Vulnerable customers are supposed to be registered on a list called the PSR – the Priority Services Register. Utility companies hold this so that they know that there is a special need customer at a house. There are around 40 PSR Needs Codes in use in the gas industry which should tell suppliers what the customer needs.
I have a standing bet that less than half of the people that should be on the PSR are registered. It’s not always obvious how to register and what qualifies you. When people switch supplier it’s not certain that the PSR data will be transferred, and data might not always be shared with Electricity or Gas Distribution Network Operators (who manage outages) or others like Water companies. Also, a household’s vulnerability status changes, people become sick and recover, babies grow up, people die.
There is clearly a link between vulnerability and Prepayment Meters (PPMs). People get put onto PPMs when they get into financial difficulties, and obviously this number has grown dramatically. Ofgem publishes Debt Arrears Indicators, these show that the number of households in debt has increased by around 500k over the past year.
Energy Supply companies need to recover the debt, each of those 500k households might owe £1000, which is half a billion pounds. A PPM costs around £250 to install so the economics work for the Supplier. Energy Suppliers don’t make a lot of money, and when you run a low margin business, these numbers make a difference.
What should we do? Three short to medium term points
PSR – make sure that the people that should be on it are on it and improve the information sharing between utilities.
PPM – minimum standards for moving people onto PPM, and minimum standards for operating when people have a PPM
Debt – most households in debt don’t have a repayment plan agreed, this needs to be made easier
Longer term fixes come with the redesign of the market, and in particular tariff redesign – I heard Jonathan Brierly of Ofgem talking about a Social Tariff this week – and this is exactly the type of intervention that will be needed. The rules for PSR, PPM and Debt are contained deep within the licences and codes that govern the industry, we also need more agile regulation to make these changes quicker.
We should be outraged, frustrated and ashamed by the stories in the press this week, but to claim to be shocked isn’t right as this problem has been around for a long time.
