Vickers: ‘Challenging’ for government to offer support direct to suppliers

Utility Week has heard competing views on the subject of the government intervening in the energy supply market as consumers struggle to pay their bills.

Led by trade body Energy UK, the sector wrote to the department for Business, Energy and Industrial Strategy (BEIS) earlier this week to seek support in dealing with business customers struggling to pay their bills during the coronavirus pandemic.

There has been speculation that a scheme worth up to £100 million a month may be needed to allow suppliers to provide payment breaks.

Concerns have also been raised about vulnerable consumers needing support with their bills, potentially exposing an already fragile industry to further bad debt.

Matthew Vickers, chief executive at the Energy Ombudsman, believes support should go directly to the consumer and posed the question of whether government should provide support to an industry it has been at loggerheads with over the past decade.

Speaking on the Utility Week webinar, Vickers said: “There are different arguments, do you provide that help directly, so would you provide that to consumers and businesses themselves or do you provide it in some shape or form to the industry?

“You would have thought that the better way of doing it is to put it direct to the consumers and businesses if you can, rather than into the suppliers.

“I think for a number of reasons, one is that optical point I have talked about around how does that play in a world of price caps? I think there’s the other question of making sure that assistance does get to where it is needed, to the point of need quickest, are you faster doing that to consumers in that way? It is a really challenging question about how government might look at doing this.”

However, Andrew Perry, energy principal at consultancy Oliver Wyman and who has previously worked for what was then the Department of Energy & Climate Change (DECC), said he believed it would be easier to provide the suppliers with support for bill payments rather than consumers.

Furthermore, Perry said there was a weaker justification for suppliers receiving support if their business customers are using less energy due to the government’s lockdown measures.

“Direct debits look more like a monthly subscription, but actually there is a strong justification that if a customer is not using energy for a significant period (e.g. 1-3 months) that they should be able to reflect that in a reduction of what they pay”, he said.