Brearley rejects industry bid to shift blame over PPMs

Jonathan Brearley has said he is “deeply concerned” and “disappointed” after Energy UK’s chief executive sought to shift responsibility onto Ofgem for suppliers breaking their license conditions by forcing vulnerable customers onto prepayment (PPM) meters.

The regulator’s chief executive made his comments to the business, energy and industrial strategy (BEIS) select committee on Tuesday after Emma Pinchbeck was quizzed on concerns about mandatory PPM installations.

“If rules are being broken, we want to know about them and they need to be enforced,” she said.

But the Energy UK chief executive said there are questions about Ofgem’s capacity to enforce suppliers’ license conditions, which include a multi-stage process for forcing  customers to take PPMs.

“If those rules are being broken, firstly we want to know where the cases are and they should be raised with suppliers but secondly there is an Ofgem job to enforce those rules. We have raised concerns about the regulator and whether it is able to do its job properly.

“We have a regulator doing that job with very extensive rules it should be enforcing but as suppliers we can’t do this on our own for behavioural and regulatory reasons,” she said, explaining that some customers are nervous about discussing financial problems with their energy suppliers.

“We expect member companies to be doing the job properly but if the regulator or Citizens Advice is seeing things, that should be reported.

“We want to see it (bad practice) stamped out: we are an industry that fundamentally serves people.”

Pinchbeck said that at around £2.5 billion, the energy supply sector’s debt book is currently at a “10 year high”. Of that sum, she said £2 billion is bad debt, which has to be collected off all bill payers if not paid.

However, Brearley told the committee he was “deeply concerned” about Pinchbeck’s comments.

“The idea that the industry says the way we obey the rules is to make regulators enforce more shows a deep problem with the culture and the approach that some in the industry are taking.

“Step one for a CEO of any company is to make sure they are looking after customers.”

Pressed later in the session, he said Pinchbeck’s comments were “quite disappointing” and a “step backwards.”

“What concerns me is, if the industry’s answer is genuinely that the regulator’s role is to force us to look after vulnerable customers, there is still a long way to go before we get the right culture in the industry.”

While acknowledging that the comments did not reflect his day to day engagement with the industry and that companies are under “enormous pressure”, Brearley added that “the fact that the trade body put it that way concerns me”.

He also told the committee that reductions in global wholesale gas prices will push the level of Ofgem’s price cap below April’s new £3,000 limit for the government’s Energy Price Guarantee, beyond which the government has said it will cover customers’ electricity and gas bills, by July.

“The expectation on existing projections is that the price guarantee will be breached by the price cap in July, which means bills going down and quite significant reductions in the fiscal cost of the Energy Price Guarantee.”

He also said the energy supply sector is “more financially resilient than when the crisis started”, pointing to how there have been no “major failures yet” over the course of the winter despite the pressures suppliers have been under.

And Brearley said that the industry has reached the “limit” for customers who could be incentivised to move onto direct debits by being offered cheaper tariffs to make the switch.