Average consumption figures From October, Ofgem is introducing new figures showing its estimate for average household consumption. These will reflect the fact that households generally are using less energy as they try to save money and benefit from improved efficiency of appliances. At present, typical annual consumption is defined as 12,000 kWh of gas and 2,900 kWh of electricity. These are the figures used for today’s cap announcement. From October onwards, Ofgem will use lower figures of 11,500 kWh for gas and 2,700 kWh for electricity. These will be reflected for the first time in the cap that runs from 1 January – 31 March 2024. 19 August: Figures Reflect Reduction In Estimated Average Usage Market analyst Cornwall Insight has issued its estimates for future energy price caps, set each quarter by Ofgem, the regulator. The cap, which reflects wholesale energy costs, limits how much energy companies can charge for each unit of gas and electricity used, along with associated standing charges – it is not a cap on actual bills. The present cap, which came into effect on 1 July, is £2,074 a year for an average consumption household on a dual fuel tariff paying by direct debit. This is down steeply on previous iterations of the cap and its temporary replacement, the government’s energy price guarantee, and the fall was cited by the Office for National Statistics last Wednesday as a reason for the sharp fall in inflation in July to 6.8% (from 7.9% in June). Average consumption is defined as using 12,000 kWh of gas and 2,900 kWh of electricity a year. However, from October onwards, Ofgem will use lower figures to reflect the fact that typical household consumption has fallen thanks to a combination of energy saving by consumers trying to cut their bills, and the improvement in efficiency of many household devices. The new figures will be 11,500 kWh for gas and 2,700 kWh for electricity. To represent this change, Cornwall has issued two sets of figures that show each basis for calculation. Using current consumption figures, the October cap is estimated to be £1,926. With the lower consumption averages in play, Cornwall says it will be £1,824. Ofgem will confirm the figure on 25 August. It is important to remember that the new basis of calculation does not in itself signal a lowering of energy prices – it reflects assumptions about how much energy is being consumed by a typical household. Looking further ahead, Cornwall says the January 2024 cap will then jump significantly (£2,083 old basis, £1,980 new basis), largely because of the threat of strike action at liquid natural gas facilities in Australia, which would threaten to increase wholesale prices. For Q2 2024 the figures are £2,015/£1,915 and for Q3 they are £1,965/£1,867. It is generally agreed that forecasts are less reliable the further they are in the future, precisely because of geopolitical and economic uncertainties and the impact of the weather on demand. Commenting on the new estimates, Craig Lowrey at Cornwall Insight said: “While a small decrease in October’s bills is to be welcomed, we once again see energy price forecasts far above pre-crisis levels, underscoring the limitations of the price cap as a tool for supporting households with their energy bills. “As many, including Ofgem have acknowledged, it is essential that the government explores alternative solutions, such as social tariffs, to ensure stability and affordability for consumers.” 27 July: Average Bills Reported To Be £200 Cheaper In 12 Months Cornwall Insight, the energy market analyst, is forecasting that the Ofgem price cap will fall further than first predicted when it is revised in October, writes Candiece Cyrus. The cap is adjusted every quarter to reflect changes in wholesale prices. In early July, Cornwall said the cap, which is currently £2,074 a year for households with typical consumption, would fall to £1,878 for the fourth quarter. It now says it will reach £1,861. However, the analyst has revised its estimate for the first quarter of next year upwards, from £1,917 to £1,959. Similarly, the estimate for April – June 2024 has risen from £1,888 to £1,917. Cornwall has also published its first estimate for the third quarter of next year, which shows prices falling to £1,870, over £200 lower than at present. 26 July: Improvements This Winter For Households, Businesses Regulator Ofgem has set out a list of proposals to improve energy services for households and businesses, writes Candiece Cyrus. This includes extended supplier opening hours for households and improved complaints handling for business customers. Ofgem said its proposals would ‘establish expectations’ to ensure all customers experience a ‘consistent and acceptable level of service regardless of the company they are with’. For households, it proposes energy firms: extend their opening hours including evenings and weekends and offer multiple contact methods including email and webchat prioritise vulnerable customers who may need immediate help provide 24/7 emergency support for households cut off from their energy supply due to problems with their supplier, such as a meter fault offer more effective support to financially struggling customers, such as temporary repayment holidays publish information on customer service performance to help households make an informed decision when switching, and drive their own performance. For businesses, the regulator is reviewing the challenges the market presents. It will consult on: improving customer service during complaint handling improving guidance around ‘deemed contract rates’ for customers who have not agreed contractual terms with a supplier to prevent issues such as overcharging extending ‘micro business’ protections to all companies, including making energy firms reveal the amount they pay to energy brokers allowing businesses the means to resolve disputes through a redress scheme. The regulator has also set the level of capital that energy suppliers are required to hold to be able to withstand market shocks after 30 firms collapsed in reaction to rising wholesale prices in 2021/22. Ofgem is also proposing it is granted the power to instruct suppliers to ringfence a portion of their customer credit balances if it is in the interest of the consumer. A statutory consultation on domestic consumer standards will close on 23 August 2023. A decision on domestic consumer standards is expected to be published by early October. Ofgem is proposing to have many of these requirements in place by December 2023 to help protect and support consumers over the winter. Proposals from the non-domestic review will be published in a statutory consultation in autumn 2023 with any licence changes expected to be implemented in winter 2023/24. 25 July: Fixed Rates Unlikely To Trump SVRs Over 12 Months Regulator Ofgem is warning households to think before they switch to a fixed-rate tariff following the return of such deals in recent weeks since the revised price cap took effect on 1 July, writes Candiece Cyrus. Its message coincides with data from analyst Cornwall Insight which reveals that switching to one of the new crop of fixed tariffs is unlikely to deliver savings on energy bills over the next 12 months. Suppliers have launched tariffs priced close to the £2,074 annual price cap for typical consumption households (see update below) following falls in wholesale energy prices. Ofgem tweeted today: “Fixed-rate energy tariffs have seen a return to the market but check if they are right for you. Prices are still unpredictable and signing up for a fixed rate now might mean you miss out if prices fall in the future.” Fixed tariffs allow energy customers to lock into a set price per unit of energy, for typically 12 or 24 months. This can allow them to manage their finances more easily, than those on a standard variable rate (SVR) tariff. Ofgem’s cap limits how much suppliers can charge customers per unit of energy and in standing charges on an SVR tariff, with updates in line with fluctuating wholesale prices made on a quarterly basis. There is no cap on bills themselves, which always reflect the amount of energy consumed. Most households are on SVR tariffs after suppliers removed their fixed tariffs from the market when wholesale energy prices began to soar due to Russia’s invasion of Ukraine. Households on fixed tariffs can pay less than SVR customers if wholesale prices increase during the term of the contract, or pay more if they fall. Cornwall Insight says those who signed up to the cheapest fixed deal available at the start of this month – Utility Warehouse’s Fixed Saver, priced at £1,974 per year for typical usage – are likely to pay the same as an SVR customer over the next 12 months. The analyst’s calculations are based on the current cap level (£2,074) and its latest forecasts for the next three quarters, which stand at: October – December 2023: £1,878 January – March 2024: £1,917 April – June 2024: £1,888. James Mabey, analyst at Cornwall Insight said: “The return of energy fixing has captured the attention of the country over the past few months, as many households seek to secure lower and more stable energy deals. “Based on our current forecasts, customers are unlikely to lose out by taking a one-year fixed deal, however, it is doubtful these deals will result in significant savings, if any at all. “While there are currently limited financial gains to be made from taking up domestic fixed tariffs, they offer a sense of security to consumers amid the recent volatility observed in the energy market. The desire for stable prices among households may increase the number of people who sign-up for the fixed deals.” 18 July: 12-Month Deal Set At £2,100 – £26 Above Price Cap Energy supplier EDF is offering new and existing customers a 12-month fixed deal on gas and electricity set at £2,100 for the average household with typical energy consumption, writes Candiece Cyrus. This compares to energy regulator Ofgem’s energy price cap for default variable rate tariffs, which stands at £2,074 a year for the average household with typical energy consumption. Actual bills, regardless of tariff, are determined by the amount of energy consumed. EDF’s Essentials Exclusive Jul24 offer is available to households that use a smart meter, or are willing to have one installed on signing up to the tariff. It charges a dual-fuel (gas and electricity) exit fee of £150 should a customer leave the tariff early. Exit fees are levied up to 42 days before the end of a deal’s term. EDF’s offer joins a limited number of 12-month fixed deals currently on the market: Available to new and existing customers: British Gas The Fixed One v23: £2,099 a year, £200 dual-fuel exit fee. Available direct to customers from the supplier So Energy So Juniper: £2,047 a year, £150 dual-fuel exit fee. Available direct to customers from the supplier Utility Warehouse Fixed Saver 2: £1,974 a year, £150 dual-fuel exit fee. Available direct to customers who sign up to two of its other services. Available to existing customers: British Gas Smart Aug24 v9/Smart Fixed v2: £2,072 a year, £200 dual-fuel exit fee. Only available to customers who have, or are willing to have, a smart meter installed E.on Next Next Loyalty Fixed v4: £2,006 a year, £150 dual-fuel exit fee. Available to customers on a fixed deal that has ended, or will end, between 26 December 2022 and 18 September 2023 Octopus Energy Loyal Octopus 12M Fixed June 2023 v1: £2,100 a year, £150 dual-fuel exit fee Ovo Energy 1 Year Fixed: £2,099 a year, £150 dual-fuel exit fee Shell Energy July 2024 v11: £2,065 a year, £150 dual-fuel exit fee. The new EDF deal shows signs that the energy market may be stabilising following Russia’s invasion of Ukraine, and the subsequent sanctions on its energy exports, which caused wholesale prices to soar globally. As a result, suppliers removed their fixed deals from the market. Now, most of the deals on the market are still only available to suppliers’ existing customers. Most customers are now on standard variable rate tariffs. The energy price cap dictates the maximum amount suppliers can charge customers per unit of energy on this type of tariff, based on wholesale prices. This limit is updated quarterly. On 1 July it dropped from £3,280 to £2,074 a year for the typical household, but energy customers are still faced with bills above historic levels. The Ofgem cap was around £1,300 as recently as March 2022 and still below £2,000 the following September. Fixed tariffs lock energy customers into a deal for a stated amount of time – usually 12 or 24 months. They can be particularly useful to households that want to budget with certainty. However, if wholesale prices fall during the deal term, fixed-rate customers can find themselves paying significantly more per unit of energy than those on a standard rate tariff. Neither the cap nor fixed deals limit a household’s bills, which are determined by the amount of energy it uses. It is only the rate per unit and the associated standing charges that are capped. Analyst Cornwall Insight’s latest predictions suggest the Ofgem cap will be updated as follows, for a typical household per year: October – December 2023: £1,878 January – March 2024: £1,917 April – June 2024: £1,888. However, wholesale prices remain at risk of geopolitical upheaval, such as further conflict in Ukraine, which explains the increased interest in fixed-rate offers. 13 July: ‘Powerwall’ Will Harness Solar Energy To Charge EVs Elon Musk, owner of electric car manufacturer Tesla, is reported to be launching an electricity supply firm focused on renewable energy – Tesla Electric – in the UK, writes Candiece Cyrus. Evidence for the move is a job advert for a Head Of Operations in London on the business-oriented social media platform LinkedIn. At present, the firm operates in Texas, and advertises itself as helping to “accelerate the transition to sustainable energy.” Its main tool for doing this is its home electric battery product, Powerwall. It allows households that have solar panels to sell excess electricity back to the grid automatically when wholesale prices are high. This attracts credits which are added to the household’s energy account, saving it money on future bills. The exact details of how the service will work in the UK are yet to be revealed. However, UK energy suppliers participating in the government’s Smart Export Guarantee (SEG) scheme allow their customers to sell their electricity back to the grid. Households are placed on an SEG tariff and paid for each unit of energy they feed back. An SEG supplier can be different to the firm that provides the household’s energy. The amount a household can earn will depend on a range of factors, including their location, their specific tariff and the positioning of their solar panels. According to the Energy Saving’s Trust Solar Energy calculator, a household located in London can save £298 a year on their bills by using solar energy. The Powerwall also stores solar energy which can be used during power cuts or when the sun isn’t shining, and offers ‘intuitive’ vehicle charging. This includes detecting when energy is needed indoors or when there’s a power cut and slowing, or stopping the charging of a car accordingly. The Tesla website says Powerwall also charges an e-vehicle with surplus solar energy if it is plugged in while the sun is shining. The accompanying app allows users to control energy distribution between their property and vehicle. One Powerwall unit costs around £8,900. Tesla Electric’s expansion comes as the UK aims to ban the sale of new internal combustion engine cars by 2030 and achieve net-zero carbon emission status by 2050. In its job advert, Tesla Electric says: “Tesla Electric is Tesla’s retail electricity offering, currently available to Tesla product owners in selected markets globally, such as Texas. “Delivering a seamless, simple customer experience will ensure that small scale residential flexibility can be fully utilised to support the transition of the entire electricity grid to 100% renewables.” 7 July: Consumers To Be Rewarded For Avoiding Peak-Time Usage Households and businesses with smart meters in England, Scotland and Wales may again be able to earn discounts on their electricity bills by using less energy during peak usage hours this winter, writes Candiece Cyrus. The opportunity will be available to customers of suppliers that provide the Demand Flexibility Service when there is a threat of energy demand outstripping supply. Participants must use smart meters that can send readings to suppliers every 30 minutes. Customers without a participating supplier could use an independent company that would draw the necessary data from their meter via an app. We will update this page with the firms that will be participating this winter once the information is available. According to National Grid ESO, which ran the service between November 2022 and March 2023, around 1.6 million households and businesses participated, reducing electricity consumption by 3,300 megawatt hours over 22 peak periods. Participating households were contacted by their suppliers in advance of specified expected peak periods for energy demand – usually late afternoon/early evenings on weekdays – so they could cut back on their electricity usage. The network said households could save £3 – £6 per kilowatt hour of energy not used during the peak period, though the exact amount was determined by individual suppliers. It is consulting on the final terms for this winter. According to the results of a survey of almost 24,000 participants, 62% were satisfied with their experience and 83% would participate again. Most of the respondents (85%) heard about the service through their provider (multiple responses were permitted). When asked the main motivations for taking part, 76% of survey respondents said the financial benefit, 41% said the challenge, and 37% said their motivation was balancing the grid or ’keeping the lights on’. When asked the main benefits of taking part, 42% cited satisfaction from managing the challenge, 39% said earning rewards and 38% said it was being part of a national collective effort. However, certain demographics were underrepresented such as younger age groups, lower income households, renters and city residents. The network said participation should be monitored to understand inequalities in access to offers through the service, and differences in the outcomes of participating. National Grid ESO introduced the discounting service as a means of reducing the need for enforced power cuts if energy demand outstripped supply, due to Russia’s invasion of Ukraine. Resulting sanctions on Russia’s gas exports threatened Europe’s access to gas supplies.The network operator said that there are “continued risks and uncertainties relating to the Russian invasion of Ukraine” this winter.” 5 July: Cornwall Issues Price Cap Forecasts Until June 2024 Energy firms are being warned by their regulator, Ofgem, to retain profits ahead of paying shareholder dividends to help them remain financially resilient in a volatile market, writes Candiece Cyrus. Financial instability contributed to 30 suppliers folding in 2021/22, when wholesale energy prices began to soar. The cost of transferring customers to other suppliers will be met through levies on customer bills. The taxpayer also carried the cost of supporting the collapsed firm Bulb – which was deemed too big to fail – before it was sold to Octopus last December. Ofgem is keen to see financial rigour in the management of energy firms as wholesale prices fall and profitability returns to the market after five years of losses. The regulator said it expects firms ‘to act responsibly and in the interests of their customers’. The government is also keen to see households benefit from the fall in wholesale prices, which is reflected in the latest update to Ofgem’s energy price cap. On Saturday, it fell from £3,280 a year for the average household to £2,074 a year (see story below). However, the effective drop is from £2,500 a year, as the cap was temporarily superseded by the government’s energy price guarantee. Analyst Cornwall Insight has issued predictions for the price cap for Q4 2023 and the first half of 2024. It says the cap will fall from £2,074 to £1,878 on 1 October before rising to £1,917 on 1 January 2024. The estimate for 1 April 2024 is £1,888. The caps from October 2023 onwards are predicated on reduced annual average consumption figures issued by Ofgem last week (see story below). As ever, actual bills are not capped and will be determined by the volumes of energy consumed. As a result of cheaper energy, industry analysts expect suppliers to start offering competitive energy deals again within the coming weeks and months. In a letter to suppliers this morning, Jonathan Brearley, chief executive of Ofgem, also said the regulator will continue to review and update the price cap. It is also considering an alternative to the cap that will better protect customers in volatile market conditions. It plans to put permanent measures in place so households on prepayment plans pay no more than direct debit customers. Prepayment customers have traditionally paid more, due to the additional administrative costs required to provide this payment method. However, as of 1 July, the government stepped in to cover the difference in costs for prepayment meter and direct debit customers, but the support is only due to last until April 2024. The regulator is also: reviewing [energy company] operating costs, which account for a large portion of standing charges added to every gas and electricity bill proposing to establish an allowance for suppliers to support prepayment customers while reviewing similar allowances for suppliers to help other types of customers with bad debt asking suppliers to publish all their domestic tariffs for greater transparency of deals available to customers consulting on a new customer standards framework which will focus on those financially struggling and with vulnerabilities. Vulnerable customers include the elderly, disabled and those with young children. The regulator introduced a voluntary code of practice in April, which all suppliers signed. This followed reports of British Gas breaching Ofgem’s rules and forcibly fitting meters in the properties of vulnerable customers. Last week ofgem launched a statutory consultation to make the code of practice compulsory. Mr Brearley said: “An energy sector where companies can make a reasonable profit is important to create a sustainable and competitive market for consumers. However, a return to the practices we saw before the energy crisis isn’t on the table – suppliers must reciprocate the support the sector was given by consumers and taxpayers when wholesale prices increased by behaving responsibly as prices fall and profits return. “The energy market has changed. Ofgem has introduced major changes to the market, and we need suppliers to learn the lessons of the energy crisis and play their part by making sure they’re financially robust, can absorb potential losses and are meeting our new capital requirements. I expect no return to paying out dividends before a supplier has met those essential capital requirements. “We will closely monitor the situation, including to make sure that the market is operating competitively on price alongside customer service and innovative products, and to make sure that suppliers are meeting their obligations to the most vulnerable.” 1 July: Customers Finally See Benefit Of Falling Wholesale Prices Today sees the long-awaited reduction in the energy price cap, which governs how much customers can be charged for each unit of energy they use, along with the associated standing charges. Set by the market regulator, Ofgem, the cap now stands at £2,074. This is how much a household would pay each year if it used the average amount of gas and electricity and paid its bills in arrears by monthly direct debit. The cap does not limit the size of bills, which are determined by actual consumption. The cap level serves as an indicator of the costs likely to be faced by a typical household. The price cap is revised each quarter to reflect changes in wholesale energy prices. The previous cap level, which took effect on 1 April, was £3,280. However, since October last year, the cap has been superseded by the government’s energy price guarantee, which calculated the typical annual bill at £2,500. The guarantee was introduced when it became clear that rocketing wholesale prices would push the cap beyond £3,500. As of today, the cap is once again in effect, bringing a reduction on the government guarantee of £426 a year. The guarantee will only come back into play if the cap rises beyond £3,000. Analysts expect the cap to fall below £2,000 when it is next revised on 1 October. Separate caps apply for those who pay in arrears by cheque or cash and for those with prepayment meters. For cheque and cash customers, the cap has fallen from £3,482 to £2,211 for typical dual fuel consumption. The additional costs reflect the higher costs incurred by energy companies to administer these payment methods. For prepay customers, the cap has decreased from £3,325 to £2,077 for typical dual fuel consumption, bringing it close to the main cap level. The government insisted that the premium previously paid by prepay customers – again, to cover administrative costs – should effectively be removed from today’s iteration of the cap level. Many prepay customers are deemed to be financially vulnerable. Ofgem defines average household annual consumption as 2,900kWh of electricity and 12,000kWh of gas. From October, these figures will be set at 2,700kWh of electricity and 11,500kWh of gas, reflecting reduced levels of consumption as financially-stretched households cut back on usage and find ways to be more energy efficient. This change will reduce the figure quoted for the cap but, as noted, it does not mean bills will necessarily fall at the same rate. Households will still be charged for energy used, albeit at lower unit rates and with lower standing charges. From 1 July, the per unit level of the price cap to the nearest penny for a typical customer paying by direct debit will be 30p per kWh for electricity customers and a standing charge of 53p per day. The equivalent per unit level for a typical gas customer is 8p per kWh with a standing charge of 29p per day. Analyst Cornwall Insight estimates that, on the basis of the new average consumption figures from October, the cap will drop to £1,871 a year for a dual fuel household based on typical consumption when it is reset. This is £107 lower than its previous forecast of £1,978. It also expects the cap to rise to around £1,901 a year for the typical household in January 2024, chopping £103 off its last prediction of £2,004 a year, again because of the average consumption figure reduction. 29 June: Households Using Less Energy To Trim Soaring Bills Analyst Cornwall Insight says the energy price cap, which is set by regulator Ofgem to limit household bills, should fall to a lower level than it first predicted in October this year and January 2024, writes Candiece Cyrus. The revision results from changes Ofgem has made to the way it calculates typical energy consumption. It says households are using less gas and electricity because of high prices and improved energy efficiency, so consumption figures need to be reduced accordingly. The cap refers to the annual bill an average household can expect to pay. Previously, this was calculated on the basis of 2,900 kWh of electricity and 12,000 kWh of gas being used. These figures have been revised down to 2,700 kWh and 11,500 kW. However, this does not mean bills themselves will change. Ofgem has made no changes to the per unit cost of gas or electricity, or to standing charges, so households will continue to pay for the energy they use as at present. From 1 July, the cap will stand at £2,074, which is down from the £2,500 energy price guarantee imposed by the government since last October, when the cap topped £3,500. Cornwall Insight predicts that the cap will drop to £1,871 a year for a dual fuel household based on typical energy consumption when it is reset in October. This is £107 lower than its previous forecast of £1,978. It predicts the cap will rise marginally to around £1,901 a year for the typical household in January 2024, chopping £103 off its last prediction of £2,004 a year. Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “The fall in the average price cap predictions reflects Ofgem’s efforts to align with the evolving energy consumption patterns of typical households, as consumers respond to high prices, energy efficiency measures, weather conditions and other influences by reducing their energy usage. “While typical household predictions may provide some insight for consumers, households are still facing the challenge of bills that are well above historic levels. This situation brings us back to the question of the cap’s purpose – as doubts about the cap’s effectiveness in protecting consumers and its impact on tariff competition become a regular part of energy discussions.” 14 June: Regulator Tells Consumers To Think Before They Fix Analyst Cornwall Insight is forecasting that the price cap that governs annual household energy bills will fall to £1,933 for those with typical consumption in October before edging up to £1,944 in January 2024. The cap was last below £2,000 in September 2022. At present, the cap – calculated each quarter by regulator Ofgem – stands at £3,280, having touched £3,550 in October 2022 and a peak of £4,279 in January this year. The rapid increase in the cap level prompted the government to introduce its Energy Price Guarantee (EPG), which has limited average consumption household bills to £2,500 a year since October 2022. This guarantee will cease to apply from 1 July, when the Ofgem cap will fall from £3,280 to £2,074. The cap is tumbling because of a drop in wholesale prices, which in turn have reduced because energy companies have sourced alternative sources of supply to those disrupted or ‘choked off’ by the conflict in Ukraine and associated sanctions on Russian gas and oil. Market watchers are speculating that the fall in the level of the cap will prompt some suppliers to reintroduce fixed-term, fixed price tariffs, which have been almost entirely absent from the market for the past 18 months because of spiralling wholesale prices. Fixed energy deals – usually 12 or 24 months in duration – hinge on the supplier being able to buy fuel at a guaranteed price for the duration of the term. They lock in the price per unit of gas and electricity for the customer, but actual bills are determined by the amount of energy used. The advantage of fixing is that the customer is protected from rising prices while the fix is in place. However, if the day-to-day price of energy falls, the customer will be marooned on the fixed price and unable to benefit. Most fixed tariffs carry exit fees for those wanting to leave the deal early – these can be as high as £75 per fuel. Ofgem has used social media to urge those considering a fixed tariff to proceed with caution. It said: “THINK BEFORE YOU FIX: Fixed-rate energy tariffs have seen a return to the market but check if they are right for you. Prices are still unpredictable and signing up for a fixed rate now might mean you miss out if prices fall in the future.” 12 June: Small Business Group Wins ‘Blend & Extend’ Promises The Federation of Small Businesses says EDF is joining the ranks of energy suppliers that will allow small business clients trapped on high-cost fixed tariffs to adjust their contracts to save money. The French-owned firm follows in the footsteps of British Gas, Engie and Drax in committing to the Federation’s ‘Blend & Extend’ initiative, which sees businesses that locked into high prices last summer able to lengthen their contracts in order to spread the higher costs over a longer period. Current lower energy prices will also feed into the calculation, helping to bring the overall cost down. Tina McKenzie, head of policy at the Federation, commented on the British Gas announcement last month, which sees a 12-month extension to tariffs: “Allowing small businesses to come out from the energy contracts they fixed during market peak last year is vital to their survival. “British Gas is doing the right thing to adopt our call and give small businesses the option to ‘blend and extend’. We hope this is made available to all small business customers who are trapped in fixed tariffs from last year’s peak period. Now is the time for other suppliers to follow suit.” British Gas is also distributing grants worth £15 million to small businesses facing severe financial pressures. In a comment reported in the Guardian, a Federation spokesperson said it will continue to scrutinise energy firms: “This [Blend & Extend initiative] is a major step forward and a tangible win, but the devil will be in the detail to ensure that the promised contracts do indeed match a reasonable price, so we will be checking on the first contracts to make sure.” Commercial energy contracts are almost always arranged on a fixed term, fixed rate basis, with hefty financial penalties for businesses that wish to break the contract early. 31 May: Prepay Customers Urged To Redeem By End Of June The government is urging households with traditional prepayment meters to use their energy bill support vouchers by the deadline of 30 June, writes Candiece Cyrus. It introduced the Energy Bill Support Scheme last October to provide £400 of help over the six months to March, paid in instalments of £66 and £67. Those on traditional prepayment meters were sent vouchers in the post or by email that could be redeemed at the Post Office, or in the 28,000 UK stores with PayPoint services, up to 90 days from their issue date. Over 83% of vouchers worth £650 million have been claimed, but £130 million-worth still need to be redeemed by the end of June. Charities and energy suppliers are working with the government to encourage those entitled to the payments to use their vouchers. Adam Scorer, chief executive of fuel poverty charity National Energy Action said: “Some customers didn’t receive them, others struggled to redeem them.” Matthew Cole, head of Fuel Bank Foundation, a charity that provides emergency fuel vouchers to prepayment meter customers, said: “We found that reasons why vouchers haven’t been redeemed include people not receiving them, due to incorrect details or the person having moved house and their records not being updated, or they lost or deleted the voucher.” Lost, missing or expired vouchers can be reissued, as long as they are redeemed by 30 June 2023. Anyone with a traditional prepayment meter who hasn’t received their vouchers, is unsure how to redeem them, or needs one to be reissued, is being told to contact their supplier for help. Ofwat, the water sector regulator, says 23% of bill payers are struggling to pay their water bill. This compares to 20% of bill payers in October 2022, and 15% in March 2022. It adds that only around 30% of customers are aware that financial help is available from water firms while, out of those who have reported ‘struggling all the time’ with household bills, only 15% have reported having received support from their water supplier. The percentage of bill payers who report ‘never’ having struggled to pay a household bill has fallen from 45% in 2021 to 25%. Ofwat has called on water companies to “continue stepping up and supporting customers who are struggling financially.” Information on support from water firms is on the Ofwat website. 25 May: Cap Drop Reflects Reduction In Wholesale Prices As widely predicted, the energy price cap set by Ofgem, the market regulator, will fall as of 1 July, from £3,280 to £2,074. It will determine the cost of energy for households in England, Wales and Scotland until the end of September. A new cap will then take effect from 1 October. At present, domestic bills are governed by the Energy Price Guarantee, which was introduced by the government last autumn when the Ofgem cap soared beyond £3,500. This guarantee stands at £2,500, but will be superseded by the new cap. The level of the cap is based on typical use of an average household on their supplier’s standard default tariff. It caps what suppliers can charge for each unit of energy consumed, along with any standing charge, and is not a cap on total bills – households still pay for the energy they use. From 1 July the per unit level of the price cap to the nearest penny for a typical customer paying by direct debit will be 30p per kilowatt hour (kWh) for electricity customers and a standing charge of 53p per day. The equivalent per unit level for a typical gas customer will be 8p per kWh with a standing charge of 29p per day. Analysts expect the October cap to dip below £2,000 before edging above that figure at the beginning of 2024. However, the actual level of the cap is determined by wholesale prices in the weeks prior to it being announced, so there is no certainty in these predictions. The reduction in the cap in July will lead to lower typical household bills than at present, but as recently as March 2022, the energy price cap was just £1,277 a year, and this time last year it was still under £2,000, at £1,971. A cap higher than £2,000 is therefore expensive in historical terms. As reported below, analyst Cornwall Insight does not expect household bills to return to pre-pandemic, pre-Ukraine war levels until the end of the decade. The lower level of the cap – which reflects lower wholesale energy prices – may trigger the reemergence of tariff switching, with households able to shop around for cheaper deals. If this happens, competitive fixed-rate, fixed-term (12 month) offers may be seen from late June onwards. Prior to the energy market seizing up in 2021/22, around six million households switched energy tariff every year. July will also see customers on prepayment meters charged the same unit rates for gas and electricity as those who pay their bills in arrears by direct debit. At the moment, prepayment bills are higher to account for administration and servicing costs, but the government has directed that this premium should be removed. 18 May: Cornwall Insight Estimates Cap To Sit At £2,053 Energy market regulator Ofgem will reveal the latest iteration of its price cap on Thursday 25 May, covering the period from July to the end of September. Cornwall Insight, the market analyst, is forecasting that it will fall to £2,053 a year for a household with typical levels of consumption, paying in arrears by direct debit – but actual bills always reflect the amount of energy used. The cap currently for typical usage stands at £3,280 but is expected to fall thanks to tumbling wholesale energy prices, in particular natural gas. At the moment, the cap has no relevance to bills because it is higher than the separate government price guarantee, which limits average annual bills to £2,500. However, if the cap falls below the level of the guarantee, suppliers will have to set their prices at or below the cap level, raising the prospect of lower bills than at present from July onwards. It is also possible that suppliers might start competing for business on the back of falling wholesale prices. There have been no switching tariffs available on the open market for well over a year. Cornwall Insight’s prediction for the Ofgem cap for October to December is that it will fall to £1,975, rising to £2,044 in the first quarter of 2024. The picture looking further ahead remains unclear because wholesale prices could rocket again in the wake of unforeseen international turmoil. The analyst commented: “Despite the cap falling (in July) from the sky-high prices of the past two years, the figure remains over £1,000 per year more than the price cap levels seen prior to the pandemic. “We do not currently expect bills to return to pre-2020 levels before the end of the decade at the earliest. “However, we hope to see the reappearance of more competitive fixed-rate energy tariffs as prices begin to stabilise, providing consumers with additional options to manage their energy costs. “Prices remain subject to wholesale energy market volatility, and our reliance on energy imports means geopolitical incidents could still have a significant impact on energy prices.” 18 May: Firms Provide Refunds After Breaching Price Limits Customers of Good Energy and OVO Energy who were overcharged to the tune of £2.7 million are to be refunded and compensated, writes Candiece Cyrus. This follows an investigation by industry regulator Ofgem that found that, between October 2022 and March 2023, almost 11,000 OVO Energy customers were overcharged a total of just under £1.5 million. It also found that, between January 2019 and October 2022, just under 7,000 Good Energy customers were overcharged by almost £400,000. The OVO Energy customers will be automatically refunded and receive compensation totalling an average of £181 each. Overcharged Good Energy customers will automatically receive a refund and compensation averaging £109 each. The customers were overcharged relative to Ofgem’s energy price cap or the government’s energy price guarantee, which is temporarily replacing the cap to keep prices more affordable. Suppliers are obliged to set their prices at or below the level of the cap or guarantee, whichever is in effect at the time. Dan Norton, Ofgem’s deputy director of retail, said: “Protecting consumers is always our top priority, and we expect suppliers to ensure customers pay no more than the level of the price cap or energy price guarantee – schemes put in place with the very purpose of helping people. “It is totally unacceptable that Good Energy and OVO Energy customers were overcharged, particularly at a time that is already so challenging and stressful for consumers across the UK. Energy suppliers should hear this loud and clear: we expect suppliers to act with the utmost care and integrity. We will continue to hold them to account if they do not meet their customer protection or reporting obligations.” Good Energy and OVO Energy will also pay £1.25 million and £10,000 respectively to Ofgem’s redress fund, which supports customers in vulnerable circumstances. Ofgem says OVO Energy’s contribution would have been considerably higher had it not notified the regulator of its overcharging issue and resolved it in good time. Good Energy has submitted an improvement plan, at the request of the regulator, to ensure it puts measures in place to prevent overcharging in the future. The firm, along with E.ON Next and Octopus Energy, has also been fined by Ofgem for failing to send a final bill or compensate customers who switched to another provider. It has been ordered to pay 350 former customers a total of £18,000 (see update below). 17 May: E.On Next, Octopus, Good Energy Missed Deadlines Three energy suppliers have paid £8 million in fines for failing to compensate former customers on time. Suppliers are obliged to get a final bill out to customers who’ve switched to another provider within six weeks, as set out in the Guaranteed Standards of Performance (GSOP) regulations introduced in May 2020. Those who fail to send the bills within six weeks must pay £30 in one-off compensation to affected customers. If bills fail to arrive within a further 10 working days, customers are entitled to a further £30. Energy regulator Ofgem told E.On Next to pay £5.5 million to almost 95,000 customers, Octopus Energy to pay £750,000 to 19,000 customers and Good Energy to pay 350 customers a combined total of £18,000. Ofgem says not getting a final bill in a timely manner can result in consumers being incorrectly set up at the new supplier, being in debt at the old supplier and receiving a large, unexpected bill. The watchdog found the three suppliers either missed or unduly delayed £6,305,925 worth of compensation payments owed to more than 100,000 customers. This is the first time Ofgem has enforced GSOP rules. Neil Kenward of Ofgem said: “Ofgem introduced these standards to make sure customers get the service they deserve when switching energy suppliers. “Our rules mean that, where energy companies drag their heels, customers are automatically compensated. We won’t hesitate to hold energy companies to account, as we have done today. “As the energy market starts to recover, we’ll likely see a return to more switching, and this action is a reminder to suppliers that they need to make switching as easy and convenient as possible for their customers, and where they cause undue delay, pay compensation swiftly.” Suppliers paid additional compensation of £1.7 million to customers or the Energy Industry Voluntary Redress Scheme (EIVRS), which supports vulnerable consumers. This included £1.3 million from E.On Next in recognition of system failings and compensation delays. Ofgem says all three suppliers have now updated their billing processes and systems to ensure payments will now be made in line with the regulations. 12 May: Affordability Issues Dog Upgrades To Housing Stock Citizens Advice is warning that the majority of homes will require some level of energy efficiency upgrade, costing an average of £15,000, if the UK is to achieve net zero carbon emission status by 2050, writes Candiece Cyrus. It says most households that are not eligible for government support through, for example, the Boiler Upgrade Scheme, are facing financial barriers to making the necessary changes. Applicants for the scheme must be qualifying property owners with a Energy Performance Certificate (EPC) that has no outstanding loft or cavity wall insulation recommendations. Grants of up to £6,000 towards heat pumps and biomass boilers. Following a survey of 12,000 homeowners in England and Wales, Citizens Advice found that around 90% of respondents cited the cost of home improvements, from the installation of floor and wall insulation to the fitting of double or triple glazed windows, as a barrier to having the work done. Fewer than 20% of respondents said they would be able to afford a heat pump, which costs an average of £10,000, without borrowing money, while fewer than 20% were willing to borrow money through a mortgage or unsecured loan to fund improvements. Aside from the financial implications, most respondents were not interested in making any energy efficient upgrades to their home. Only 40% indicated an interest, with most showing preference for measures such as loft insulation and double or triple glazing over installing a heat pump, solid wall insulation and cavity and floor insulation. A similar number said they would consider paying for energy efficient measures after they were told it could save the average household £300 on their annual energy bill, showing the need for incentives. Around 30% of respondents were concerned about the effectiveness and suitability of any measures taken. The survey also revealed that age plays a role in homeowners’ enthusiasm towards home improvements. Respondents aged 18-34 were almost three times more likely to be interested in installing a heat pump than homeowners aged over 55. According to the Energy Saving Trust, fewer than 250,000 of the UK’s 29 million homes have heat pumps, but the government expects that millions more will be needed over the next 10-15 years to meet its net zero targets. 9 May: Analyst Sees Competition Return As Market Stabilises Analyst Cornwall Insight says energy firms could start offering fixed-rate, fixed-term deals from July as wholesale prices stabilise at lower levels than have been seen for over 18 months, writes Candiece Cyrus. Competitive fixed deals have been virtually nonexistent since the market was thrown into crisis ahead of Russia’s invasion of Ukraine in February last year and the subsequent sanctions placed on Russia’s gas exports. Wholesale prices rose steadily in 2021 as fears of conflict grew, and over two-dozen energy suppliers went out of business. However, a combination of a mild winter and reduced customer demand in 2022/23 has led to higher than predicted European storage levels, which has helped to lower concerns over energy supply and curb market volatility. At present, the government’s Energy Price Guarantee, which was introduced in October last year to help households with soaring energy bills, limits the amount firms can charge their customers per unit of energy, and in standing charges, at £2,500 per year for the average household. It overrides the price cap, set quarterly by energy regulator Ofgem, which usually limits how much energy firms can charge their customers per unit of energy and in standing charges based on wholesale prices. Energy suppliers are currently setting their prices with reference to the guarantee. However, from July, the Ofgem price cap is likely to undercut the government guarantee, at which point firms will only be able to offer tariffs at or below the cap. Cornwall Insight predicts the cap will fall to £2,063 per year for an average household, for the period between July and September, from its current level of £3,280. It says the cap should remain relatively stable heading into next year, rising to £2,098 per year between October and December, and then to £2,162 per year between January and March 2024. While fixed deals can help energy customers manage their bills better, as their per-unit rates will remain the same over the deal term (usually 12/ 24 months), they should note that there is a risk of losing out on paying less if wholesale energy prices fall during this period. Dr Craig Lowrey at Cornwall Insight says: “As the wholesale energy market has levelled out in recent weeks, our predictions for the price cap have followed suit. Some energy suppliers will potentially look to leverage this opportunity to bring back fixed tariffs on or around the price cap, with stable projections lowering concerns they will lose out over the fixed term. “This potential re-emergence of competitive tariff propositions presents an opportunity for households to finally get a grip on their energy bills, having been hit hard by the energy crisis. While this seems positive, fixing energy tariffs is a gamble, the market may go down as well as up, and households run the risk of getting locked into bills higher than the price cap.” Regulator Ofgem has tweeted out the message THINK BEFORE YOU FIX today, adding: “Fixed-rate energy tariffs might be appearing back on the market but check if they are right for you. Prices are still unpredictable and signing up for a fixed rate now might mean you miss out if prices fall.” 24 April: ‘Tell Us Once’ Principle Across Range Of Providers Energy regulator Ofgem is proposing the creation of a universal joint priority services register that would enable vulnerable households on certain means-tested benefits to sign up once to receive extra help from utility firms, writes Candiece Cyrus. At present, customers need to sign up to each company’s register separately. Ofgem’s proposed joint register would unify existing databases energy firms and other utility services, including water suppliers. Customers are deemed vulnerable due to factors such as their age, illness, a disability or having young dependents in their household. Customers officially identified by a firm as vulnerable are provided with additional assistance such as: priority support in an emergency, which includes advance notice of scheduled power cuts the provision of hot meals a nominee scheme which allows a family member of the customer’s choice to receive their bills and deal with suppliers on their behalf an identification and password scheme to identify genuine workers when they call at their home. Jonathan Brearley, Ofgem’s chief executive, commented: “Our rules clearly require suppliers and network companies to use their priority services register to provide appropriate support to customers. This is an extremely important part of the licence conditions and we will respond robustly if this is not the case. “We should all consider building towards a joint register, not just between water and energy, but including wider sectors and potentially local and national government, such as data held by the Department for Work and Pensions. “Ideally, this joint register would be based around a ‘tell us once’ principle – where families who have vulnerabilities tell one agency about this and, with permission, this is shared across the others with a single, reliable source of data to anticipate, identify, and respond to the needs of those customers.” The energy regulator says firms are not doing enough to inform their customers about the support they could receive if vulnerable. Only one in three customers are aware of a priority services register, according to its research, and of those who are aware, a substantial minority who could be eligible for support based on their circumstances, are not on it. Dr Elizabeth Blakelock, principal policy manager at Citizens Advice, tweeted: “No single regulator can make this happen – they only have the ability to direct the firms in their sector. So we need the government to set up a taskforce to agree the scope of this system and ensure firms participate.” 18 April: Campaigners Insist Wider Protections Are Required Ofgem, the energy market regulator, today released a Code of Conduct for energy suppliers, outlining how they should conduct involuntary – or forced – prepayment meter (PPMS) installations, writes Bethany Garner. The aim is to limit installations at vulnerable households, with an outright ban on high risk individuals (see below). Involuntary PPM installation is typically used as a last resort for customers who fall into significant arrears on a standard energy meter. But in recent months suppliers including British Gas, Scottish Power and Ovo have come under fire for forced installations in homes occupied by ‘vulnerable’ customers, including the elderly – which is not permitted. The issue came to light when The Times reported instances of supplier representatives breaking into properties to change the meter. There has been a temporary ban on forced installations since the story broke in March. They will restart in May, in approved circumstances, with suppliers having to satisfy a range of criteria before proceeding. The code, developed in consultation with Citizens Advice, Energy UK and other stakeholders, will take effect from today. All energy suppliers in England, Scotland and Wales have signed up. It bans suppliers from forcing PPM installation for customers Ofgem considers ‘high risk’. This category includes adults aged 85 and over, individuals with severe or terminal illnesses, and those who need a consistent electricity supply for medical reasons. These individuals may depend on electrically powered equipment such as ventilators or dialysis machines. The Code also clarifies the circumstances under which forced PPM installations can still be made. Suppliers can’t install a PPM unless the customer hasn’t paid their bill for at least three months, or has outstanding debt of at least £200 per fuel. If the customer has already arranged a debt repayment plan, the supplier can’t install a PPM without their consent. While customers in the ‘high vulnerability’ group are shielded from involuntary installation altogether, individuals classed as ‘medium risk’ will be considered on a case by case basis before forced installation takes place. This group includes households with children under five, elderly adults (over 75) and individuals with serious physical or mental health conditions. Our energy spokesperson, Kevin Pratt, said: “It is welcome news that the welfare of those deemed high risk will be safeguarded by the new rules, but charities are concerned that others – those under 85 and some people with serious illnesses or young children – may literally be left out in the cold because forced installations will still be permitted.” Caroline Abrahams, charity director at Age UK, said: “It’s good to see some regulation coming in to begin to rein in the practice of forcibly installing pre-payment meters, which has previously been something of a Wild West, but these new rules do not go far enough. “We don’t think any older person should be subjected to this treatment, not only the over-85s and the over-75s who are deemed vulnerable in some way, partly as a matter of principle but also because of concerns about how effective the assessment of vulnerability will be. “The risk is that some older people – and younger ones too – who should definitely not be on a pre-payment meter end up on one.” The Code of Practice also stipulates that: Before forcibly installing a PPM, suppliers must carry out a ‘site welfare visit’ to assess whether the device is suitable for the household, and whether any occupants should be considered ‘vulnerable’. During these visits, the supplier’s representative must use an audio recording device or body camera – which must also be worn during PPM installations. If a supplier goes ahead with forced PPM installation, they should use a smart meter whenever possible. All new PPMs must be installed with £30 credit, which is added to the customer’s outstanding energy debt. Once the meter is installed, suppliers must attempt to contact the customer within 72 hours to ensure they know how to use it. Mr Pratt added: “The root of the problem is simply that energy is too expensive. That’s why households fall into unmanageable arrears on their standard meter bills and end up being forced onto a prepay arrangement. But we’re only going to tackle that through radical action such as the introduction of a social tariff that subsidises prices for those deemed most vulnerable. “For that to happen, we need buy-in from the regulator, suppliers and, crucially, the government, and other billpayers will need to accept that a social tariff will effectively be funded by everyone’s energy bills. But unless there is deep structural reform to the beleaguered energy sector, supported at a societal level, it is hard to see how contentious issues such as clumsy and cruel forced meter installations are going to be resolved.” If a supplier installs a PPM in a way that breaks the Code, the device must be removed, and the customer may be eligible for compensation. Customers who believe their supplier has breached this code can contact the Energy Ombudsman. 31 March: Analysts Says Business Energy Costs Set For 133% Rise Analyst Cornwall Insight is predicting that Ofgem’s energy price cap, which ordinarily limits what suppliers charge households per unit of energy and for standing charges, will drop to £2,024 a year in July and £2,076 a year in October for a household with typical energy consumption, writes Candiece Cyrus. This is higher than its estimates announced last week, of £2,000 a year for July and £2,023 a year for October, indicating continued volatility in the wholesale energy market. The cap for the period April to June is £3,280, having stood at £4,270 in the first quarter of the year. The cap isn’t currently applied to household bills as the government’s Energy Price Guarantee, introduced in October last year, caps bills at £2,500 a year for the typical household. It will remain at this level until 31 March 2024. Once the cap falls below the level of the EPG, the latter will become defunct and the cap will be applied to household bills once again. While it would mark a large reduction in bills, it would still be considerably higher than the cap level before 2021. Mr Lowrey said: “The energy market has been on a difficult journey over the past three years, with consumers having faced energy bills at levels never experienced before. “Our forecasts for the second half of 2023 show the prospect of a more stable energy climate, which all being equal, will see energy bills continue their downward trajectory. However, in the short-term they still remain well above historic highs. “Of course, we must never take anything for granted, and as quickly as they fall, global shocks and our reliance on energy imports could see the energy market, and subsequently bills, rise yet again.” Huge increases in store for business users Cornwall Insight also says businesses that had to fix their energy bills when wholesale prices peaked in August last year will see a rise of up to 133% in their electricity bills from tomorrow. Most business energy tariffs have a fixed duration, with firms only able to switch suppliers during a ‘renewal window’ towards the end of the term. This means they are at the mercy of prevailing market prices at that point. Cornwall Insight says the hike in prices is due to a cut in the government’s support for businesses, with the Energy Bill Relief Scheme being replaced with the less generous Energy Bill Discount Scheme (EBDS) 1 April. The analyst’s announcement follows a warning from the Federation of Small Business, that increased energy prices could force 370,000 firms to downsize, restructure, or at worst, close (see story below). Under the new scheme, which runs until 31 March 2024, businesses will receive a much-reduced discount on the unit price of their gas and electricity once wholesale prices reach a certain threshold. Firms that are heavy energy users, otherwise known as Trade Intensive Industries or ETIIs, will need to apply for a larger discount. Dr Craig Lowrey at Cornwall Insight said: “The impact of EBDS on businesses is not uniform and will vary significantly across sectors. Energy-intensive industries that will receive additional support under EBDS may experience greater financial stability, while vulnerable businesses, some already struggling post-pandemic, may find reduced support levels and expensive fixed contracts a tough pill to swallow.” 30 March: Small Firms Face Stark Choices As Bills Set To Rocket The Federation of Small Businesses is warning that this weekend’s changes to government subsidies for business energy costs could lead to 370,000 firms being forced to make fundamental changes to their operations, including closure in some cases. On Saturday 1 April, the Energy Bill Relief Scheme (EBRS) will be replaced with the Energy Bills Discount Scheme (EBDS). The new scheme, which will run until 31 March next year, provides non-domestic energy users with a discount on the price of each unit of energy they use. This kicks in when the price per unit reaches a certain threshold, and is limited to a fixed amount. For most non-domestic energy users in Great Britain and Northern Ireland these threshold prices and maximum discounts have been set at: electricity: £19.61 per megawatt hour (MWh) with a price threshold of £302 per MWh gas: £6.97 per megawatt hour (MWh) a price threshold of £107 per MWh. Businesses which are highly dependent on electricity and gas usage, known as Energy and Trade Intensive Industries or ETIIs, will be able to apply for a larger discount to a maximum limit, which will apply to 70% of their energy volumes. For electricity, the maximum discount will be £89 per MWh with a price threshold of £185 per MWh. For gas, £40 per MWh with a price threshold of £99 per MWh. Suppliers will automatically apply the discount to business energy bills. The FSB and other business groups say the support provided is significantly lower than that offered by the EBRS, which was introduced in October last year to provide a discount from a wholesale unit price threshold of £211 per MWh for electricity and £75 per MWh for gas. According to the FSB, 340,000 small businesses that fixed their energy bills last year, when wholesale prices were at their highest, will see their bills rise in some cases by many thousands of pounds. It says a pub that uses 48,000 kWh in electricity and 192,000 kWh in gas annually, which moved on to a new energy tariff in August last year, would have seen its estimated £85,000 annual energy bill reduced by £60,000 under the EBRS, which ends on 31 March. From 1 April, under the EBDS, it would only receive just over £2,000 in support, leaving it with £83,000 still to pay in energy costs. The FSB is therefore calling for a ‘Help to Green’ scheme as a long-term solution to support businesses with high energy costs. It would provide small businesses with a £5,000 voucher for investing in energy-saving or even energy-generating measures. This includes high quality insulation, solar panels and heat pumps. It also has called for suppliers to be sympathetic to businesses and offer an ‘extend and blend’ approach to tariff offers, allowing businesses on expensive tariffs to benefit from a fall in wholesale energy costs since January this year. However, as suppliers buy months in advance, today’s prices still reflect the higher bulk costs paid last year. Tina McKenzie, policy chair of the FSB, said: “The jump in energy bills on April Fool’s Day won’t be a laughing matter but will be a shock to hundreds of thousands of small businesses, who signed up to fixed contracts when the government discount was guaranteed under EBRS. “Some 370,000 small firms could also be forced to consider downsizing, restructuring or closing as it is impossible to pass on the full costs to customers, who cannot suddenly afford to pay £25 for a pizza or see the price of a pint double. “There’s much that could and should be done rather than leaving small firms high and dry. Allowing the most vulnerable small businesses to renegotiate or ‘blend and extend’ their energy contracts to better reflect lower wholesale energy prices is the least the government and energy suppliers could do.” 27 March: Firms Urged To Encourage Voucher Use Figures published by the Department for Energy Security & Net Zero today show that three energy companies – British Gas, Scottish Power and Ovo Energy – accounted for 70% of forced prepayment meter installations in 2022, writes Candiece Cyrus. In total, 94,201 prepayment meters were force-fitted under warrant last year, with the three companies above responsible for 66,187. Energy companies have traditionally applied to the courts for permission to enter a property using a warrant in order to change the occupant’s meter, usually as a last resort because of significant arrears. However, the practice has come under the spotlight following revelations by The Times that British Gas was forcibly fitting meters in properties occupied by ‘vulnerable’ customers, including the elderly, which is not permitted. As a result, Grant Shapps MP, energy security secretary, suspended the force-fitting of prepayment meters until 31 March. Ofgem has since extended the suspension until it is satisfied companies are abiding by a revised code of conduct. The Chancellor also announced in his Budget on 15 March that households on prepayment meters will no longer need to pay more than others for their energy from July. At present, prepayment charges are higher to reflect the cost of administering the system. In its analysis of the 2022 figures, the Department for Energy singles out Scottish Power as the ‘worst offender’ when comparing the amount of meters force-fitted (over 24,300) relative to its customer base. The government says this equated to 500 installations per 100,000 meter points. British Gas forcibly fitted 25,000, while for Ovo Energy the figure was over 16,000. This compares to around 10,000 by E.ON, 7,000 by EDF and 4,000 by Shell. Both Utilita and Bulb forcibly fitted over 2,000, and there were 1,500 by Utility Warehouse, just over 100 by Tru Energy and fewer than than 100 by Ecotricity, Good Energy and Octopus. Mr Shapps last month said today: “Today’s figures give a clear and horrifying picture of just how widespread the forced installation of prepayment meters had become, with last year seeing an average of over 7,500 force-fitted a month. “After my calls for change, I’m pleased that suppliers have made their actions public and agreed to put a stop to forcing prepayment onto vulnerable customers for good – but this cannot happen again. “I will be watching Ofgem’s ongoing review closely so customers get the support they need – and those vulnerable consumers who have wrongly suffered forced installations get the justice they deserve in the form of redress.” Mr Shapps also urged suppliers to help households on traditional prepayment meters to access the 2.1 million vouchers yet to be claimed under the government’s Energy Bills Support Scheme. An increasing number of those with traditional prepayment meters have been redeeming their vouchers – as of February, 7.6 million vouchers had been redeemed by two million households. The percentage of redeemed vouchers has been steadily rising, reaching 76% in January and 78% in February. The vouchers have provided £400 towards household energy bills in instalments over six consecutive months from October to March. Suppliers send customers on traditional prepayment meters their vouchers by post, text, email or as automatic credit on topping-up. They can be redeemed at the Post Office or in the 28,000 UK stores with PayPoint services up to 90 days from their issue date. 15 March: Prices Due To Fall In July As Lower Cap Kicks In Ahead of this afternoon’s Budget, the government has confirmed that its Energy Price Guarantee (EPG) will be kept at £2,500 until the end of June. It was scheduled to rise to £3,000 on 1 April. The cost of subsidising domestic energy bills has fallen, giving the Chancellor, Jeremy Hunt, scope to extend the measure in a move he says will shield a typical household from a £160 price increase. The quoted EPG figures represent the annual bill for a household with average consumption paying in arrears by direct debit. Those with prepayment meters pay slightly more under the EPG, but Mr Hunt is also using the Budget to end this differential so that the so-called prepayment premium is eliminated. This will save average consumption prepayment customers around £45 a year when it comes into effect later this year. The government says that, if the EPG had not been introduced in October to supersede the price cap operated by Ofgem, the market regulator, typical bills would have reached £4,279 a year this winter. The price cap, which is reviewed quarterly, will fall to £3,280 on 1 April, still higher than the EPG. However, the cap is forecast to fall to £2,013 in July, at which point suppliers will be required to offer tariffs that conform with the cap, rather than the EPG. The steep fall in wholesale gas prices in recent weeks has not yet been reflected in household bills because suppliers buy in advance – today’s bills still reflect the bulk costs paid in the autumn. But if wholesale prices continue to fall, it is thought we may see the re-emergence of competition between suppliers, with keenly priced tariffs being used to encourage customers to switch between firms – a market phenomenon that hasn’t functioned for 18 months. The EPG will remain in place until the end of March 2024, reverting to £3,000 on 1 July. It will come into play once more if the Ofgem cap rises above this figure due to increases in wholesale prices. In addition to forecasting the cap to sit at £2,013 from July to September, industry analyst Cornwall Insight predicts it will be at £2,002 in the fourth quarter. Mr Hunt is expected to announce further cost-of-living support in his speech, including more help with childcare costs for parents on Universal Credit. No announcement has been made ahead of the Budget regarding support for commercial energy consumers, whose higher bills are inevitably being passed on in the form of higher prices. Danni Hewson, head of financial analysis at AJ Bell, said: “From local swimming pools to those industrial-sized greenhouses that grow our precious salad, energy costs have become enemy Number 1. This Budget might have been touted as one to stimulate growth but without extending help for business as well as households, growth might be difficult to incubate.” 14 March: Companies Must Comply With Code Of Practice Energy regulator Ofgem has extended the ban on the forced installation of prepayment meters beyond the end of March. The ban, which also applies to the remote switching of smart meters to prepayment basis, was introduced last month by Ofgem, at the behest of Grant Shapps MP, energy secretary. This followed reports in The Times that British Gas had forcibly installed prepayment meters at the premises of vulnerable customers. It subsequently emerged that other suppliers were similarly not treating their customers fairly with regard to moving them onto prepayment meters in order to limit the arrears on their accounts (see stories below). A code of practice is being drawn up to ensure customers’ interests are protected with regard to the use of prepayment meters. Jonathan Brearley, Ofgem CEO, told members of the cross-party Parliamentary Business, Energy & Industrial Strategy Committee of MPs that his priority is to make sure the industry gets its act in order: “Companies will only restart installations when and if they can establish that they are acting in accordance with the new code of practice.” 8 March: Govt Urged To Hold Price Guarantee At £2,500 Citizens Advice, the official advocate for energy consumers, is calling for the introduction of a cut-price ‘social’ tariff for hard-pressed households who meet the official definition of being in fuel poverty, writes Candiece Cyrus. Households that spend more than 10% of their income, after housing costs, on energy bills are deemed to be in fuel poverty, with an estimated 10 million homes currently in this situation. The charity says this number will rise to 12 million households if the government’s Energy Price Guarantee is reduced on 1 April, as planned. At present, the Guarantee subsidises bills so that a typical household is paying £2,500 a year for its gas and electricity. This figure would rise to £3,000 – a 20% increase – from April if planned changes take effect, although Citizens Advice says it is widely expected that the Guarantee will remain at £2,500 after extensive lobbying by charities and consumer groups. An announcement on the future of the Guarantee is expected in the Budget next week. If the Guarantee were not operating, typical energy bills would be above £4,200 now and around £3,300 from April. Citizens Advice says households are paying twice as much for their energy as they were in 2021, with households on the lowest incomes spending more than 50% of their income after housing costs on energy bills compared to 34% in 2019. The idea of a subsidised social tariff was put forward by Keith Anderson of Scottish Power last year. Ofgem, the market regulator, is examining how such a tariff might operate and, crucially, how eligibility would be determined (see stories below). Citizens Advice says a social tariff could reduce bills based on a household’s level of income and energy consumption, with average savings £381. Reductions could reach up to £1,500 for households on the lowest incomes. Dame Clare Moriarty, Citizens Advice’s chief executive, said: “Energy affordability is a long-term problem that needs a long-term solution. A social tariff protects millions of people from spending excessive amounts on their bills. “High energy costs have left too many people choosing between heating and eating. Uncertainty over future high prices only adds to the stress and worry felt in households across the country. “This policy helps make energy bills more affordable in the years ahead and supports the shift to warmer, safer homes that are ready for the net zero transition.” The announcement of the social tariff proposal follows Age UK’s call for a ‘prepayment amnesty’, which would allow the four million UK households on prepayment meters to have their meters uninstalled for free and replaced by a credit meter. According to Age UK, 25% of the four million households on a prepayment meter have an occupant aged over 60, and 85% of this group are in fuel poverty and/or receive benefits, which means they are on the lowest incomes. The charity says it has been contacted by those who ‘self-disconnect’ as they cannot afford to top up their meter. 27 February: Govt Urged To Ditch Hike As Cap Heads To £2,112 In July Ofgem, the energy regulator, has announced that its price cap for the three months from April to June will be £3,280 a year for a dual fuel household paying by direct debit based on typical consumption. It currently stands at £4,279 a year. The new cap will not be used to determine household bills because it will remain above the government’s energy price guarantee, introduced last October as the cap rocketed in response to rising wholesale prices. At present, the government guarantee stands at £2,500 a year (for typical households). It will rise to £3,000 on 1 April, the same day the new Ofgem cap becomes effective. This increase in the guarantee means household bills will rise by 20%. Charities are calling on the government to maintain the guarantee at £2,500 to avoid worsening the cost of living crisis for consumers already struggling to pay their bills. The impact of energy bills on household budgets will also worsen from April because the final payments of the £400 government energy bill discount scheme – spread over six monthly payments from October 2022 to March 2023 – will have been paid. The cost to taxpayers of subsidising household energy bills is effectively the difference between the guarantee and the Ofgem cap. With the gap narrowing as wholesale prices fall, campaigners say the impact on the public purse is reducing to the point where it is reasonable to maintain the guarantee at £2,500. They further point to predictions that the Ofgem cap will fall further in July when it is next revised. Analyst Cornwall Insight, which has a track record of accurately predicting movements in the cap (it estimated £3,294 for the April figure, just £14 out), says July’s cap will be £2,112. It further predicts that the cap will be largely unchanged in October, at £2,118. It bases its forecasts on analysis of current and ‘forward’ wholesale prices, the latter being the cost of securing future supplies. Once the cap falls below the level of the guarantee, the guarantee will cease to operate and suppliers will be obliged to charge at or below the level of the cap. That means the government would only need to maintain the cap at £2,500 for three extra months, after which the need to subsidise bills would end. An announcement about future government support for domestic and commercial energy is expected in the Budget on 15 March. There have been suggestions that the downward trend in wholesale prices could see a return of tariff switching as suppliers reintroduce competitive fixed-price deals. 21 February: Govt Tells Regulator Not To ‘Pull Any Punches’ Regulator Ofgem is calling for suppliers to consider offering compensation and the removal of prepayment meters (PPMs) where they have been wrongly installed in customers’ homes, writes Candiece Cyrus. Earlier this month, The Times revealed that British Gas has used excessive and inappropriate means when force-fitting prepayment meters, including deploying locksmiths to gain entry to the properties of vulnerable customers. In response, Ofgem launched an investigation into the British Gas case and a review of prepayment meter installations in general. Following intervention by Grant Shapps MP, energy secretary, suppliers agreed to pause the installation of prepayment meters until 31 March. Commenting on Ofgem’s investigation, Mr Shapps said on Twitter: “Forcing the vulnerable onto prepayment meters is a scandal. I’ve been clear I want to see redress for those wronged. “It is right that Ofgem is now investigating. Tough action must be taken where this has happened – it cannot afford to pull any punches.” Ofgem says firms should use the time until the end of March “to review all of their recent forced and remotely switched PPM installations, and consider if any need to be reversed, and compensation offered where the strict rules have not been followed.” Remote switching involves altering a smart meter electronically so that it works on a prepayment rather than credit basis. Industry rules allow energy suppliers to force-fit prepayment meters once they have secured a court warrant. However, Ofgem states this should always be a last resort and should not be carried out if the customer is deemed vulnerable, which includes having children under five, being pregnant, being of pension age or having a disability or mental health condition. Jonathan Brearley, Ofgem’s chief executive, says suppliers could face fines if systemic problems are found with their PPM practices. As part of its review, which will be complete by April, Ofgem will look into what further protections energy customers may need surrounding prepayment meter installation, and where the need for customers to be moved onto prepayment plans can be reduced. As part of its British Gas investigation it said it will assess whether the supplier has: provided its struggling customers with support, such as advice on how to reduce costs, signposting to sources of debt assistance and alternative repayment options, before choosing to put them on prepayment plans assessed whether it is safe and reasonably practicable to install a prepayment meter and whether a customer’s mental capacity and/or psychological state could cause the installation of a prepayment meter to be severely traumatic, or make their condition significantly worse taken all reasonable steps to ensure that each representative who visits a customer has the necessary skills, including the ability to assess the safety and practicability of installing a prepayment meter, and assess the customer’s mental capacity and psychological state on the doorstep ensured all representatives are fit and proper to enter a customer’s home treated customers fairly in accordance with Ofgem’s Standards of Conduct, and that its representatives behave in a fair, honest, transparent, appropriate and professional manner. 20 February: July Cap To Undercut Govt Price Guarantee Cornwall Insight has further revised its estimate of the April iteration of the Ofgem energy price cap, which will be confirmed by the regulator a week today. The analyst is predicting the cap will be £3,294. As this will be above the level of the government’s energy price guarantee of £3,000 a year for typical household bills, the cap will not govern what people pay. The price guarantee is currently £2,500, rising to £3,000 on 1 April – a 20% increase. March will also see the end of the government’s phased £400 energy bill rebate scheme, adding further pressure to household budgets. Cornwall Insight says the quarterly-updated cap will fall below the level of the price guarantee in July, saying the cap will then stand at £2,153.34. The forecast for October’s cap is £2,161.05. Once the cap is below the guarantee, the government will no longer subsidise energy bills and suppliers will be required to offer tariffs at or below the level of the cap. This raises the prospect of customers being able to switch to competitive deals if suppliers decide to create attractive fixed-term deals to capture market share. However, it should be recalled that, even at £2,150 or thereabouts, the cap in July would still be almost £1,200 higher than in July 2022, when it stood at £1,971, again for households with average consumption. Falls in the level of the cap reflect the lower prices energy firms are paying on wholesale market to secure future supplies. Prices are falling as countries source alternatives to Russian natural gas. The cap will remain high for the immediate future to reflect the higher prices already paid by firms for the fuel they are supplying at the moment and until the summer. 15 February: Wholesale Price Falls To Feed Through To Bills Falling wholesale prices could see the return of competition to the energy market from July, enabling customers to switch to cheaper deals, according to industry analyst Cornwall Insight. In the years leading up to 2021, before the current energy crisis, around six million households a year switched suppliers, usually moving to fixed-rate tariffs lasting 12 or 24 months. These were priced below standard variable rate tariffs (SVTs), the price of which was capped from 2019 onwards by a price cap set by the market regulator, Ofgem. However, as wholesale prices soared in the latter half of 2021 and into 2022, the availability of cheap fixes dried up, and SVTs became the least-expensive option. With all suppliers pricing their SVTs at or close to the level of the Ofgem cap, the incentive to switch disappeared. Since then, as the cap increased in response to soaring wholesale prices, the government introduced the Energy Price Guarantee (EPG), which is lower than the Ofgem cap, and which means prices for each unit of energy used are held at a given level for all domestic customers. Under the EPG, the average annual bill for a typical household stands at £2,500. If the cap were still in place, this figure would be £4,279. However, the EPG average bill will rise to £3,000 a year from April as the government trims back support. This will still be below the predicted price cap at that point, but in July, the cap is expected to dip to around £2,360 – and energy bills will then be required to reflect the level of the cap, not the EPG. Cornwall Insight commented: “There is a good chance that suppliers will be able to offer fixed tariffs that compete with the capped government prices, reviving the benefits of switching suppliers. “In examining the potential for switching, we note that if the wholesale market volatility, as experienced in 2022, returns, it could become uneconomic or impractical for suppliers to offer the kind of competitive tariffs in question. “However, the current market conditions suggest there may be room for households to have a wider engagement in the energy market than they have in recent times.” Price differentials between suppliers may emerge because firms buy bulk energy supplies in advance, at different times and prices. Some may also choose to undercut rivals in order to secure market share. 10 February: Energy Secretary Says More Needs To Be Done All energy suppliers have agreed to stop forcefully installing prepayment meters in the homes of vulnerable customers. The move comes in response to demands from the government for change in their practices (see story below), writes Candiece Cyrus. Grant Shapps MP, energy secretary, wrote to suppliers last Sunday, requesting that they tell him how they are supporting their customers and how many warrants they have each sought to forcibly install prepayment meters. He set suppliers a deadline of last Tuesday to tell him how they would rectify situations for customers who should not have had prepayment meters installed, including the payment of compensation. Today’s announcement on the cessation of forced installations follows Lord Justice Edis issuing directions to magistrates courts to stop approving warrants earlier this week. However, Mr Shapps says more needs to be done by industry regulator Ofgem to oversee energy firms’ treatment of their customers. Ofgem said it will ask customers about their experiences, rather than just suppliers. While all suppliers responded to Mr Shapps letter, with several outlining means of redress for their customers, such as compensation or replacing a prepayment meter with a credit meter, he said a number failed to offer any details of their plans. Ofgem requires suppliers to support vulnerable customers who are struggling with their bills by, for example, offering affordable repayment plans, and only putting them on prepayment meters as a last resort. Vulnerable customers include the elderly, disabled, and parents with young children. A recent report in The Times revealed that British Gas has used locksmiths to gain entry into properties in order to fit prepayment meters because the occupants had fallen into arrears on their credit meter. Suppliers have also remotely switched smart meters to prepayment mode. Charity Citizens Advice has also been calling for a ban on forced installations since last summer after the number of people it saw who could not top up their prepayment meter surpassed levels for the previous 10 years combined. Mr Shapps says he will “continue to stand up for vulnerable customers who have had their homes invaded, and to ensure that this cannot happen in future.” He added: “People will have understandably been shocked and appalled at how vulnerable people’s homes have been invaded and prepayment meters installed against their wishes – and suppliers are only at the beginning of correcting this abhorrent behaviour. “I am angered by the fact some have so freely moved vulnerable customers onto prepayment meters, without a proper plan to take remedial action where there has been a breach of the rules. So, I have only received half the picture as it still doesn’t include enough action to offer redress to those who have been so appallingly treated.” 7 February: Grant Shapps Pledges To Bring Down Bills Prime Minister Rishi Sunak has split the Department for Business, Energy and Industrial Strategy (BEIS) into three new government departments, writes Candiece Cyrus. He has created the Department for Energy Security and Net Zero, alongside the Department for Science, Innovation and Technology, and the Department for Business and Trade. He is also ‘refocusing’ the Department for Culture, Media, and Sport. Grant Shapps MP, has moved from being business, energy and industrial strategy secretary, to the role of secretary of state for energy security and net zero. Following his appointment, Mr Shapps tweeted: “My focus will be securing our long-term energy supply, bringing down bills and thereby helping to halve inflation.” On Sunday, Mr Shapps gave energy firms until the end of today (Tuesday) to tell him what action they will take if they are found to have wrongfully installed prepayment meters in the homes of vulnerable customers. The science, innovation and technology secretary is Michelle Donelan MP. She was culture secretary. The current international trade secretary, Kemi Badenoch MP, has been appointed business and trade secretary. She remains president of the Board of Trade, and minister for women and equalities. Lucy Frazer KC MP is new Secretary of State for Culture, Media, and Sport, having been a Minister of State for Housing and Planning. 6 February: Falling Wholesale Prices Fuel Optimistic Cap Forecast Analysts Cornwall Insight has released revised energy price cap forecasts for the remainder of the year which, if accurate, will see the cap undercut the government’s energy price guarantee, writes Candiece Cyrus. The price cap was introduced in 2019, by industry regulator Ofgem, to limit the amount energy suppliers can charge households per unit of energy and for associated standing charges. Updated on a quarterly basis, in response to wholesale energy costs, it now stands at £4,279 for the period January – March 2023. However, thanks to the government’s guarantee, which subsidises prices to an average of £2,500 per annum until the end of March, the cap is not currently in use for domestic consumers – Cornwall Insight’s figure demonstrates what a household with average consumption would pay if it were. The Guarantee level increases to £3,000 in April and will last for 12 months. Cornwall Insight predicts that the cap will fall to £3,338 in April, before falling further to almost £2,362 in July. This would take the cap below the guarantee, rendering the latter redundant at that point – household bills would then be determined by the cap. However, they would remain far in excess of the £1,271 average in place 12 months ago. In October, the analysts expect the cap to stand at £2,389, still lower than the Guarantee. Forecasts for the cap are reducing as European countries previously dependent on Russia for natural gas source alternative energy supplies Warmer temperatures also helped reduce demand for energy, thereby lowering wholesale prices. 5 February: Government seeks end to ‘abhorrent’ behaviour by suppliers over prepayment meters Grant Shapps MP, energy secretary, has given energy suppliers a deadline of Tuesday to tell him what action they will take if it emerges they have wrongfully installed prepayment meters in the homes of vulnerable customers. Mr Shapps favours the payment of compensation in such cases. As reported below, British Gas has admitted fault in cases where vulnerable households, including those with small children or medical conditions, have not been treated fairly or with compassion. News of the scandal, originally broken by The Times, includes reports of debt collectors breaking into homes to install prepayment meters. There are also reports of smart meters being switched to prepayment mode remotely by some suppliers. Mr Shapps is angry that a number of reviews by the regulator, Ofgem, into the services provided by energy suppliers have not identified this unacceptable behaviour or other significant shortcomings, and have even given some companies a clean bill of health. He has ordered Ofgem to toughen up on energy suppliers and investigate customer experience of how suppliers are performing, including setting up a new customer reporting system for households to pass on their own stories of how they are being treated. Mr Shapps said: “I am appalled that vulnerable customers struggling with their energy bills have had their homes invaded and prepayment meters installed when there is a clear duty on suppliers to provide them with support. “They need to refocus their efforts on their consumers, who are at the receiving end of this abhorrent behaviour. “I’m also concerned the regulator is too easily having the wool pulled over its eyes by taking at face value what energy companies are telling it. It needs to listen to customers to make sure this treatment of vulnerable consumers doesn’t happen again.” Last Thursday, several suppliers announced they would suspend forced installations after being pushed by Ofgem to pause the practice. But this time last week, Mr Shapps launched a crackdown on the mistreatment of energy users by suppliers, already asking them to voluntarily commit to stopping this practice. 3 February: British Gas At Centre Of Controversy Regulator Ofgem has acted to quell mounting controversy over the forced installation of prepayment meters by energy firms, especially in households identified as ‘vulnerable’. The move – which reportedly includes asking energy suppliers to suspend all forced installations immediately – follows an investigation by The Times which found that British Gas has used locksmiths to gain entry into properties so that meters could be changed. Ofgem said: “These are extremely serious allegations from The Times. We are launching an urgent investigation into British Gas and we won’t hesitate to take firm enforcement action. “It is unacceptable for any supplier to impose forced installations on vulnerable customers struggling to pay their bills before all other options have been exhausted and without carrying out thorough checks to ensure it is safe and practicable to do so. “We have launched a major market-wide review investigating the rapid growth in prepayment meter installations and potential breaches of licences driving it. “We are clear that suppliers must work hard to look after their customers at this time, especially those who are vulnerable. The energy crisis is no excuse for unacceptable behaviour towards any customer, particularly those in vulnerable circumstances.” There are around 4.5 million households with prepayment meters in the UK. They are favoured by many landlords and are also used where customers are not able or do not want to pay in arrears for their energy usage through a monthly or quarterly bill. However, prepayment meters are more expensive than credit meters because of the higher administration costs. Where a customer with a credit meter falls into deep arrears, energy suppliers have been able to apply to the courts for a warrant to install a prepayment meter in order to prevent the arrears worsening. But the alleged use of forced entry into properties occupied by vulnerable households by agents working on behalf of British Gas has sparked criticism that the entire system is flawed and open to abuse. Graham Stuart MP, energy minister, has asked British Gas for assurance that its “completely unacceptable” behaviour will not be repeated. He said via social media: “I want to see accountability at the very top of the company and an explanation of the personal role he [British Gas owner Centrica CEO Chris O’Shea] will take to fix these very serious cultural issues and regain the public’s trust. “Most crucially of all I want to see those impacted by this identified and redress provided. While wrongdoing cannot be undone, substantial compensation can and should be given. “British Gas has assured me that this process has begun and I will be monitoring matters extremely closely to make sure justice prevails.” Mr O’Shea told the BBC that British Gas has suspended the practice of forcing the installation of prepayment meters. Ofgem has already announced a review of forced prepayment meter installation and the remote switching of smart meters from credit to prepayment operation. The regulator has also published a review of customer service and complaints performance from information submitted by 17 energy suppliers. It found: weak policies and pathways for customer service journey, including incomplete communications to customers in relation to complaints inconsistent scripts for staff handling complex calls customers left waiting for hours on the phone on several occasions phone calls not picked up and slow responses on written customer contacts up to 50% of customers giving up and hanging up calls as not answered high rates of customer complaints upheld by the Energy Ombudsman incomplete management information being used to monitor performance weaknesses in customer service agents’ training and/or quality control mechanisms. Additionally, Ofgem found the following about specific companies: severe weaknesses in customer service at E.ON, resulting in specific enforcement action being issued moderate weaknesses at 11 suppliers (British Gas, E Gas & Electricity, EDF, Good Energy, Outfox the Market, OVO, ScottishPower, SO Energy, Utilita, Utility Warehouse and Tru Energy) minor weaknesses at five suppliers (Bulb, Ecotricity, Green Energy, Shell and Octopus). Ofgem was unable to identify any suppliers with no weaknesses. It has started compliance engagement on areas needing improvement. 24 January: Households Earn Credit By Pausing Consumption Households with smart meters will again have the opportunity to earn credit against their energy bills tonight by taking part in the Demand Flexibility Service run by National Grid and participating energy suppliers, writes Kevin Pratt. The service, which is designed to reduce energy consumption at peak times and underpin security of supply, will last from 4:30pm to 6pm. Last night (Monday) saw the scheme operate for the first time after a series of trials last year – it ran from 5pm to 6pm, with an estimated one million households taking part. The financial reward – usually paid as a discount off the next bill – is determined by how much energy is not used compared to normal during the period in question. A household reducing consumption by one kilowatt hour could be in line for savings of £3 – £6, according to National Grid, although it is up to individual suppliers to determine the actual amounts. To take part, you need a smart meter, and your energy supplier must be signed up to the scheme – it will contact you the day before the Service operates if this is the case. If your supplier is not participating, you may be able to use an independent company that will draw the relevant details from your meter via an app. Details of the participants can be found here. Both domestic and business consumers are eligible. The scheme is not primarily intended to reduce overall demand across England, Scotland and Wales, where it operates. Rather, the intention is to smooth the spike in demand at peak times and ease pressure on the grid, thus avoiding power outages. National Grid says it is running the scheme as a precaution and that people should not be worried about power cuts. Industry observers say the issue has arisen for a number of reasons, including the UK’s lack of storage capacity for natural gas, which is used to generate electricity, and calm weather conditions, which have reduced output from windfarms. The Grid is also considering bringing mothballed coal-fired power stations back into operation as further back-up, especially if the cold snap continues. At present, the ability to trigger the demand management service is scheduled to run until the end of March. 23 January: National Grid ‘Power Hour’ Slated For Tonight Grant Shapps MP, business and energy secretary has written to energy suppliers telling them to stop forcibly moving consumers onto prepayment meters without providing adequate support to those in difficulty. Mr Shapps is asking for voluntary commitment to stopping this practice. He is also demanding that suppliers share the number of court-issued warrants they’ve applied for in recent months, which enable them to switch a household’s meter. The government says suppliers should be making greater efforts to help consumers in financial difficulties before forcing a switch to a prepayment arrangement. Statistics show that many households who are forcibly switched subsequently see their energy cut off because they do not have the money to top up their new meter. National Grid’s Demand Flexibility Service will be used for the first time this evening between 5pm and 6pm because of an expected spike in demand linked to the cold weather. It said: “This does not mean electricity supplies are at risk and people should not be worried. These are precautionary measures to maintain the buffer of spare capacity we need.” The service allows customers of participating energy suppliers to be financially rewarded if they reduce their electricity usage during peak hours. Customers – who need to have a smart meter – are contacted by their supplier in advance so they can participate. The amount earned by participants could reach £10 depending on how much they reduce their normal power usage by during the hour. National Grid has also asked generators to fire up coal-fired power stations to boost security of supply. Mr Shapps believes firms could offer additional credit, debt forgiveness or debt advice. He has asked suppliers to discuss possible action they can take to support customers and avoid forced fitting. He says courts are being “overwhelmed” with applications for warrants, with reports that large batches are being approved in a matter of minutes. The government aims to ensure that the process by which suppliers bring these cases to court is fair, transparent and supports vulnerable customers. Mr Shapps said: “Suppliers are clearly jumping the gun and moving at-risk customers onto prepayment meters before offering them the support they are entitled to – I simply cannot believe that every possible alternative has been exhausted in all these cases. “I am deeply concerned to see reports of customers being switched to prepayment meters against their will, with some disconnected from supply – and quite literally left in the dark. “Rather than immediately reaching for a new way to extract money out of customers, I want suppliers to stop this practice and lend a more sympathetic ear, offering the kind of forbearance and support that a vulnerable customer struggling to pay should be able to expect.” The government has resisted calls for a moratorium on forced prepayment switching, saying this could lead to an increase in bailiff action as suppliers try to recover debt from households with unpaid arrears. Some energy suppliers are already taking steps to support consumers such as by pausing remote switching of smart meters to prepayment mode or providing additional credit to customers struggling to pay. The government wants all suppliers to increase this kind of support to avoid resorting to forced fitting. Suppliers are also being asked to work harder to ensure households redeem vouchers issued under the government’s Energy Bills Support Scheme so that they can have cash knocked off their energy bills. The government says 71% of vouchers have been redeemed so far and has issued a list of supplier redemption rates showing which firms are meeting their responsibilities and which ones need to do more. Topping the list for most vouchers redeemed is E Gas & Electricity with 85%, followed by Bulb with 79%, with Good Energy, Utilita and Scottish Power at the bottom of the list. The government has called on these suppliers to ensure their prepayment customers are clear on how they can redeem their vouchers. There will be a summit of government, suppliers, the regulator Ofgem, trade body Energy UK and charity Citizens Advice in the coming days. Under discussion will be a plan to tackle what is called “bad behaviour” by energy suppliers. In addition to publishing supplier voucher redemption rates, this comprises: a call for suppliers to voluntarily stop the practice of forced prepayment switching as the answer to households struggling to pay bills and make greater effort to help the most vulnerable request of the release of supplier data on the number of warrant applications they have made to forcibly enter homes to install meters launch of a public information campaign reminding eligible consumers to redeem their Energy Bills Support Scheme vouchers coordination with Ofgem to ensure the regulator takes a more robust approach to the protection of vulnerable customers and conducts a review to make sure suppliers are complying with rules. Ofgem said it does not have the power to ban forced prepayment meter installation but it has committed to reviewing: self-disconnections (when customers on prepayment plans cannot afford to top-up their meter and are left without energy) remote switching of smart meters to prepay mode forced meter installations