Social tariffs should be issued for vulnerable energy customers

A “social discount” or tariff should be introduced for vulnerable energy customers to improve affordability for low income households.

That was one of several recommendations in a report by Christians Against Poverty (CAP) which surveyed more than 1,000 of the people it provides help to.

A key issue it revealed is that pre-payment meter (PPM) customers are experiencing self-disconnection and self-rationing.

The report found more than half (55 per cent) have gone without heating, lighting, cooking or other energy-dependent activities at least occasionally in the last two years because they could not afford it, with three in ten (29 per cent) doing so weekly.

More than half (52 per cent) of PPM customers helped by CAP show signs of self-disconnection, meaning they face an interruption to their supply due to a lack of credit on their meter.

Almost a fifth (19 per cent) have been without energy for two months or more.

Energy regulator Ofgem estimates that at least 450,000 people experience self-disconnection annually. While the majority are only off supply for less than three hours, disconnection can last for much longer.

Writing in a foreword to the report Paula Stringer, CAP’s UK chief executive, said: “We must question the reliance on prepayment as a debt collection strategy, and increase confidence to ask suppliers for help. We need to help households get back on supply after periods of short-term self-disconnection and, crucially, to ensure everyone can afford to use the energy they need to stop severe rationing and long-term disconnection.”

The report makes several recommendations, including one calling on the government to introduce a social discount or tariff. While the charity did not specify what such tariffs would entail, a spokesperson said it was looking to “start the conversation”.

It recommends Ofgem introduce measures such as stopping standing charges until usage restarts, if a PPM has not been used for a given period of time.

In regards to the priority services register (PSR), it calls on Ofgem to clarify its purpose and create an alternative offering for people with affordability issues.

Suppliers, it says, should introduce an emergency credit guarantee to clearly articulate how the credit works and the charges involved, to increase confidence for people use it. They should also incorporate additional services into the PPM installation processes, such as specialist energy efficiency teams to ensure costs are as low as possible.

Furthermore, retail staff communicating with customers about debt collection should offer them a cheaper tariff.

Responding to the report, an Ofgem spokesperson told Utility Week: “Ofgem share many of the concerns in the report about energy affordability and self-disconnection and will consider these recommendations carefully.

“We will shortly publish final policy proposals to improve outcomes for consumers who self-disconnect and self-ration, following our recent consultation on this issue.

“Our PPM tariff cap continues to protect over 4 million households, ensuring they are not overcharged for the energy that they use.”

A spokesperson for Energy UK said: “The energy sector is committed to improving the services it provides to all its customers, particularly those in need, which is why we established the independently-chaired Commission for Customers in Vulnerable Circumstances, which reported last year.

“We are now taking steps to implement its recommendations including a new Vulnerability Charter, which will be published later this year and will build on existing voluntary initiatives from suppliers.

“The commitments will include suppliers ensuring their frontline staff are fully equipped to identify and offer support to vulnerable households and that the right communication channels are in place so that customers feel able to ask for help when they need it.”

Recently released data from comparison service Uswitch found 2.4 million pensioners keep lights turned off while in the house at night in order to keep their energy bills down. Meanwhile, 1.2 million said they struggle to pay energy bills during the winter, with the average owed by those in debt to suppliers standing at £120.