Had we seen more concerted action on all these fronts, then the Ofgem price cap coming into force on 1 July would be £1,071.98 – £496.62 lower than what the average household is going to be paying.

“Given energy bills will stay high for the foreseeable future we now need the next Government to act quickly after the election to end energy debt, protect households from the volatile global energy market, bring down bills for good, improve housing standards and make Britain a clean energy nation.”

Warm This Winter spokesperson Fiona Waters said: 

“Energy bills will go up again in October and years of staggering prices have taken their toll. Customers are already £2,500 out of pocket because of Britain’s broken energy system and now we know they are going to continue to be penalised if we don’t see the reforms we need.

“As well as the plans to insulate homes, bring down standing charges and provide support through a social tariff, we also need to see new renewables schemes that, according to the House of Commons Library briefings, are able to generate electricity more cheaply than fossil fuels.”

Juliet Phillips, UK energy lead at E3G added: 

“It’s been repeatedly shown that investing in long-term, clean solutions to fix our broken energy system will bring bills down permanently. 

“The British public backs common-sense proposals to upgrade our homes and ensure that everyone can afford to heat their home. We urge all political leaders to make this a national priority, and take action before energy bills are set to soar again this winter.

“Without action, households are set for another £200 price rise in the Autumn, as the UK remains dependent on expensive foreign gas.”

ENDS

[1] The cost was calculated by taking the following steps:

  1. Take published Ofgem unit rates and standing charges for the average household based on current typical domestic consumption values (average use) of £1,568
  2. Reduce gas consumption levels to reflect impact of improving insulation in home, in line with the ECIU model (brings average bill to £1,348.80)
  3. Reduce unit costs to reflect the lowest available unit cost available on the market (Future Energy Associates database, brings the average bill to £1,292.28)
  4. Reduce standing charges and adjust unit costs in line with Future Energy Associates discussion paper, published on 20 June 2024 (brings bill down to £1,124.95)
  5. Remove VAT at 5% (£1,071.98)

Figures and methodology peer reviewed by Chris Galpin at E3G.

[2] Data as at 6 June 2024. Researchers examined the declared profits of the 20 firms the End Fuel Poverty Coalition is most asked to comment on. This sample of the industry ranges from energy producers (such as Equinor and Shell) through to the firms that control our energy grid (such as National Grid, UK Power Networks and Cadent) as well as suppliers (such as British Gas). It does not include supply chains nor market trading firms.

Energy giants have pocketed just under £427 billion in profits since the energy crisis started according to a new analysis of company reports. Over £34 billion of these profits (the equivalent of over £1,153 per household) are thought to be made by the firms and business units responsible for electricity and gas transmission and distribution. These are the “network costs” consumers pay for maintaining the pipes and wires of the energy system and are usually paid for through standing charges on energy bills. Standing charges have risen 147% in recent years for electricity and 15% for gas.

The last update was on 1 April 2024 which showed industry profits of £420bn with £30bn from networks and transmission.

The data was compiled by freelance business journalist David Craik. David’s experience has included writing business and city news and features for national newspapers and magazines such as The Daily Mirror, Sunday Times, Wall Street Journal, Scotsman and Daily Express. Much of his content focuses on company financial results and reports in the energy sector and on personal finance issues including wealth management, property, investing and managing household budgets and bills. If any firm wishes to correct the records, please email info@endfuelpoverty.org.uk.

Ofgem called on to keep the ban on energy acquisition tariffs

A coalition of consumer organisations and energy firms is urging Ofgem not to lift the ban on acquisition-only energy tariffs, which could lead to existing customers being excluded from the best deals and risk opening the door to loyalty penalties.

Ofgem has said it is minded to remove the ban on acquisition-only tariffs – which would be used by energy suppliers to attract new customers or lure switchers from rival firms – from 1 October 2024. It has consulted on this and is due to reach a final decision imminently.

Existing customers would not have access to these deals and Which? is concerned consumers who want to stay with their current supplier could be left worse off. These customers – and new ones whose initial deal expires – face being hit by so-called “loyalty penalties” as their bills jump in subsequent years.

New Which? research shows the public are opposed to cheap deals that exclude existing customers.

The consumer champion has written to the regulator alongside Eon, Octopus, So Energy, Rebel Energy, End Fuel Poverty Coalition, Citizens Advice and Fair by Design, calling for it to reconsider its proposals to lift the ban on acquisition-only tariffs.

In the letter, the organisations warn of the risk of “a return to a market which discriminates against loyal customers”. They also raise the potential impact on customers in debt, who may not be able to switch but could also find themselves struggling to access a better deal with their current supplier under the plans.

The letter highlights the lessons of recent history, when more than 30 suppliers went bust – many after trying to win customers with unsustainably cheap tariffs.

Which?’s latest survey findings show eight in 10 (81%) people would think it was unfair if their supplier was offering cheaper deals to new customers only. A similar number (78%) said they would think this was unfair even if they would potentially benefit in the short term by signing up to a discounted deal.

Rocio Concha, Which? Director of Policy and Advocacy, said:

“Our research has shown that consumers overwhelmingly believe cheaper energy deals only available to new customers are unfair – even when they might stand to benefit.

“That’s why Which? and a coalition of energy firms and consumer organisations have written to Ofgem warning them not to lift the ban on acquisition-only pricing.

“Allowing deals exclusively for new energy customers could open the door to loyalty penalties and would come at the expense of those who wish to stick with their current supplier on their best deal.”

A spokesperson for the End Fuel Poverty Coalition, commented:

“Removing the ban on acquisition tariffs will create price discrimination against loyal customers and also hurt further the millions of households who can’t switch to a new supplier because they are in energy debt.

“Removing the safeguard also means risking a return to the unsustainable form of competition in the energy market that existed before 2021. Suppliers collapsed partly because they had grown too quickly in a market driven by acquisition tariffs.

“Ultimately energy bill payers bore the heavy price of these collapsed firms through the Supplier of Last Resort programme which added billions to households’ standing charges.”

ENDS

The joint letter is available on the Which? website at this link.

Changes could halve energy standing charges

A new discussion paper that would see energy standing charges reduced has been published by campaigners.

Future Energy Associates have identified how standing charges for every household with electricity and gas connections could plummet from £334.08 a year to £183.02 – a reduction of almost half (£152.06 / 46%).

For electricity the standing charge would reduce from £219.42 to £149.17 per year (32% reduction) and for gas the standing charge would reduce from £114.66 to £33.85 per year (71% drop). 

Delivering these changes would require changes to Ofgem regulations and Government funding as well as action taken to protect low income and high usage households, such as those who rely on energy for medical needs.

This could include the introduction of a social tariff, which is backed by well over half the population according to recent polling by Opinium, and could be paid for through contributions from energy industry profits (producers, networks and suppliers).

The analysts identified that up to £5bn a year of costs on energy bills could be moved to general taxation. Policy makers could remove these costs from all bills, which would bring down electricity unit rates as well or (for a lower cost to the Treasury of around £200m a year) remove the costs just from vulnerable low income households with high energy needs.

The options paper commissioned by the Warm This Winter campaign includes moves to:

  • Transfer five elements of standing charges (the adjustment allowance, headroom allowance, profit allowance, payment uplift and levelling costs) entirely to the unit rates.
  • Shift some policy costs to general taxation.
  • Revise the ratio of operating costs paid through standing charges versus unit rates to increase the amount on unit costs, thereby delivering an incentive to the energy market to drive down excess costs such as marketing.
  • Reduce the standing charge elements of network costs by 10%, funded by excess shareholder profits.
  • If all these options were taken together (i.e. changes to standing charges and unit costs) these proposals would reduce the total energy bill for the average household by £214.22 a year.

Dylan Johnson, one of the analysts involved in the report, said:

“The comprehensive changes we have suggested would bring down standing charges and could also mitigate negative distributional impacts of standing charge reform previously identified by Ofgem. We would urge new ministers to meet with industry, consumer groups and experts to analyse how we can change standing charges in a way that is fair to all households.”

A spokesperson for the End Fuel Poverty Coalition, commented:

“Standing charges are an unfair flat tax on every energy consumer. Every household pays through the nose just to be connected to the grid, even if they use no energy.

“In the past there has been caution about reform due to the potential impact of change on households with a high dependency on energy for medical needs, we still need further detailed analysis of these options by Ofgem to ensure that this group is not penalised. 

“However, this report does indicate that reform of standing charges may actually be possible in a fair way. It will need Ofgem, the next Government, energy industry and consumer groups to work together to make it happen. The prize of cutting standing charges in half before this winter should be one which new Ministers seize upon.”

Jonathan Bean from Fuel Poverty Action added:

“Millions of us are suffering energy starvation due to high standing charges that leave no money for heating, hot water or power. Many on prepayment meters get cut off. This cruel energy system needs urgent reform by the new Government.”

Warm This Winter spokesperson Fiona Waters said: 

“The energy crisis has already left bill payers £2,500 out of pocket since it started three years ago and we know energy bills will go up again in October.

“People up and down the country are literally at breaking point, are still paying 50 percent more for energy and at the heart of these unfair bills are the standing charges. The public are crying out for action now.

“The next UK Government will need to act quickly, bring down bills for good, end energy debt, improve housing standards through insulation and ventilation and also make Britain a clean energy superpower so we are not at the mercy of profiteering global oil and gas giants.”

For customers in energy debt, campaigners have also called for a universal, consistent, nationwide, debt matching programme funded by the £1.3bn customers are paying through bills for energy debt costs this year. 

ENDS

Standing Charge Reduction Analysis by Future Energy Associates is available to download: https://www.endfuelpoverty.org.uk/wp-content/uploads/Standing_Charges_Final.pdf

Customers out of pocket due to Britain’s broken energy system

The average household has spent £2,500 more on energy bills since April 2021 than they would have done had prices remained stable. [1]

The data takes into account the Government support schemes that were set up to help households and means that, across the whole country, the additional spend by households on energy over the last three years totals more than £72bn.

The new figures calculated by the End Fuel Poverty Coalition come as Ofgem has lowered the price cap for domestic energy bills by 7%. However, the new cap level means that gas and electricity costs remain 50% higher than in 2021 and are predicted to increase again from 1 October according to expert forecasters. [2] 

Recent research by Ipsos found that a third of people expect their disposable income to fall even further over the next year, while the Stop The Squeeze campaign has claimed that fewer than one in ten of the public feel that the cost of living crisis is over. 

Meanwhile, the head of the energy regulator told MPs on the Energy Security and Net Zero Committee that prices “are still significantly higher than they were before, and when we look further out our best estimate is that prices are going to stay high and volatile over time.”

A spokesperson for the End Fuel Poverty Coalition, commented:

“Years of staggering energy bills have taken their toll and we now know the true cost of the crisis. Customers are £2,500 out of pocket because of Britain’s broken energy system, people are turning to loan sharks to pay their energy bills, millions of people are living in cold damp homes and many are experiencing a mental health crisis driven by high bills.  

“The next Government will need to act quickly after the election to end energy debt, protect households from the energy market, bring down bills for good, improve housing standards and make Britain a clean energy superpower.”

Warm This Winter campaign spokesperson Fiona Waters commented:

“Even with today’s price cap reduction, people will still be paying 50 percent more than they were three years ago for gas and electricity.

“They are simply fed up with being ripped off and used as cash machines by the energy industry that week after week announces billions in profits. People want to see investment in a fairer system, especially during these times of global uncertainty when there could easily be another worldwide energy price shock.

“That’s why thousands have joined our Big Energy Credit Claim Back protest and political parties should listen.  Voters want to see our broken energy system mended with a shift to homegrown renewable energy and a proper insulation scheme which will both reduce bills and increase energy security by freeing us from volatile global gas prices.”

ENDS

[1] £2,500 and £72bn figures calculated as below. Price cap at 30 March 2021 was £1,042 for the average household. All figures based on Ofgem data. Average household energy bill levels include the relevant Energy Price Guarantee and Energy Bills Support Scheme payments where appropriate (the £52bn net cost of those measures are also borne by the taxpayer). Cap data is based on the prevailing typical domestic consumption values at the time – as set by Ofgem.

Cap change date Average household energy bill (GBP) Amount above GBP1,042 per household weighted for the number of months in price cap period (e.g. annual amount above cap halved for periods starting 1-Apr-21, but then quartered for periods from 1-Apr-23) All households
01-Oct-20 £    1,042 Baseline   
01-Apr-21 £    1,138 £                                48  
01-Oct-21 £    1,277 £                              118  
01-Apr-22 £    1,971 £                              465  
01-Oct-22 £    2,100 £                              529  
01-Apr-23 £    2,500 £                              365  
01-Jul-23 £    2,074 £                              258  
01-Oct-23 £    1,834 £                              198  
01-Jan-24 £    1,928 £                              222  
01-Apr-24 £    1,690 £                              162  
01-Jul-24 £    1,568 £                              132
TOTAL     £                           2,495 £  72,340,500,000

[2] End Fuel Poverty Coalition records based on Ofgem price cap announcements and (in italics) Cornwall Insight predictions (last checked 20 May 2024)

Cap change date Cap change (GBP) Average household energy bill (GBP) % change from last period YOY change Change from Pre-Energy Bill Crisis Change from Pre-Ukraine Invasion
Pre-cap   1067        
01-Oct-17 -19 1048 -1.78      
01-Apr-18 41 1089 3.91      
01-Oct-18 47 1136 4.31 8.40%    
01-Apr-19 117 1254 10.39      
01-Oct-19 -75 1179 -5.98 3.79%    
01-Apr-20 -17 1162 -1.44%      
01-Oct-20 -120 1042 -10.33% -11.62%    
01-Apr-21 96 1138 9.21%      
01-Oct-21 139 1277 12.21% 22.55% 22.55%  
01-Apr-22 693 1971 54.35%      
01-Oct-22 129 2100 6.54% 64.45% 101.54% 64.45%
01-Apr-23 400 2500 26.84%      
01-Jul-23 -426 2074 -17.04% 5.23% 99.04% 62.41%
01-Oct-23 -240 1,834 -11.57% -12.67% 76.01% 43.62%
01-Jan-24 94 1,928 5.13% -8.19% 85.03% 50.98%
01-Apr-24 -238 1,690 -12.34% -32.40% 62.19% 32.34%
01-Jul-24 -122 1,568 -7.22% -24.40% 59.48% 22.79%
01-Oct-24 71.83 1,631 4.61% -11.04% 56.57% 27.76%
01-Jan-25 2.76 1,634 0.17% -15.24% 56.83% 27.97%

Italics = Based on Cornwall Insight predictions

 

Customers set for £1.3bn bill for energy debt charges

Households will be paying energy firms a combined £1.3bn in annual charges to help suppliers recover bad debt from 1 April.

A new report from the Warm This Winter campaign also casts doubt on the effectiveness of the charges in actually helping customers struggling with their bills. [1]

Energy firms were already able to charge £842m a year on bills for bad debt allowances, but from 1 April 2024 Ofgem has ruled that an additional £735m can be charged (or £28 per household per year). The amounts are offset by a £275m adjustment to the bad debt charges incurred after the Covid pandemic. 

The combined impact of these charges varies depending on the bill type with prepayment meter customers paying the least at £25.17 per household per year. Direct debit customers pay £38.96 a year on these charges while standard credit customers are hit hardest paying £129.71.

The report also reveals that “debt-related costs” consist of three main elements: bad debt write offs, debt related administrative costs and working capital. It appears unclear if these write offs will come off customers’ accounts, or if they are written off on supplier income statements while the debt is sold to debt collection agencies.

In addition, the debt related administrative costs and working capital include recouping the costs of the moratorium on involuntary prepayment meter installations. The moratorium was brought in after it was found energy firms were breaking into vulnerable people’s homes to force them onto a prepayment meter.

Firms can also claim for the administrative costs to suppliers from dealing with customers in debt, despite other allowances in the price cap enabling them to cover operating costs. The allowances also allow firms to claim for the day-to-day costs of customer arrears and using the money to cover the period between an energy firm incurring costs and receiving customer payments.

The news has been met with concern from consumers, with new polling from Opinium finding that over half (55%) of the public oppose energy firms using money raised through the additional £28 per household being spent on debt administrative costs. [2]

The public felt that around half (48%) of the money raised from the £28 debt charge should be spent writing off household energy debt of the customer accounts of those most in need.

Fiona  Waters, spokesperson for the Warm This Winter campaign commented:

“Energy bill payers are quite rightly up in arms about these additional costs which look like they do nothing to reduce the debt of ordinary people but instead help energy companies pursue those who simply can’t pay.

“It’s yet another outrageous rip off caused by our broken energy system, where ordinary people are expected to foot the bill all the time whilst energy giants bank billions and their bosses live in the lap of luxury.

“We need long term solutions such as expanding homegrown renewable energy and a mass programme of insulation to bring down energy bills for good so UK families no longer find themselves in debt through no fault of their own and are hounded for payments.”

A spokesperson for the End Fuel Poverty Coalition, said:

“The recovery of energy debt led to the forced prepayment meters scandal in 2023 and customers are still paying the price for energy firms’ poor practices.

“Rather than hit hard pressed households with higher standing charges, we need to see a longer-term approach to solving the energy debt mountain, such as an industry wide Help To Repay scheme.

“If Ofgem persists in implementing this charge, the very least they can do is ensure it is used to write off debts from customer accounts and isn’t spent on hiring debt collection agencies.”

Policy expert and report author Richard Winstone, added:

“Ofgem produced over 350 pages of documentation to reach a conclusion that will cost the public hundreds of millions of pounds extra this year with no clear benefit for consumers. They pack their documents with complicated jargon and formulae, yet they could not find room for a simple explanation as to how this money will actually benefit those struggling with their energy bills. 

“Throwing money at suppliers and hoping they do the right thing is what has led to record profit levels from the likes of British Gas at a time when customer service standards are at their lowest for a decade and customer debt is at its highest. Ofgem either needs to stop increasing the cost to consumers or start creating regulation that ensures suppliers use the additional funds for specific, consumer-benefitting, purposes.”

Jan Shortt, General Secretary of the National Pensioners Convention, commented:

“As always, it is the customer that pays, not the shareholders or energy industry who are currently making the biggest profits for years. Sustainable and affordable energy sources are a must and the regulator should consider how it can protect customers from this unacceptable level of levy when everyone is still struggling with high energy bills.”

ENDS

[1] “An overview of the additional debt related costs”, Richard Winstone / Warm This Winter, March 2024. Full report available to download. 

[2] Public opinion polling from Opinium who interviewed 2,000 people between 15 and 19 March 2024. Results were weighted to be representative of the UK population.

55% oppose using the money to cover admin costs, 25% support, 20% don’t know.

48% figure is based on respondents choosing a range of percentages to be used to write off debt. The figure includes the responses from 16% who felt none of the money should be used in this way, 16% felt all of the money raised should be used in this way. 

Ofgem allows energy firms to force fit prepayment meters

Ofgem has given the green light to energy firms to resume force-fitting prepayment meters in people’s homes.

The practice was suspended in early 2023 after investigations by the i and the Times newspapers.

EDF, Octopus and Scottish Power can now install the meters again after meeting new rules set by Ofgem, the industry regulator.

However, a spokesperson for the End Fuel Poverty Coalition, commented:

“It is outrageous that energy firms are seeking to use the courts to force people onto prepayment meters in the middle of winter. These meters have the potential to leave them without heating in the middle of winter.

“We still have grave concerns about the processes energy firms have in place for assessing vulnerabilities. Late last year, Scottish Power were found to be trying to seek warrants to force vulnerable households onto prepayment meters.

“Ultimately, without a change in the law, we knew this day would come. MPs and Ministers – who ignored pleas to introduce a full ban – can only hope that it is not their vulnerable constituents who are forced onto these meters.

“If anyone receives a court summons from their energy firm they must contact Citizens Advice, a local law centre or other advice provider as soon as possible to see if help is available to them. Customers should not ignore these letters as the consequences of doing nothing could be severe.”

Jonathan Bean from Fuel Poverty Action added:

“We are horrified that Ofgem has taken the cruel and dangerous decision to allow Scottish Power and others to break into homes and limit energy supplies in the middle of winter. This will leave many people traumatised and cold.”

National Pensioners Convention General Secretary, Jan Shortt said:

“While we understand that energy debt needs to be dealt with, force fitting Prepayment Meters through the courts is a draconian measure the NPC would very much like to see abandoned.  We will be monitoring very closely any efforts to apply warrants granted.

“There are many reasons for energy debt – not least the doubling of costs last year and the cost-of-living crisis making it very difficult for the majority of ordinary people and pensioners to eke out their income to pay ever-increasing bills.

“We urge the Minister for Energy Security and Net Zero to engage with the energy providers, the Regulator of Ofgem, the NPC and the End Fuel Poverty Coalition to debate and consider a plan to enable those in debt to be able to make payments according to their ability, not the energy providers to top-load plans.

“We would also welcome some understanding from energy providers in terms of customer responses to their communications on debt.  Firstly, they should understand that for most older people, there is no spare money, and they are not members of the ‘won’t pay’ brigade.  The overt assumption that everyone in debt is deliberately not paying is erroneous, spiteful and completely unnecessary.

“Secondly, the energy providers need to rebuild trust between themselves and their customers as a result of those choosing to work outside of their moral obligations.”

Before suppliers can restart involuntary installations, they must meet the conditions set out by Ofgem. These include:

  • Suppliers must conduct an internal audit to identify wrongfully installed involuntary PPMs installed before the PPM moratorium (in place from February 2023) and offer compensation and a return to a non-prepayment payment method to any affected customers.
  • The supplier must commission and conclude an independent assessment to verify their readiness to comply with the new rules.
  • The suppliers’ Board must attest that the supplier is ready to restart involuntary PPMs in compliance with the Code, and pay redress to customers of wrongly installed PPMs
  • If the PPM Market Compliance Review finds major concerns, the supplier in question will need to take corrective agreed with Ofgem

A statement by Ofgem added that once suppliers meet the above conditions and restart involuntary PPM installations, they must also provide regular monitoring data to the regulator, so that concerning practices can be identified early.

Customers and consumer groups will be able to check energy suppliers that can install prepayment meters without household permission on the Ofgem website.

While EDF, Octopus and Scottish Power can now proceed with considering involuntary PPM installations as a last resort, they will still be required to follow a robust set of rules put in place by Ofgem. These rules include:

  • Making at least 10 attempts to contact a customer before a prepayment meter is installed
  • Carrying out a site welfare visit before a prepayment meter is installed
  • Refrain from all involuntary installations for the highest risk customers (the ‘do not install’ category) including:
  • Households which require a continuous supply for health reasons, including dependence on powered medical equipment,
  • Households with an older occupant (aged 75+), without support in the house,
  • Households with children aged under 2 years old,
  • Households with residents with severe health issues including terminal illnesses or those with a medical dependency on a warm home (for example due to illness such as emphysema, chronic bronchitis, sickle cell disease).
  • Suppliers must also assess the suitability of a PPM when one of the below disabilities/characteristics/conditions is a factor:
  • Children 5 and under,
  • Other serious medical/Health Conditions (such as neurological diseases (Parkinson’s, Huntingdon’s, Cerebral Palsy), respiratory conditions (COPD) and mobility limiting conditions (Osteoporosis, Muscular Dystrophy, Multiple Sclerosis)),
  • Serious mental/developmental health conditions (such as clinical depression, Alzheimer’s, dementia, learning difficulties, Schizophrenia),
  • Temporary situations (such as pregnancy, bereavement)

Call for the abolition of the January price cap change

Campaigners have called on Ofgem to scrap future January energy bill changes as a five percent hike in prices hits households at the worst possible time.

The Warm This Winter campaign has called the increase a step too far for ordinary households in the UK, many of whom face the choice between eating and heating.

A spokesperson for the End Fuel Poverty Coalition commented:

“Struggling households are facing an assault from all sides. Energy bills are going up just as winter bites hard, Christmas debts have to be paid off and the ongoing wider cost of living crisis continues into another year.

“Ofgem needs to abolish this January price hike. The cruel impact of a change in bills at this time of year can’t be underestimated.

“We criticised the policy strongly when it was introduced as we feared this would be the result of it – bills going up at the worst time of year.

“Given the way the price cap is structured, it is unlikely we’ll ever see a decrease at this time of year. Changing the price cap three times a year would be enough to pass on any reductions in wholesale prices to consumers and ensure we would not have a change of bills in the middle of winter.”

Warm This Winter spokesperson Fiona Waters added:

“Without additional support, it will be anything but a happy new year for people trapped in Britain’s broken energy system.

“We need to see the UK Government introduce an Emergency Energy Tariff for vulnerable households and a Help To Repay scheme for those in energy debt.

“Failure to avert this cold homes crisis will lead to pressure on the NHS, a mental health catastrophe and additional winter deaths caused by living in cold damp homes.”

It follows Warm This Winter’s latest research which revealed 16% of adults (8.3m people) live in cold damp homes, exposed to the health complications that come from living in fuel poverty. Of those, vulnerable households and customers on prepayment meters are more likely to live in dangerous, cold damp homes.

The NHS warns that people with damp and mould in their homes are more likely to have respiratory problems, respiratory infections, allergies or asthma.

Unaffordable energy prices are here to stay and even in winter 2024/25, energy bills are expected to be 60% higher than winter 2020/21.

“People have had enough of these sky high energy bills and today’s price cap places yet another huge burden on families who are stretched to the limit, we need an end to this vicious cycle. The UK Government needs to take much more action to help people stay warm this winter and every winter through increased support for home insulation and cheaper renewable energy,” added Fiona Waters.

Advice workers and charities could benefit after new Ofgem rules

Energy suppliers must prioritise enquiries from vulnerable customers and their representatives, under new rules announced by Ofgem. 

A recent report [paragraph 36] by the House of Commons Select Committee on Energy Security, called for firms to set up a priority access line for charities working with households in fuel poverty. This would enable advice workers to access enhanced customer service and enable them to help more people in the long run.

Roni Marsh from South West London Law Centres gave evidence [Q42] to the Committee in September and told MPs:

“I would like to ask for us to have priority access to some of the energy firms, not so that we can spend less time with people but so that we can see more people with the time we have with a priority support route.”

Now under the new Ofgem rules [p8], energy firms have an obligation to “prioritise vulnerable customers who need immediate support, or their representatives acting on their behalf.”

Energy firms now have until the 14th December to put these measures in place.

A spokesperson for the End Fuel Poverty Coalition, whose members include front line community organisations, commented:

“Thousands of hours of advice time is wasted each year by charities waiting on hold to speak to energy firms about the problems faced by the people they support. We expect energy firms to make good on the promises they made to MPs on the Commons Energy Select Committee before this winter.”

The requirements also require suppliers to contact customers if they miss two monthly or one quarterly payment, check to see if they are struggling with bills and, if so, offer support such as affordable payment plans or, if appropriate, repayment holidays. 

Recent research by a price comparison website found that almost one in seven people say they have gone from being in credit to their energy firm a year ago to owing money now.

And as a first step, suppliers will also need to publish the ratings of their customer service. Ofgem will also begin work with the sector to develop new measures of customer service with a view to publishing next year.

Warm This Winter campaign spokesperson, Fi Waters said: 

“Suppliers need to get their act together and give customers the service they deserve. Our Tariff Watch Report revealed companies are charging £242 on average per customer on operating costs.

“Instead of spending the same amount on customer service as they do on marketing, which includes football sponsorship, they should plough that back into providing a proper and effective service for the ordinary people they are making millions from. 

“Whilst we welcome any move from Ofgem to make suppliers more accountable, what Warm This Winter is demanding is an end to our broken energy system and current government inaction that is costing lives, damaging health and wasting money.” 

Jonathan Bean of Fuel Poverty Action said:

“Ofgem’s proposals are a weak response to the awful treatment that many customers suffer.  Vulnerable people are forced to battle for months, causing enormous harm. 

“Rather than punishing them for their failures, Ofgem may even allow energy firms to increase their already bloated operating cost allowances.”

The End Fuel Poverty Coalition spokesperson added:

“It’s not enough for energy firms to just pick up the phone to customers struggling with their bills. With soaring energy debt levels, people need to have their concerns dealt with efficiently and in a sympathetic manner.

“We hope that as the new guidance is implemented, Ofgem will expand the measures it uses to assess energy firms’ performance. As well as ‘contact ease’ being measured and published, the regulator should also consider ‘contact success’ and ‘contact empathy’ as measures of performance for energy firms.”

The new standards – developed following a statutory consultation this summer – aim to make it easier for customers to contact their suppliers, ensure households who are struggling with bills are supported and improve overall customer satisfaction. The End Fuel Poverty Coalition’s response to the consultation can be read online [pdf].

The introduction of the new rules into supplier license conditions means Ofgem claims it will be easier for the regulator to take action where there is evidence of suppliers failing to meet these requirements. 

Consumers need help to repay energy debt, not higher bills

Proposals to increase energy bills further in response to surging levels of household energy debt have been criticised by campaigners.

While energy suppliers made more than £2bn in profits in the first half of 2023 alone, new figures from Ofgem found energy debt reached a record £2.6 billion due to soaring wholesale prices and cost-of-living pressures on households.

A one-off increase to customers’ energy bills of up to £17 a year is now being considered by Ofgem, which the regulator argues will protect firms from customers running up large debts.

But charities and campaigners have called for the introduction of a “Help To Repay” scheme instead of passing the cost of debt onto all households.

The coordinator of the End Fuel Poverty Coalition, commented:

“Households are struggling under the huge weight of energy debt – which has been caused through no fault of their own, but by record energy bills.

“All this time, energy firms have continued to profit from the misery of people racking up debt and living in cold damp homes.

“Rather than pass on more increases to energy bills, the Government needs to work with energy firms to introduce a ‘help to repay’ scheme to help get Britain’s households back onto an even keel.

“Given that the Government is due to hand Norwegian oil giant Equinor a massive tax break for the controversial Rosebank fossil fuel field, there’s an obvious source of money for this support plan.”

Adam Scorer, chief executive of National Energy Action, said: 

“This is the highest level of energy debt we have seen, it is growing quickly and concentrated in the poorest households.”

In June, a range of organisations including the End Fuel Poverty Coalition, Money Advice Trust, StepChange Debt Charity, Scope and National Energy Action wrote to the Secretary of State for Energy Security and Net Zero [pdf] with proposals to set up a ‘Help To Repay’ repayment-matching scheme.

David Cheadle, acting chief executive of the Money Advice Trust, the charity that runs National Debtline, told Press Association: 

“With energy debt at a record high, now is the worst possible time to increase bills further, as Ofgem is proposing.

“Instead, the Government must step in and act now to help households facing unaffordable debt repayments by introducing a Help to Repay scheme to offer payment matching and write-off.

“Doing so would help tackle the record levels of energy debt we are now seeing, without the need to increase energy bills for all customers.”

Fiona Waters, spokesperson for the Warm This Winter campaign, said: 

“The fact Ofgem is considering a £17 additional bill on all households is appalling. They say it’s to cover £2.6 billion of energy debt, but that enormous debt just proves ordinary people cannot keep footing the bill for our broken energy system. 

“The government needs to put the public’s need for an affordable energy supply ahead of the demands of energy giants. 

“Why not use the billions that its giving in tax breaks to Norwegian oil giant Equinor for the Rosebank oil field, which will do nothing to lower fuel costs, to write off this debt that people have through no fault of their own. ”