Engagement and dialogue – the best choice for households facing the energy bill dilemma

With energy experts predicting that a typical household energy bill could hit £4,266 next year, more than doubling the current cost, it is hardly surprising that this issue is at the top of the news agenda, spawning significant political comment and activist campaigning.

Households falling into arrears should of course contact their supplier and agree an alternative payment plan and those with prepayment meters can apply for temporary credit if they can’t afford to top up the meter. Extra support is also potentially available for vulnerable customers, a £150 ‘Warm Home Discount Scheme’ is available for certain households eligible via the Department for Work and Pensions, a further £150 rebate is available for those in council tax bands A to D, the Government’s ‘Energy Bills Support Scheme’ has deducted £400 off every household bill, and a ‘fuel voucher’ scheme is operated by many local authorities. So, some support has been forthcoming – although this is unlikely to match the scale of the increasing bills. 

There will be customers in default who can’t pay what is owed – and responsible energy firms supported by specialist collections agencies will work hard to offer help and forbearance. The key message that needs emphasising time and again is the importance of dialogue and engagement between customer and their creditor or collections agency. A conversation at the first signs of difficulty will usually ensure support and new options become available. 

Wise heads in the consumer and debt advice sector are already counselling caution to those customers tempted to sign up to campaigns by activists urging mass non-payment. Although they voice some sympathies with their aims, these debt charities are warning that to urge customers to deliberately withhold payment could harm rather than help those in need. Those cancelling payment by direct debit are likely to see their bill increase. If arrears are generated these could be reported to the Credit Reference Agencies and adversely affect credit scores. Moreover, a decision to cease payment could lead to energy suppliers installing prepayment meters where they are not already in place. 

Customers should be wary of attempts by others to politicise their own energy bill payment arrangements. Before the winter months arrive, it is highly likely that the Government under a new Prime Minister will take further steps to offer additional support. Between support to dampen the impact of bill increases and the potential for help if customers engage and pick up the phone to their supplier, it would be wrong to characterise households as being ‘forced into direct action’.   

Nevertheless, it is clear that governments around the world and regulators are going to need to intervene while the crisis in Ukraine restricts supply and global energy prices are so inflated.

There are practical steps they can take. In October last year we wrote to UK energy regulator Ofgem in the wake of several energy company failures where customers would find their debt transferred to a new ‘supplier of last resort’. The CSA urged Ofgem to think through how customers with arrears owed to firms in administration would have previously agreed forbearance measures continued and to take steps to ensure clarity and accuracy of data so that customer engagement could be prioritised.

Collections agencies who are members of the Credit Services Association are signed up to the customer protection steps set out in our Code of Practice which apply to the collection of energy arrears. These standards will be important, but even more vital is to persuade households to talk to suppliers and collections agencies and keep the dialogue going about their circumstances, because that will be the best way to ensure tailored support and assistance is delivered where it is needed most.