The Government’s Responses to the Trade and Industry Select Committee’s reports on Debt and Disconnection and Fuel Prices

The ERA has broadly welcomed the publication of the Government’s Responses to the two key reports published by the Trade and Industry Select Committee earlier this year.

The Government has recognised the huge strides the industry has taken over the past few years to protect vulnerable customers and provide CSR schemes to those who need them.

Suppliers have increased their CSR initiatives in the last two years with over £110 million being spent in 2004-2005 on social schemes, much of which is focused on helping to alleviate fuel poverty. Suppliers also provide dedicated services to the 1.5 million customers on their Priority Service Registers (PSR) which entitles them to special schemes free of charge including free gas safety checks and quarterly meter readings. There are also grants, free energy efficiency measures, various payment options and benefits assessments available to vulnerable customers.

In addition the Government has agreed with the industry that an outright ban on disconnection would not be in the interests of customers. Suppliers take a number of practical measures to resolve customer’s debt problems and this programme of activity is ongoing. All the major energy retail companies have committed to the implementation of the ERA ‘safety net’ procedures for disconnections. Thus, the suppliers objectives are to contact and support vulnerable customers and take action to avoid them being disconnected.

Disconnection is fundamentally a last resort and also operates as a deterrent to those people who can pay but choose not to. Furthermore, the Government welcomed the arrangements put in place by the suppliers in September 2004, which ensure that, as far as possible, vulnerable customers are not disconnected for debt.

The Government noted that Ofgem will monitor the effectiveness of those arrangements.

These initiatives, pioneered by suppliers, have contributed to a 90% decrease in electricity disconnections and over 80% decrease in gas disconnections over the last 8 years.

The Response also noted that the ERA is planning to establish a fuel poverty helpline. The ERA recognises that tackling fuel poverty and providing affordable energy requires a multi-level approach. The primary purpose of the helpline will be to encourage vulnerable customers to talk to their supplier either directly or through a third party, such as a health worker, housing association, local authority, benefits office or a range of other voluntary organisations.

Another important development in the energy retail sector is the progress taken on billing. The industry has already gone a long way in improving the customer experience with billing but recognises more can still be done. However, in an industry that delivers 200 million bills a year, billing complaints represent only 0.07 per 1000 customers per month. As a result of working together as an industry, complaints to the industry watchdog, energywatch, have dramatically reduced over the last two and a half years. The Citizens Advice Bureau also reports that fewer than 5% of calls to them were about utility companies (which include water and telecommunications).

As with other sectors, energy retailers recognise that although a lot has been achieved, more has still to be done and there is no room for complacency. This is why we are working closely with the Government, stakeholders and various organisations in the interests of customers.

Fuel prices

The energy retail industry is concerned with the increasing wholesale energy prices and the impact this can have on its customers. “We are heavily impacted by the rising oil and gas wholesale prices. We hope that this price escalation will settle so that we can deliver the affordable and efficient service our customers expect”, said Duncan Sedgwick, Chief Executive of the Energy Retail Association.

Vance Duhaney
Public Affairs Manager
Energy Retail Association