Utilita boss: Why does Ofgem think we’re the bad guys?

Utilita boss Bill Bullen has slammed a number of recent decisions by Ofgem, which he says “decided we were bad” and unfairly placed the supplier “on the naughty list”.

Speaking to Utility Week the challenger brand’s founder stressed relations between Utilita and Ofgem were not all negative but he described the current situation as “very frustrating”.

He added: “I can understand the sensitivity, they’ve obviously taken a lot of criticism about their management of the market over the last decade… they’re being a little bit subjective and selective about exactly what they’re going about doing.

“And it’s very frustrating. We always seem to be one of the bad ones. But actually, objectively, if you look at it, I think we’re doing really well.”

Bullen was specifically referring to two incidents which have occurred over the past year.

Although Utilita is predominantly a prepayment meter (PPM) specialist supplier, it does serve a small number of direct debit customers and in July was highlighted by Ofgem as having inadequate direct debit processes in place.

Furthermore, the supplier was recently ordered by Ofgem to stop telling people they are not required to provide additional support credit to vulnerable PPM customers who are thought to be self-disconnecting.

‘It was absolutely farcical’

Bullen explained that Utilita already had processes in place to issue additional support credit before it became an official licence condition. A feature on the supplier’s app, called Powerup, allows customers to top up their credit up to £100 to ensure they do not go off supply.

He said after Ofgem made providing additional credit an official licence condition, Utilita was deemed not compliant with the new rules as it would not allow customers with outstanding additional credit to top up until this was paid off. It was therefore issued with a provisional order, despite the fact Powerup was used 1.3 million times in the last 12 months.

The supplier has since changed its software to allow customers to top back up to £100 without first paying off the previous credit.

He said: “So that’s the resolution to the problem. But we feel that Ofgem made an absolute meal out of it as they have done on the direct debit issue earlier in the year, that was just absolutely farcical.

“The objective analysis showed that of the 500,000 customers who’d seen a more than 100% increase in direct debits following the 54% increase in prices, only three of them were Utilita customers. Yet we were put on the naughty list of businesses that had non-compliant or insufficient controls around direct debits.

“The reality is, all we were missing was a little document that said ‘this is our process’. The fact that we coded a computer program so that that whole direct debit thing is completely automatic and follows a set of objective rules, which is why we were such a small part of the objective analysis, meant nothing to Ofgem. They decided we were bad.”

Elsewhere, Bullen accused Ofgem of “constantly increasing the burden on us from a regulatory perspective”, as well as “constantly snipping away at the money we have to invest in business and have to operate the business because of the way that price capping works”.

“They pretty much ensure that there’s zero chance of making money out of supplying pre-pay customers,” he added.

An Ofgem spokesperson said in response: “Ofgem’s priority is to protect consumers and we continue to hold suppliers to account to ensure they are delivering the best possible service for their customers.

“We work closely with suppliers and we also understand the pressures they are facing as a result of high energy prices. We believe our decisions deliver the right balance and both protect consumer interests while also being fair for suppliers.”

Ending the PAYG stigma

Bullen was speaking as Utilita issued a “red flag” report to the Department for Business, Energy and Industrial Strategy (BEIS) and Ofgem on Friday (2 December), requesting urgent intervention to avoid excess winter deaths caused by households self-disconnecting.

It warns that of the c.4 million PPM customers in the UK, 2.25 million are on traditional legacy meters that do not have smart capabilities. This means in the event they are unable to add credit to their meters, their supplier will not know they have self-disconnected, nor will they be able to provide financial assistance.

The paper makes a number of recommendations for improving services for legacy pay as you go (PAYG) energy customers, including prioritising smart meter installs. Suppliers must also not impose a separate standing charge on low, or no, usage PPM customers.

Organisations such as Smart Energy GB, the campaign behind the smart meter rollout, must “urgently improve education and myth-busting” to encourage smart meter take up.

Additionally it calls on consumer bodies, charities and UK media to become “better informed” about the issues to avoid “misleading consumers and fuelling the outdated PAYG stigma”, while energy retailers, BEIS and the DWP must collaborate to better identify a simple strategy for helping every household avoid self-disconnection.

Bullen added: “Unless the customer has refused a smart meter, there’s no excuse for legacy meters to exist today. Having no choice but to sit at home without heating or light is unacceptable and our government and the regulator must intervene immediately to stop self-disconnections for good.”