The cold light of day

It has emerged that two million pensioners are struggling to pay the bills – and eat – because they are on standard variable tariffs (SVTs). Utility Week speaks to four energy suppliers about fuel poverty, and what exactly they’re doing about it.

Charities including Age UK and Christians Against Poverty say they fear a health crisis is imminent, as a poll for comparison website Comparethemarket this week found 20 per cent of elderly people are eating less to offset high energy bills.

Energy bills increased by an average of 14 per cent last year, with customers on SVTs paying the most. Over a million told the poll they will struggle to pay their bills this winter, and 1.3 million (11 per cent) said they could not afford any increase.

Twelve per cent said their health had already suffered because they limit the amount of heating they use, and more than a third (38 per cent) ration their energy because of the cost, according to the poll of 2,000 respondents aged 65 or over.

The survey also found people aged 65-plus who changed supplier in December saved an average of £200 – but older people switch less than all other demographics, which, according to the survey, is because they get confused or aren’t online.

The problem is that the human body starts to lose its ability to regulate temperature with age – in a healthy person it starts around 75, but it’s earlier for those with medical conditions. That is why hypothermia is a major risk for the old – they need more external heat to keep warm than a younger person and are unable to recognise if they are becoming dangerously cold. That is why people die of cold in winter, and that is why fuel poverty among the older generation is important. Age UK’s website states one older person dies from the cold every seven minutes during the winter.

Ofgem said this month that an energy price cap could be implemented by next Christmas, but 56 per cent of respondents to the Comparethemarket survey said they do not believe this will reduce their bills. There were fears the cap would be set too high, or that suppliers would make up the reduction in their profits through hidden charges.

In response, Dermot Nolan, chief executive of Ofgem, told a parliamentary select committee he accepted the regulator “should have done better with vulnerable customers”.

Since 2001, the government has had a legal duty to set out policies that will, as far as possible, cut out fuel poverty. Since then a variety of schemes and measures have been introduced, but the number of households assessed to be in fuel poverty has not fallen in line with the targets.

At a recent fuel poverty summit the agenda included discussion around measures to help customers move away from pre-payment meters and extra support for those struggling to heat their homes. Ministers called on energy companies to make data publicly available to ensure issues facing vulnerable customers can be tracked and managed.

In turn, suppliers agreed to report back to government ministers on the progress of helping those who are struggling with their energy bills. The outcomes of the summit will feed into the forthcoming fuel poverty strategy, which is open for consultation until 1 February.

But what exactly are companies doing to tackle this important issue right now?

EDF

In order to identify those in need, EDF says it trains its customer contact teams to identify where extra help may be required, which includes tariff advice, energy efficiency advice, referrals to partners who can provide wider financial capability help, or a benefits health check. When discussing a repayment scheme, it says its teams always consider a customer’s ability to pay to ensure the amounts agreed are appropriate.

The identification process includes adding the customer to the Priority Services Register, which provides additional services to customers, including different bill formats, gas safety checks, password schemes, and a direct number for a specialist help team.

In 2003 EDF was the first energy company to introduce a fund that customers can apply to for a grant, to help lift them out of arrears and the debt cycle.

Last year EDF says it made targeted outbound calls to identified groups of customers to offer help including tariff advice. One of the targeted groups included them being on standard variable tariffs (SVTs).

This year it introduced a Safeguard Assist Tariff, aimed at customers entitled to receive the Warm Home Discount payment and on SVTs to move them to a better rate from February onwards.

EDF also has an eco-scheme to provide low cost insulation, (which can be free, based on eligibility criteria).

Ovo

The Ovo Energy Fund exists as part of being an obligated supplier under the WHD scheme. Ovo also partners with the Centre for Sustainable Energy, who operate a dedicated Energy Advice line for its customers and offer debt charity referrals to customers who need extra support.

A spokesperson says: “We aim to ensure all of our customers have the information they need to decide which tariff is best for them. To help vulnerable customers, we rolled out vulnerability identification training in 2017 to identify if customers need support, for financial or other reasons. We also changed our ‘discretionary credit’ policy in 2017 to ensure PAYG customers with financial vulnerability are supported through periods of financial instability. Following Ofgem’s recent consultation, the vulnerable customer safeguard tariff will also provide further protection for our vulnerable customers.”

Npower

Npower’s Energy Fund offers tailored support to customers struggling to pay for energy debt. With support from the fund, customers are also encouraged to regain control of their overall finances and become financially stable so they’re able to pay for future bills. Grants are awarded to help clear energy debt for customers who are committed to making regular payments over a three-month period for their ongoing energy use.

The Health Through Warmth (HTW) scheme helps people who fall outside statutory grant eligibility for heating measures – vulnerable, low income clients who have long term health conditions and inadequate heating or insulation. To be eligible, you don’t need to be or become Npower customers. The scheme, which has now run for 17 years, has helped over 83,500 people and provided assistance worth £90 million, including £14.3 million from Npower’s own HTW Crisis Fund.

The Npower Fuel Bank launched in April 2015 and aims to remove the stark choice between heating or eating. It has now issued around 37,000 vouchers for foodbank users with pay as you go meters, many who have gone without heat or electricity to save money. It currently runs in 14 areas and 65 foodbank centres across the country. To date, of the 85,000 people helped, around 52,000 were adults and 33,000 children, and they’ve accessed over £1.5 million worth of energy support. To help scale up the Fuel Bank scheme, the Npower Foundation was launched in November 2017.

For customers who receive the WHD and are also on a SVT, Npower’s Safeguard Tariff will protect customers from price increases. The Safeguard Tariff, which is set in line with Ofgem’s Vulnerable Customer Cap, will become effective on 2 February 2018 and will affect approximately 115,000 Npower customer accounts. For a typical dual fuel customer, the cap will mean an annual reduction of £231 for Receipt of Bill customers, or £136 a year for customers who pay via Direct Debit (figures based on typical domestic consumption).

A spokesperson says: “In addition to the Safeguard Tariff, we’ve contacted all customers in receipt of WHD with higher than average consumption to ensure that they have been offered energy efficiency support and a tariff health-check.

“We are also continuing to trial the Tariff-Check hotline for customers to discuss the best tariff for them. In 2017 Npower received 132,736 calls that generated 92,747 switches. Also, our ongoing written communications clearly state our cheapest available tariff.”

British Gas

The British Gas Energy Trust helps clear energy debts for customers who are struggling and pays for new energy efficient appliances. British Gas has funded the Trust since 2004 and has provided more than £100 million worth of support to people in fuel poverty, regardless of which energy supplier they are with.

The company has worked with National Energy Action (NEA), the leading charity for fighting fuel poverty, for over 30 years. This year it will be collaborating with them on the joint Energy Impact Awards, which celebrate best practice in battling fuel poverty, along with a number of other projects.

It says it trains all its agents to recognise vulnerability, “through active listening and questioning. When a customer on a low income is identified they are transferred to our specialist Priority Services Team. This is a 300-strong group of staff in Leeds who will talk to the customer about the right tariff for them.”

Fuel for thought

A fuel poor household is defined as one which needs to spend more than 10 per cent of its income on all fuel use and to heat the home to an adequate standard of warmth. In England, this is defined as 21°C in the living room and 18°C in other occupied rooms. The current definition of fuel poverty states that it is driven by three key factors: energy efficiency of the home, energy costs, and household income.

Don’t say they didn’t warm you

The Warm Home Discount (WHD) scheme was introduced the government in 2015 with the aim of tackling fuel poverty. It’s a benefit payment which provides a £140 a one-off discount on electricity bills for eligible customers between the months of October and March – applications open in August of each year. Some smaller suppliers voluntarily participate in parts of the WHD, but all energy suppliers with over 250,000 domestic customers are required to participate in every element of the scheme.