Using data to protect the most vulnerable

The task of protecting vulnerable customers during the harsh winter months has never felt so urgent as it does now. Household budgets are being squeezed to unimaginable levels by the cost of living crisis, exacerbating seasonal challenges like the recent cold snaps, and ongoing ones like the fact that so many people live in energy-inefficient homes.

The charity, National Energy Action estimates that there were 4,020 excess winter deaths last year in England and Wales, the equivalent of 45 per day in winter. It’s now warned that the figure could be higher this year as more households find themselves in fuel poverty.

Energy suppliers have an ethical duty to protect those who need it most – but what steps can they take when the number of people now falling into the vulnerable category is rising? Specifically, how do you identify, at a very granular level, the customers most likely to become seriously ill or even die, based on a complex combination of factors including their age, location, ability to pay and reported health conditions?

To answer the question, it’s worth casting your mind back to Ofgem’s Stakeholder Engagement and Consumer Vulnerability Incentive Panel Report from September. It stresses that ‘accurate data analysis can lead to a clear identification of those most in need and that senior management buy-in and an agile approach can lead to increasingly effective targeting of support to those who most need it when they need it’.

Nobody would disagree with this – the problem is that many energy companies have significant gaps in their data because it’s siloed, incomplete or out-of-date. Some will be grappling with datasets they inherited from suppliers who’ve gone bust, or trying to keep up with sudden changes in someone’s circumstances, like redundancy.

Unless companies can get their data in order so that they can leverage the full complement of analytics tools – including machine learning and predictive modelling – they’ll remain reactive, not proactive.

From data to action

Fast and accurate data modelling, using the technologies mentioned above, allows energy companies to understand the impact of macro changes, such as a rise in wholesale gas prices, or a change in government policy, on certain groups of customers. Suppliers could also use weather data to understand whether a cold spell might push people in some postcodes but not others into arrears.

At an individual level, smart meter data combined with other datasets could highlight whether a degradation of usage is the result of someone being forced to cut down rather than choosing to. Analysis could reveal the point at which suppliers should intervene with targeted support, as well as broader education campaigns on how to stay warm during the winter or how to sign up to the Priority Services Register (PSR).

Looking ahead

A report in this publication last year underlined the value of a shared PSR list, making data on vulnerable customers available to energy and water companies, as well as support services. As one industry leader points out, the technology exists to make it a reality – paving the way for suppliers and other stakeholders to be able to deftly identify vulnerable people.

Against a backdrop of energy price volatility, the ability to analyse data accurately and at speed is critical for building resilience in the sector and the economy.

Back in December, analysts warned that UK energy companies could be exposed to £1.9 billion-worth of debt, some of which would be unrecoverable, due to the ongoing energy crisis. The collapse of around 30 energy companies in 2021/2 was also a sobering reminder of just how precarious the industry is at the moment.

More than ever, suppliers need to be able to flex to changes in a customer’s circumstances and reduce the likelihood that they’ll suffer a drop in revenue because they’ve defaulted on their bill. Importantly, data-driven insights help to improve customer experience and restore trust, which has taken a battering over the past year or so.

We don’t yet know what the impact of this winter will be, nor what will happen when the energy price cap is removed in April. Certainly, many people will have seen their quality of life and health suffer because they cannot afford to heat their homes properly.

While the events of the past few years have been extreme, they demonstrate that we never know what challenges lie ahead. This is why energy and utilities suppliers must be able to derive insights from the latest data in order to optimise both their strategies for supporting vulnerable customers, as well as the business.