Response to Ofgem’s call for evidence on prepayment self-disconnection and self-rationing

Citizens Advice welcomes the opportunity to respond to this call for evidence on self-disconnection and self-rationing [ 330 kb]. This submission was compiled with the input and help of the Extra Help Unit.

This policy issue has been a priority for Citizens Advice and the Extra Help Unit for some time. Our recent research showed that in the past 4 years since our last survey there has been relatively little progress on this issue, with 16% of prepayment customers still self-disconnecting at least once a year.

Within this we estimate that around 140,000 households are going without energy because they cannot afford to top-up their prepayment meter (PPM). When we looked who was in this group, the one facing the biggest barriers to staying on supply, we found that 88% of these households contained a child or someone with a long term health condition, with 50% reporting mental health issues. A fair society and a properly functioning energy market should be guaranteeing these people a reliable energy supply, rather than being left in cold, dark homes. Our survey didn’t cover self-rationing but we know from the cases we help with that there are many people who will reduce their energy usage without actually going off supply when they are worried about affordability.

The Extra Help Unit’s case work highlights that there can be big differences in how suppliers respond to those who are off supply. Some newer companies are either difficult to contact by phone in the first place or are initially surprised by the expectation that they provide some temporary credit to help keep people on supply. The vast majority of suppliers will supply some form of discretionary credit when requested although some of these will apply arbitrary limits to requests, even if previous credit has been paid off. The good practice we see involves using specially trained staff to make a judgement about the best way forward based on an understanding of the customer’s circumstances. This might be further discretionary credit, a voucher (supported by recent changes to warm home discount), moving the household back onto a credit arrangement or referring them onto other support such as debt or energy efficiency advice.

The considerable improvements in the support offer in recent years will only be effective if people are prepared to ask their supplier for help. Our research found just 9% of people who could not afford to top-up their meter had asked their supplier for help. It is clear there is much work to do from all in the industry to persuade people that their supplier will offer support if they are struggling to pay for their energy. It is also clear that, given the vast majority of people without enough money to top-up are on benefits, the Department for Work and Pensions (DWP) is a stakeholder with a central role in supporting people to stay on supply.

Finally, although smart meters come with some of their own operational limitations in the switching process, the technology offers huge potential improvements to both the user experience and the support offer for prepayment customers. Online top-ups with alerts and reminders will remove many of the practical problems associated with traditional prepayment meters. Information on usage should also allow suppliers to identify who needs help and tailor that support accordingly. A smarter future energy market cannot be one where vulnerable households do not have a reliable energy supply to their homes.