Ofgem has issued provisional orders to Utilita and Scottish Power for failing to support vulnerable customers.
Several failings have been reported by Ofgem following a review conducted into Scottish Power and Utilita. For Scottish Power, this primarily revolves around the way in which it has set up its debt repayment plans and deals with customers currently struggling to pay energy bills.
The UK government has already laid out measures to mitigate the impact of the energy crisis via the introduction of the Energy Price Guarantee from 1 October. This will see the average domestic energy bill at £2,500 by setting the unit prices at 34.0p/kWh for electricity and 10.3p/kWh for gas for variable tariffs. This is expected to cost upwards of £100 billion.
However, many households will struggle to pay their energy bills despite these measures implemented by the government. Energy suppliers have a huge role to play in ensuring vulnerable customers will be supported. The provisional orders to both Utilita and Scottish Power will be alarming for the sector and will need to be addressed urgently.
To solve this issue, Ofgem has laid out conditions to fulfil Scottish Power’s obligation to support vulnerable households.
One condition calls on the energy supplier to pause disconnections for customers with active, agreed or overdue repayment plans of £5 per week or below. Alongside this, Scottish Power should review and update all call scripts, training materials, policies, communications with customers and provide training for company staff.
This would be done to ensure they reflect that there is no default minimum repayment amount when sufficient information is available on a customer’s ability to pay. Scottish Power should also contact and review all customers on debt repayment plans of £5 per week, per fuel, or below to ensure they are based on each customer’s ability to pay.
Ofgem also recommends that the supplier should commission an independent audit of its own processes to assess whether they have been effectively implemented and provide the report to Ofgem by no later than 31 October 2022.
The firm must fully engage with Citizens Advice, Citizens Advice Scotland’s Extra Help Unit and Ombudsman Services to ensure all referrals and off supply incidents are reassessed in line with the service level conditions.
The final condition requests Scottish Power to continue to engage with Ofgem over the coming months to ensure compliance with the relevant standard licence conditions and other provisions of the Order.
“These Orders to Utilita and Scottish Power are a clear signal to suppliers about the vital importance of protecting customers,” said Cathryn Scott, enforcement and emerging issues director at Ofgem.
“The rise in cost of living is an increasingly important public issue, and we expect urgent and immediate action on the points raised, as well as constructive engagement with Ofgem during the process. Suppliers must consider a customer’s vulnerability and ability to pay to a closer degree, particularly with what is likely to be a very challenging winter for many.”
Alongside Scottish Power, Utilita has also been found to be failing to deal with all customers, including vulnerable customers, customers on the priority services register (PSR) and customers in debt.
Ofgem states that Utilita must comply with its licence conditions that govern additional support credit and ensure that pre-payment meters (PPMs) are safe and practicable for its customers.
The energy supplier is now required to cease the use of call scripts which tells customers that additional support credit is not a licence requirement. Ofgem also calls on Utilita to take ability to pay into account for all repayment plan calculations and on each occasion that additional support credit is offered and calculate the instalments for repayment.
The final recommendation is for Utilita to develop its additional support credit policy to ensure compliance with the relevant SLCs.
Ofgem itself had been called upon to increase support for vulnerable households with The Good Law Project having threatened Ofgem with court action if it failed to comply with its legal duties to protect vulnerable customers amid plans to raise the energy price cap in mid-August.
This escalated when Ofgem announced an energy price cap rise to £3,549 per year in late-August prompting The Good Law Project, Fuel Poverty Action and the Highlands & Islands Housing Association’s Affordable Warmth Group to issue plans to sue Ofgem on allegations it has “failed to mitigate the impact of rising energy bills on consumers”.
The provisional orders issued from Ofgem have also prompted a response from Uswitch.com which stated that, amid the energy crisis, it is vital that energy suppliers support vulnerable households.
“At a time when they are under severe financial pressure, it is even more vital that all customers are given the right support with their bills,” said Richard Neudegg, director of regulation at Uswitch.com.
“Scottish Power and Utilita appear to have failed to meet some obligations to their most vulnerable customers and Ofgem has rightly called on both suppliers to turn things around quickly and submit reports by the end of October. Even with the government’s help, people still face high energy bills this winter that many will find difficult to pay.
“Ofgem’s full-market review of providers’ assistance for consumers who are struggling with their bills must be welcomed. Suppliers must also ensure that they are maintaining high levels of customer service at this tough time.”
