‘Significant increase’ in PPM customers using emergency credit

There has been a significant increase in the number of prepayment meter (PPM) customers using emergency credit, a new report has found.

Ofgem has been measuring the impacts of Covid-19 social distancing on domestic energy consumption, financial wellbeing and the concerns of energy consumers around managing bills.

The regulator’s report is based on surveys carried out in October. It found there has been an increase in the number of PPM customers experiencing issues when topping up their meters, with more than a third (35 per cent) using emergency credit – significantly more than the 22 per cent in May.

Meanwhile more than double (12 per cent – up from 5 per cent in May) ran out of credit and were temporarily disconnected, while 17 per cent could not afford to top up their meter (compared to 11 per cent).

Additionally 12 per cent said they had reduced the amount of energy they were using and 11 per cent the amount they put on the meter, but Ofgem was unable to determine whether this was due to self-rationing or a seasonal fluctuation.

One in eight (13 per cent) customers said they had fallen behind on at least one regular household bill in the past few months, rising to more than a quarter (26 per cent) among younger people.

Along with groceries and credit card bills, energy was one expenditure that consumers were willing to cut back on in order to save money.

More than half (55 per cent) said they would try to reduce energy use, compared to 12 per cent who said they would instead defer payment to their supplier.

In general, younger people were more likely to be directly impacted by the response to the Covid-19 pandemic compared to average.

Three times as many of those aged 16-24 reduced their direct debit (18 per cent), fell behind on an energy bill (14 per cent) and requested payment holidays (13 per cent).

Younger people were nearly twice as likely to be concerned about their energy supply (39 per cent) compared with the GB average (22 per cent).

Furthermore, more young people have experienced issues topping up their PPM than older people.

For example one in five of those aged 16-34 have been unable to top-up because they could not afford to, compared to 14 per cent among those aged 35 and above. More have been temporarily disconnected (16 per cent vs 9 per cent) and more have reduced the amount they put on the meter (14 per cent vs 9 per cent).

An extension to furlough

An increase in the number of people struggling to pay their bills was expected when the furlough scheme ended, therefore this week’s announcement that the government would continue to provide support until March has been welcomed.

The Fuel Bank Foundation backed the move but expressed concerns about the long-term prospects for PPM customers.

Matthew Cole, the charity’s chair of trustees, said: “For those who have been furloughed, it will provide some financial relief through what is likely to be a difficult winter for many people, as the country continues to try and get a grip on the virus.

“However, there will be little relief for those who aren’t eligible for furlough support, such as those on zero hours contracts or those who rely on casual overtime. They are the forgotten workers, who we see increasingly needing our help and financial assistance.

“We are deeply concerned about the longer-term impact on households, particularly those with low incomes, that further lockdowns will have on the ability to pay their bills and top up pre-payment meters, and the subsequent increase in the number of people living in fuel poverty.”

Cole added that since the start of the pandemic the charity has seen on average a 23 per cent increase in the need for its services, while some areas have seen demand increase by more than 300 per cent during the spring and summer months.

He continued: “It’s likely to be higher in the coming winter months, with people using more energy to heat their homes while in lockdown, as well as generally using more energy for lighting, cooking and powering electrical items.

“The worry is that despite financial support provided by the furlough scheme, it is just delaying the inevitable job losses once the scheme ends. As jobs are lost, household incomes will come under increasing pressure, leading to a greater risk of self-disconnection for those already in financial distress caused by Covid-19.”