WIREDGOV

Ofgem has published its latest report on how suppliers managed debt and disconnection in 2013. It shows that the total number of customer accounts in debt rose in 2013, but the average amount owed was similar to that in 2012.

Household budgets are stretched and suppliers should be doing all they can to support customers struggling to pay. So Ofgem will examine how suppliers communicate with customers who are in debt. Ofgem will ensure that suppliers are meeting rules that require them to treat customers fairly, and agree repayment plans that suit customers’ financial circumstances.

The number of customers using prepayment meters (PPM) continued to rise in 2013 and Ofgem is working to make sure these customers can get better deals especially if they are in debt.  We will formalise the current voluntary practice of allowing PPM customers with a debt of up to £500 to switch by making it an obligation. In addition, suppliers have committed to simplifying the switching process for these customers by the end of April next year.

The number of disconnections among direct debit and standard credit customers remains very low but there was a small increase from 557 in 2012 to 640 in 2013. However, we are concerned that some PPM users that cannot afford to top up may be self-disconnecting. Ofgem is working with Citizens Advice to better understand the causes of self-disconnection for PPM users and how customers in financial difficulties can be best supported.

The report shows that the number of free gas safety checks for certain eligible customers including the elderly and people with long term health problems has more than halved in recent years from around 40,000 in 2009 to around 17,000 in 2013. Ofgem is requiring an explanation from suppliers as to why this happened.

1. Ofgem’s report on suppliers’ social obligations in 2013     

The 2013 report shows:

• The total number of customers in debt rose in 2013, however the average amount owed was similar to 2012.
• At the end of 2013 (the latest data Ofgem has), approximately 6% of domestic electricity accounts (1.5 million) and 6% of domestic gas accounts (1.4 million) in Great Britain were in debt. This is more than at the end of 2012, when approximately 5% of domestic electricity and 5% of domestic gas accounts were in debt. This includes customers repaying debt and customers who have not yet agreed a repayment arrangement (customers in arrears).
• The average amount of debt customers were repaying in 2013 was similar to what they were repaying in 2012 - £306 for electricity accounts and £323 for gas accounts. Around 40% of customers repaying debt owe less than £100.
• The rise is the total amount of customers repaying debt in 2013 was driven by increasing numbers of customers repaying debt in England. Trends in Scotland and Wales were different.  The number of electricity customers repaying debt in Scotland and Wales fell in 2013, and the increase in the number of gas accounts repaying debt in those two countries was smaller than the increase seen in England. See the tables titled ‘Number of electricity accounts/gas accounts with a customer repaying a debt on 31 December in 2010, 2011, 2012 and 2013’ in the report for the figures.

2. Prepayment meters

By the end of 2013 there were more than 4 million electricity pre-payment meters in Britain over 3 million gas PPM accounts. This is an increase of 4% and 6% respectively compared with 2012.

Up to 10% of PPM users are in debt and Ofgem will help them by formalising a voluntary commitment from suppliers where they allow PPM customers with a debt of up to £500 (per fuel) to switch. Suppliers have also committed to improving the process by removing information-sharing requirements that make it overly complex, leading to some switches not being completed. Both these changes are due to take effect by mid-2015.

3. *The gas appliance safety check is part of a range of free services that certain eligible customers are entitled to under suppliers’ priority services register.

For further press information contact:

Chris Lock:    020 7901 7225
Dafydd Wyn: 020 3263 9943
Lisa O’Brien: 020 7901 7426
Out of hours media contact number:  07766 511470