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Energy regulator steps up action against festive fraud

Energy suppliers have been urged by regulator Ofgem to do more to protect customers as energy theft and scams escalate over the festive period. 

Energy theft and scams can occur in several different ways: 

  • Someone else tapping into your gas or electric supply illegally 
  • Interfering and tampering with electrical and gas metering equipment 
  • Being sold a fake Prepayment Meter (PPM) top up card by an illegal trader, often door-to-door at targeted households   
  • Some scammers are offering customers £50 worth of electricity for just £25, targeting pre-payment meter users 
  • Criminals also use fake electricity keys to top up energy credit illegally, claiming they are from a legitimate energy company. These can be door to door sales, targeting vulnerable customers.  
  • Fake emails or websites pretending to be Ofgem. Earlier this year, a website designed to mimic Ofgem was found which could have had disastrous implications for customers if it hadn’t been shut down quickly. 

The estimated cost of energy theft in Great Britain is estimated between £830m to £1.388bn per year which equates to an additional £29-48 annually to each domestic consumer’s energy bill. Everyone pays the price of this fraud, not just the targeted victims.  

As the cost-of-living crisis bites, criminals are seizing the opportunity to prey on vulnerable customers, with energy theft reports having increased considerably.  

There were over 12,000 reports to Crimestoppers in the 12 months to April 2023 compared to approximately 8,000 reports in the 12 months to April 2022 (see Energy Theft: Latest Facts and Statistics | Stay Energy Safe)

Under licence conditions, suppliers are obligated to prevent and identify instances of energy theft and Ofgem expects suppliers to ensure that appropriate metering arrangements are in place for their consumers. 

However, Ofgem has discovered that overall performance of suppliers against their targets has fallen short over the past two years. 

  • In 2021/2022, 17,423 thefts were identified and confirmed by suppliers against an overall target of 41,000 which equated to a target achievement of just 42%. 
  • In 2022/2023, 16,581 thefts were identified and confirmed by suppliers against an overall target of 41,000 which equated to a target achievement of just 40%. 

Melissa Giordano, Deputy Director at Ofgem, has now written to all suppliers to inform them that Ofgem is currently undertaking a review of this issue and remind them of the strict licence conditions that help with the prevention and detection of energy theft in Great Britain. 

Melissa Giordano, Deputy Director for Retail Systems and Processes at Ofgem, said:  

"Energy theft is a growing issue, and we believe there is more for suppliers to do in preventing and identifying these types of cases so action can be taken. I would also urge all customers to be vigilant of scams: if something sounds too good to be true it probably is.  

“Tampering with meters or energy supplies is also incredibly risky. If households are struggling with bills, they should contact their supplier to ask for support. Ofgem has been working closely with industry to make sure they are proactively supporting their customers, particularly those in vulnerable circumstances.” 

A recent survey by Crimestoppers also found that 50% of the public know ‘nothing’ about energy theft, with 28% stating they were aware of it but would be unable to identify the signs of potential instances of energy theft (see New Research: Energy theft is a ticking time bomb. But do people know the dangers? | Stay Energy Safe).

Outside of the financial impact on consumers, tampering with energy meters can have serious consequences including serious injury or risk to life. A 370% increase in metering equipment interference was reported between 2017 and 2021.  

Now, as part of Ofgem’s ongoing work to reduce energy theft, the regulator will be engaging and monitoring on an ongoing basis with both the UNC Performance Assurance Committee (PAC) and REC Performance Assurance Board (PAB) and other relevant stakeholders to ensure that suppliers are taking all reasonable steps to prevent, identify and confirm instances of energy theft.  

Alongside this, suppliers must improve their efforts to prevent, identify and detect energy theft. The regulator will be closely monitoring how they are performing in this area.   

Ofgem has responded in near real-time to over 100 scam phishing campaigns over the last year alone, protecting consumers from potentially significant harm.  

This festive season, the regulator reminds everyone to stop if they notice anything unusual in these demands. Ofgem never asks for bank details or personal details, and customers are urged to check the authenticity of any communications and protect themselves, as criminals will try to rush and panic customers.  

Credit information company Experian also warned last month that the number of credit card applications being identified as fraudulent has increased by more than a fifth this year, with ID theft on the rise during the festive period.  

NOTES TO EDITORS 

In relation to the investigation of theft, suppliers are: 

  • expected to take all reasonable steps to identify whether the domestic customer of the premises is of pensionable age, disabled or chronically sick 
  • required to gather sufficient evidence to establish that theft has occurred as a result of a domestic customer’s intentional act or by culpable negligence. 

There are targets, set by the Retail Energy Code (see below), which are in place to incentivise the detection of theft by suppliers. 

Retail Energy Code: 

Electricity and Gas suppliers must be a party to, comply with and maintain the Retail Energy Code (REC) as set out in SLC 11. The Energy Theft Reduction arrangements specified in Schedule 7 of the (REC) are in place to combat energy theft and support suppliers to deliver their SLC 12.A obligations outlined above. The Theft Detection Incentive Scheme (TDIS), as part of the REC’s theft arrangements, sets specific theft identification targets for suppliers based on their market share.  

Ofgem is currently undertaking a review in close collaboration with internal and external stakeholders, including the Uniform Network Code (UNC) and Retail Energy Code (REC) amongst others, reminding suppliers of the licence conditions that help with the prevention and detection of energy theft in Great Britain. 

Ofgem is aware of third party intermediaries who are approaching domestic customers door to door and offering a “buy one, get one free” service whereby if a customer’s energy supplier detects a potential issue with metering equipment, that suggests theft, and rectifies this issue then the third party will return to the domestic customer’s premises to tamper again with the meter again at no additional cost to the domestic customer. Not only is this criminal behaviour but meter tampering is extremely dangerous and poses a potential threat to life. 

Ofgem continues to work closely with the National Cyber Security Centre to prevent malicious cyber-attacks and scams.

Consumers should check Ofgem's website for information on how to avoid and report energy scams and for energy advice for households.

Channel website: https://www.ofgem.gov.uk/

Original article link: https://www.ofgem.gov.uk/publications/energy-regulator-steps-action-against-festive-fraud

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