Latest PPM warrant backlash prompts call for further change

The way energy suppliers assess their customers should be overhauled to avoid vulnerable members of society being unfairly forced on to prepayment meters (PPMs), an industry expert has suggested.

Centrica’s former credit and risk manager Ian Parry told Utility Week that suppliers must be smarter by using third party data sources to check a consumer’s vulnerability before applying for a PPM warrant.

Parry’s comments come after Scottish Power was recently granted a warrant to forcefully install a PPM in the home of a mother with a six-week-old baby, despite tougher rules coming into force banning the forced installation of PPMs in households with children aged under two years old.

A report by The Times states that a debt agent for Scottish Power gave detailed evidence in relation to 20 cases heard during a recent court hearing where the supplier applied for warrants and said there were no known vulnerabilities in the homes.

Yet the paper has since established that the account holders in at least two of these cases are mothers of children under two, with one having given birth in September.

The news has prompted an intervention by energy security secretary Claire Coutinho, who has written to Scottish Power’s chief executive Keith Anderson following a call with him on Wednesday (1 November). Coutinho has additionally spoken with Ofgem boss Jonathan Brearley on the matter.

In her letter to Anderson, she said: “It is your duty to ensure you have taken all practicable steps to assess the vulnerability of households. In this case I understand you made at least 10 attempts to contact the customers and ascertain their situation. I know we will both agree that the last thing any of us want, is a repeat of the abhorrent practices that took place last year.

“The previous secretary of state wrote to you in January and February this year on the importance of protecting your most vulnerable customers, and as I said to you on our call yesterday, my view is exactly the same. The unacceptable practices we saw earlier this year cannot happen again and I expect you to be taking your duties seriously.”

Scottish Power has assured Ofgem that no PPM will be forcibly installed until it meets the regulator’s restart conditions and as it stands no company has attempted to install a PPM in breach of Ofgem’s conditions.

In its defence the supplier did however say it had made multiple attempts to contact its customers before applying for warrants.

After the issue was brought to light, Scottish Power added the customers to the Priority Services Register, cancelled the warrants and has said it will work with them to agree an affordable repayment plan. (See the supplier’s response below.)

Commenting on the matter, Parry told Utility Week that suppliers should be using more tools such as third party data and the help of charities to ensure the most vulnerable customers are dealt with appropriately.

He said there can be as much as 20 steps in the debt collection process before a PPM is forcefully installed, with each getting “more scary” and potentially pushing customers further away.

Parry explained that while some retailers, notably larger players, have the capacity to access and use third-party data, some smaller companies do not have this capability. Third party data sets which could be beneficial to energy suppliers could be sourced from banks, government or other utility providers.

Asked what the solution to this is, Parry responded by saying Ofgem should take the lead and require suppliers to access third party data, contact customers multiple times and then at some point step out of the process by asking a third party such as a consumer charity to engage with the consumer on their behalf.

“So the whole tone of things starts to change at that point and the consumer might think ‘they really are trying to help me because they’ve got this debt charity involved’,” he explained,

He added: “Ofgem could put a few steps in place to encourage suppliers to start looking a bit more smartly at the processes and strategies that they could be using rather than just relying on brute force, stepping from one stage to the next and just saying ‘well, we tried to contact them 20 times and it was only when we arrived at the property that we realised that they were in a vulnerable situation’.

“With the technology and the data that we have available, we can do better and we should do better.”

A Scottish Power spokesperson said: “As we made clear in court, the warrants granted are for customers who have repeatedly refused to engage with us to discuss their outstanding debt and agree an affordable repayment plan. As a result, we were not aware of their individual circumstances at the point of warrant application, despite numerous attempts to contact them.

“No prepayment meter installation would ever go ahead if any high-risk factors were identified at the visit, in line with Ofgem’s Code of Practice and licence conditions, and no warrant action can currently be progressed until Ofgem agrees.

“This highlights the difficulties suppliers face when customers won’t engage with them when they run into difficulty…given we now have additional information about both customers, we’ve added them to the Priority Services Register, cancelled the warrants and will work with them to agree an affordable repayment plan.”

An Ofgem spokesperson said that as yet, no supplier has met the conditions required to be able to resume their PPM warrant activity.

They added “Obtaining a court order is only one part of the process and there are other safeguarding steps that suppliers must follow before any involuntary installation could take place.

“Alongside this, we have put in place new rules which expand the protected ‘do not install’ category of customers to include households with a child under two years and anyone over 75 with no support in their home.

“Our terms could not be clearer and we will not hesitate to take action against any supplier who breaches these conditions.”

A government spokesperson meanwhile said: “No warrants should be acted on until Ofgem have agreed this can take place, on a supplier-by-supplier basis and we will be seeking updates from suppliers and Ofgem in light of these highly concerning cases, to ensure installations only resume when it is crystal clear that no vulnerable families will be impacted.”