Vickers: Tackling coronavirus puts sector on front foot for net zero

While energy retailers are mitigating the effects of coronavirus, the challenges of building trust within the sector and tackling the net-zero challenge will still be there when the dust has settled. While the pandemic presents perhaps the biggest existential challenge for society since the Second World War, there is much to be optimistic about says Matthew Vickers, chief executive at the Energy Ombudsman.

A month into lockdown and as jobs and livelihoods come under increasing pressure, the energy sector is working full steam ahead to mitigate the ill effects of the coronavirus pandemic. Early on in the crisis the Department for Business, Energy and Industrial Strategy (BEIS) agreed a series of principles with retailers to ensure the most vulnerable consumers were kept on supply.

Despite the monumental upheaval the Energy Ombudsman’s chief executive Matthew Vickers remains optimistic about the challenges that lie ahead. He believes the swift agreement of the principles came as a result of a drive in recent years to focus on vulnerability as a core issue.

“It’s been a pleasant surprise really when you look at how quickly everyone got focused and the level of alignment there was”, Vickers tells Utility Week.

“I suppose, because we’ve all talked about it so much over the last couple of years, everyone seemed very clear that we needed to put that focus on vulnerability. So I think that’s a good thing in effect, that’s really become part of the DNA because everyone knows the need to focus there.

“It shows you, when we have to strip things back to the essentials, just how well we’ve been able to collaborate and work together as different bodies within the sector.”

Specifically, the principles agreed between BEIS and retailers focus on ensuring the most vulnerable, such as those on pre-payment meters (PPM), are kept on supply throughout the crisis.

While the sector rightly focuses on the immediate challenges posed by the pandemic, Vickers does believe the collaborative approach taken by BEIS and retailers bodes well for tackling continuing long-term issues such as the challenge of achieving net zero by 2050 and rebuilding trust in a sector which has faced heavy criticism in recent years.

“Some of the things that we’re learning, the partnerships that we’re forging and the ways that we’re having to work together, and that real focus on showing what can be done really quickly when there is that kind of threat will stand us in good stead, it’s not wasted. We’re developing that kind of capability in those relationships which is going to be what we need for the net zero challenge,” says Vickers.

For the ombudsman, it’s clear there is a lot of mileage in the work being done to tackle coronavirus.

“I think we’ll find some of the skills, the aptitude and the mindset that will develop coming through this will stand us in better stead. Normally you’d say there’s a once in a generation kind of existential threat. Well there’s more than that here at the moment between this and net zero. I think we might find that one, ironically, helps us with preparation for the other. It’s the same muscle memory that we’ll need, it’s the same mindset, it’s the same skills. So let’s make sure that whatever the new normal looks like, this is our opportunity to ask ‘how do we build from that?’”

Resetting trust

There is also the issue of trust which has been a major problem within the wider utilities sector, not just in energy retail. Vickers believes that coronavirus has presented the sector with an opportunity to remind people, if it were needed, how utilities are an essential service and that now is the time to “reset” trust.

“If you were looking for a moment when you could reset that trust point, this is. There is going to be a massive challenge with affordability, but how we deal with that is not just down to suppliers, it’s down to the whole system and how we involve government and wider society in this. This is going to be an opportunity where if we reset right from this it could have us raring out the blocks with some of those things about trust, attitude, relationships and how we get to net zero. It’s not going to be easy but it’s a big opportunity.”

In addition to the opportunities that could arise from coronavirus, there are still challenges for the sector. Under normal circumstances the Energy Ombudsman sees affordability as the main challenge for consumers, and the current crisis is no different. Yet Vickers does concede that the service was surprised by the speed at which small businesses presented with affordability issues.

SMEs, the backbone of the economy

Currently the Energy Ombudsman deals with domestic consumers and microbusinesses, but Vickers says the increase in small and medium enterprises (SMEs) attempting to seek help from the service highlights a gap in protection. The assumption is that once a business gets to a certain size it will have access to legal avenues to resolve disputes, including using the courts.

He continues: “Particularly at a time like this, the reality is that for SMEs you are still talking about having the time and effort to go and be able to do all of this through the courts, never mind can the courts cope because we are going to be talking about hundreds, if not thousands, of these cases. All of those questions about affordability, debt, payment, whenever we come out of this, this isn’t going to have gone away.”

“At a point when we are going to be trying to recover the economy and help small businesses, where those who have survived will still be in a really fragile state, you’d want a quick, easy way of dealing with that, which is more along the lines of an ombudsman rather than having to go to court,” he adds.

For Vickers, the industry has made great progress with vulnerability but he recognises that businesses will be a vital component of the economic recovery once the pandemic has ended.

“There has been some great progress getting to grips with consumer vulnerability, but this is now throwing up something that says, ‘what about business vulnerability?’ Because right now that’s what we’re talking about, the heartbeat of British industry, and a big part of what we’re all going to be relying on, to get the economy back on its feet is going to be that backbone of SMEs. That’s where we can see that level of vulnerability. And it would be great if we were able to deal with that as an ombudsman,” he adds.