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The Credit Services Association (CSA)
Blog: How the energy sector is addressing vulnerability, debt and fuel poverty
Audrey Gallacher is Director of Retail Energy Supply at Energy UK; the trade association for the UK energy industry. At the Credit Services Association’s (CSA) UK Credit & Collections Conference (#ukccc) on 15 September 2016, she will be sitting on a panel entitled ‘Regulation based on the consumer and not the supplier’ alongside regulators the FCA and Ofwat, and debt advisor Sara Williams.
When it comes to debt and vulnerability, the consumer is at the heart of the energy industry. Through regulation, voluntary initiatives and a range of industry-led schemes to reduce fuel poverty, energy suppliers take their obligations to their customers very seriously. Energy suppliers are obliged, by regulation, to take a customer’s ability to pay into account when resetting repayment rates for debt. Whether done in-house or through external debt collection agencies, energy customers can be confident that everything is being done to understand their financial circumstances so that repayment plans are realistic for both parties.
Addressing fuel poverty
If a customer is in severe financial difficulty there are a range of interventions an energy supplier can, and will often take, to alleviate the situation. Between 2008 and 2014 suppliers spent £175 million over and above the £1billion per annum spend required by regulated obligations to support fuel poor and vulnerable customers. This support included funding Citizens Advice’s work on energy, including the Citizens Advice Consumer Service and the Extra Help Unit, providing vital advice and support for all customers but particularly those in vulnerable circumstances. Suppliers also provide direct financial assistance to people in or at risk of fuel poverty through the Warm Homes Discount and their own trust funds. This winter around two million low income customers will receive a rebate worth £140 a year under the scheme. Last year (2014/15) suppliers spent in excess £15 million writing off debt for customers through their trust funds.
Improving energy efficiency
As well as advice and direct financial assistance suppliers spend vast resources under the Energy Companies Obligation to make homes more energy efficiency. As of the end of September 2015, provisional figures show that obligated suppliers had installed 1,591,822 measures under ECO since the scheme began in January 2013.
Maintaining energy supply
Energy Suppliers have also done their best to bring down the number of disconnections and ensure that customers are almost always on supply. It was in this spirit in 2004 that the Energy Retail Association (now part of Energy UK) established the Safety Net for vulnerable consumers. At its core the Safety Net is a pledge by the larger six suppliers to never knowingly disconnect a vulnerable customer. Since the Safety Net was founded, the nature of debt and disconnection in the UK energy retail market has changed beyond recognition. In 2003 there were around 16,000 disconnections of domestic customers for debt in the UK. In 2014 - the most recent year for which published data exists - there were just over 200. The Safety Net is audited annually and this year, for the first time, the results of the audit have been published. The commitment to publish the results reflects the increasing priority Energy UK’s members place upon protecting their most vulnerable customers.
Supporting customers is, and will continue to be, at the heart of the energy industry. But there is no room for complacency and Energy UK looks forward to working with our members, the regulator Ofgem, the consumer champion Citizen’s Advice and other organisations including those in the debt collection sector to drive continuous improvements for all energy customers.