Weekend press: Energy firms ‘chasing customers to pay more than they can afford’

In our latest round-up of stories from the national press, concerns are raised about energy companies adopting “increasingly aggressive” debt collection practices, foreign secretary Liz Truss says she backs energy sanctions against Russia and Thames Water will reward home developers if they commit to reducing water use in their properties.

UK energy firms ‘chasing customers to pay more than they can afford’

Energy companies are adopting increasingly aggressive debt collection practices and sharpening their communications with customers to increase profits, a leading fuel poverty charity has warned.

National Energy Action (NEA) said householders are being forced into significantly worse situations than in previous years, including higher direct debits without change of usage, unaffordable debt repayment plans and prepayment meters, as energy companies accelerate debt collection to recoup costs.

The charity reported customers being “aggressively chased” for payments and said that letters and other communications from companies have become considerably sharper and arrive faster than normal.

With bills set to rise by 54% in April, which is expected to push even more people into debt, NEA warned that if energy companies do not change their practices it will lead to an increase in energy rationing and self-disconnections.

Customers told the Observer of being chased by debt collection departments within the 14-day bill payment period.

Matt Copeland of National Energy Action said chasing debt had become more important for energy suppliers that were unable to make profits.

“What’s driving this is that over the past few months, suppliers have been unable to make a profit so chasing debt becomes much more important for them as a business and that’s what leads to this change in tactics to reduce levels of debt they see,” said Matt Copeland, the NEA’s head of policy and public affairs.

Energy companies are required by regulator Ofgem to set debt repayment plans based on what customers are able to pay. But Copeland said that when customers go into debt, companies are being “less proactive” in ensuring that repayment plans are affordable for customers.

Meanwhile, he said some customers are being subjected to the “double whammy” of unaffordable debt payment plans and rising direct debits at once. “Overall the process around debt and escalation is sharpening up and we’re seeing people getting into that process a lot more quickly.”

The NEA is seeing particularly acute problems among customers whose debts were transferred to administrators rather than their new supplier when their energy companies went into administration.

“In these cases, we are seeing much more aggressive debt collection practices which bypass a lot of necessary protections, especially for the most vulnerable customers,” said Copeland.

He called on Ofgem and the government to take action to close the loopholes that make it possible, especially ahead of April’s cost rise.

The Observer

Cash will pour in for housebuilders who fit homes with low-flow showers

Housebuilders are to be rewarded for installing low-flow showers and other technologies to help save water.

Thames Water, which is in an area classed as under serious water stress, will give developers a discount on the costs of joining the sewage network if they commit to reducing water use in their properties.

Developers are also being encouraged to retrofit existing homes in their portfolio as they build new ones to achieve “water neutrality”, meaning that the total demand for water in the area is the same after a new development goes up as it was beforehand.

Housebuilders that commit to water neutrality will be paid more than £1,000 per property on any new development.

They will receive smaller discounts by installing technology such as low-flow showers, which use less water and pressure, and systems that use “greywater” from basins, baths and washing machines to flush toilets and water gardens.

The move comes as water companies face pressure over leaks in their systems and over river pollution, which they argue is exacerbated by the addition of new homes that can overwhelm existing sewage systems.

Discounts for sustainable drainage

Thames Water will also offer discounts for homes built with sustainable drainage, which the Government is considering making a requirement for new developments.

That could mean restrictions on non-permeable driveway paving, and more green spaces to allow water to soak into the ground rather than run off into the sewage system via drains.

Thames Water believes that limiting water use and runoff could help to stop the outflow of sewage into rivers from its systems, which occurred for more than 200,000 hours in 2020.

The Environment Agency has warned that parts of England could run out of water within 25 years as a result of growing demand from a rising population and the impacts of climate change, and has called for household water use to be cut by a third.

It has also called for leaks on water companies’ networks to be cut by half. Thames Water is among the worst for leaks, losing around 25 per cent across its network.

The South East is predicted to face shortfalls of up to 1.1 billion litres of water a day by 2040 if no action is taken to limit loss.

The water industry is lobbying the Government for labelling on household appliances to show how much water they use, and new building regulations on new homes to help them use less water.

Andrew Tucker, Thames Water’s head of demand management, said: “To keep taps running for future generations and to protect sensitive rivers and chalk streams, we need to reduce the amount of water we all use.

“This includes us fixing more leaks, but also people using less water in their daily lives.”

The Telegraph 

Foreign Secretary Liz Truss backs energy sanctions against Russia

Foreign Secretary Liz Truss has called for limits on oil and gas imports from Russia, following the country’s invasion of Ukraine.

Truss told Sky News that the G7 nations needed to reduce their dependency on Russian fossil fuels.

She said: “I would support the idea of having ceilings on how much oil and gas is imported from Russia.”

This follows consistent warnings from Prime Minister Boris Johnson that Europe had to cut down its reliance on Russian natural gas supplies, to ensure the continent could stand up to escalating aggression from the Kremlin.

Yesterday, the West further tightened its sanctions against Russia, omitting multiple Russian banks from the SWIFT international payment system, which will make it harder for Russia to trade and for its companies to do business.

“We will hold Russia to account and collectively ensure that this war is a strategic failure for Putin,” said the leaders of the European Commission, France, Germany, Italy, Britain, Canada and the US.

The statement did not reveal the banks that would be expelled, but an EU diplomat has since outlined that 70 per cent of the Russian banking market would be affected.

The group also said it would impose restrictions on Russia’s central bank to limit its ability to support the rouble and finance Putin’s war effort with its $630bn of reserves.

However, the West has continued to avoid any measures that could prevent Europe purchasing energy from the country.

The continent relies on Russia for around 40 per cent of its natural gas supplies, and has already suffered this winter amid shortening supplies from Gazprom – relying on LNG top-us from the US.

By contrast, the UK only relies on Russia for five per cent of its natural gas, with the bulk of its resources coming from both Norway and its North Sea assets.

City AM

People in England told to pay council tax by direct debit to get £150 rebate

Councils across England are urging householders to set up a direct debit payment for their council tax so that they can automatically receive the government’s £150 energy rebate in April.

The payment is designed to help offset some of the huge rise in gas and electricity costs due to take effect the same month and will be paid to those living in properties in council tax bands A-D.

About 80% of households qualify for help, but while the money will be paid straight into the bank accounts of those who have a direct debit set up with their local council, anyone paying by any other means will need to make a claim.

The Local Government Association said this meant the payments would take longer as councils would need to first contact the households and then make pre-payment checks before giving the rebate.

It said in some parts of the country, thousands of households were not set up to receive the payment automatically.

Hull city council, for example, has estimated that it does not have bank details for 60,000 households, while Dartford council has reported that 15,000 households do not pay by direct debit.

Shaun Davies, the chair of the LGA’s resources board, said: “This year will be tougher than most, particularly for those on lower incomes, so it is good that the government is stepping in to provide financial support to help ease these pressures.”

He added: “You can still get the money if you don’t have a direct debit set up, but it could take longer as your council will have to contact you and then you’ll have to make a claim.”

The Guardian

BP to divest stake in Russian state-oil company Rosneft

BP is seeking to divest the near 20 per cent stake in Russian state-oil company Rosneft it has held since 2013 in the starkest sign yet of the corporate backlash against Moscow’s invasion of Ukraine.

The UK-listed oil group said in a statement on Sunday that it would no longer report reserves, production or profits from Rosneft, and its chief executive, Bernard Looney, would resign from the Rosneft board “with immediate effect”.

BP did not specify how and when it might divest the Rosneft stake. It could write off the shareholding, sell it back to Rosneft or find another buyer. Analysts have speculated that a state-backed Chinese or Middle Eastern group might be interested in the shareholding, but it is thought that BP could struggle to find a bidder. The Qatar Investment Authority is already a major Rosneft shareholder.

BP said the changes in the accounting treatment of the Rosneft stake would lead to two “material non-cash” charges in its first-quarter results that could amount to as much as $25bn: an $11bn charge related to foreign exchange losses, and the difference at that time between the “fair value” and the “carrying value” of the stake, which is currently $14bn.

The other BP-nominated director, Bob Dudley, BP’s former chief executive, will also step down from Rosneft’s board, the oil major said.

Helge Lund, BP’s chair, described Russia’s invasion of Ukraine as an “act of aggression which is having tragic consequences across the region”.

He said BP had operated in Russia for more than 30 years, “working with brilliant Russian colleagues”.

“However, this military action represents a fundamental change,” he added. The board had concluded that the company’s involvement with Rosneft “simply cannot continue”, Lund added.

BP has previously been criticised for its 19.75 per cent stake in Rosneft, which has been under US and EU sanctions since Russia annexed Crimea in 2014. But the Russian invasion of Ukraine, which has resulted in sweeping sanctions against Putin’s regime, has increased scrutiny of the partnership.

BP said it would also exit three other joint ventures with Rosneft, potentially bringing an end to a lucrative, if often contentious, 30-year relationship between BP and Russia. BP’s former joint venture with a consortium of oligarchs, TNK-BP, became so fraught in the 2000s that in 2008 Dudley, who then headed that business, was forced to flee the country.

BP sold its 50 per cent share in TNK-BP to Rosneft in 2013, for $12.5bn in cash and a fifth of the state-controlled oil company.

Looney said he had been “deeply shocked and saddened” by the offensive, which had “caused us to fundamentally rethink BP’s position with Rosneft”.

In a statement on Russia’s state-owned news agency RIA Novosti, Rosneft said BP’s decision “destroys a successful 30-year co-operation” and thanked the UK company for “decades of joint work”.

The Financial Times

Utility Week’s weekend press round-up is a curation of articles in the national newspapers relating to the energy and water sector. The views expressed are not those of Utility Week or Faversham House.