Wednesday 14 November 2018

Views sought on energy PPM customers’ self-disconnection

Views sought on energy PPM customers’ self-disconnection

Ofgem is calling for evidence from interested parties on prepayment meter (PPM) customers experiencing self-disconnection and self-rationing and the quality of support and supplier practices in this area.

It is also seeking views and evidence on the groups of consumers most at risk, how self-disconnection and self-rationing are being monitored by suppliers and how they can work together with other organisations to achieve “good consumer outcomes”.

Self-disconnection occurs when PPM customers experience interruption to their electricity or gas supply due to a lack of credit on the account or meter and self-rationing is when they may deliberately limit their energy use to save money or restrict spending in other essential areas to keep their meter topped up.

PPM customers are more likely to be vulnerable and fuel poor and the regulator’s data shows one in 10 PPM customers temporarily disconnected from their energy supply last year.

Ofgem said it is concerned about the negative impact of self-disconnection and self-rationing on vulnerable customers as they could cause or exacerbate existing health problems where a customer has to choose between heating their home and eating.

Anthony Pygram, Director of Conduct and Enforcement added: “Suppliers are required to treat all domestic customers fairly and to make an extra effort to identify and respond to the needs of those in vulnerable circumstances. There are also specific requirements aimed at protecting consumers on PPMs which can help reduce the risk of self-disconnection and self-rationing.

“We realise that not all consumers who experience harm when self-disconnecting may be willing to self-identify or contact their supplier. We want to see a market where suppliers adopt a proactive approach to identifying consumers who may be at risk of self-disconnection and self-rationing, provide support to those in need and work collaboratively with other stakeholders.”

The call for evidence is open until 10th December 2018.

Ofgem recently confirmed the energy price cap will come into effect from 1st January 2019 – you can read how it came about here.

Additional information

There were around 4.5 million electricity and 3.5 million gas prepayment meter customers last year – a slight increase since 2016, largely driven by the installation of smart meters in prepayment mode. A higher proportion of consumers are using PPMs in Scotland and Wales than in England for both fuel types.

Prepayment meters hold an inherent risk of self-disconnection due to their set up. Ofgem cites survey data from Christians Against Poverty, which shows 55% of PPM customers and 37% of non-PPM users restricted their energy usage in 2016.

There are a number of reasons why PPM customers may self-disconnect and not all the instances of self-disconnection will pose the same degree of concern. For example, occasions when PPM customers forget to top up their meter or do not top up their meter because they are temporarily vacating supplied premises, for example on holiday, are less problematic than instances when consumers in vulnerable circumstances forget to top up a meter or have no physical or financial means to do it.

Most recent data from Citizens Advice shows while the main reasons for not topping up were due to forgetfulness or lack of awareness that their PPM was low on credit, 21% of customers or around 140,000 households self-disconnected for affordability reasons in 2017. Around 88% of these households contained either a child or someone with long term health issues, highlighting the prevalence of self-disconnection among vulnerable groups.

Written by

Bruna Pinhoni

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