‘Unethical’ to let PPM customers rack up debt

Good Energy’s chief executive has criticised the current protections in place for vulnerable customers as “an unhelpful fudge”, as he warned debt issues could “spiral out of control” if the use of prepayment meters (PPM) is discouraged.

Nigel Pocklington spoke to Utility Week on the back of continuing pressure on the sector around PPMs, following explosive allegations against British Gas over the way its contractors treated some vulnerable customers and the subsequent fallout. This led to retailers pre-empting calls y Ofgem and government to suspend forced installations.

Pocklington said that only around 11% of the warrants Good Energy applies for actually result in a customer being switched to prepay, and that for many the beginning of the warrant process finally gets the engagement needed for the supplier to support customers with their debt.

Pocklington added: “We are going to need to return to a world where this is a product that is appropriate for some people when properly policed because otherwise debt and payment issues will spiral out of control. It is not an ethical position to allow households to get into unpayable debt.”

He continued: “The bigger picture though is what do we really have here? We don’t have a meter technology issue, we have an affordability problem for a large number of households in the UK given where power prices are. I am very much in favour of a social tariff as a way of solving for this. As long as it’s done properly, i.e. that the state and the welfare system has a much bigger role to play in deciding issues around financial vulnerability.

“The current arrangement we have got, which is a price cap and occasionally a bit grey rules around vulnerability and some element of state support, things like the Warm Home Discount and a large element of implementation by energy suppliers, is a pretty unhelpful fudge of this issue and it may have worked in cheaper energy price days but it doesn’t work now.”

It comes as Good Energy has announced it is rolling out a smart export option to its Feed in Tariff (FIT) customers, allowing them to be paid more for the electricity they export to the grid.

With more than 180,000 generation customers the supplier is the UK’s largest voluntary FIT administrator and the second largest overall, behind Eon.

Under the current scheme generators are paid a set rate which is based on the assumption that they export 50% of what they generate.

However following a pilot scheme which took place in December last year, Good Energy’s FIT customers which move to smart export will be paid for the actual amount of electricity they export, rather than the 50% standard estimate.

Pocklington explained there are two reasons for the move, one being that it is the direction Ofgem would like the scheme to go in.

He added: “But secondly it’s a customer experience point really, which is that if the overall aim is a more dynamic energy grid where people are managing their consumption, and generation in this case, more actively, then it is a fairer and better product to actually pay people based on their own generation rather than a deemed rate.

“It will depend on the customer but for a lot of customers our data so far would suggest they’ll get paid more frankly, because the deemed rate is quite a conservative assumption.”

Good Energy said it plans to roll the service out to 80,000 customers by the end of 2023.

The move to FIT smart export comes as the company plans to become a Smart Export Guarantee (SEG) supplier within the next few months, with Pocklington confirming its new SEG tariff will be called Power For Good.