Energy watchdog to push emergency credit for people struggling to pay bills

As thousands are pushed further into poverty by the Covid-19 crisis, Ofgem is looking to make extra support standard practice for energy companies

Ofgem will tell UK energy suppliers to make help offered during the Covid-19 crisis permanent in a bid to cut the number of vulnerable people having their gas and electricity cut off.

When the country locked down in March, companies agreed to boost the support package available for people struggling to top up the meter – meaning giving out emergency credit vouchers and a delay on cutting off households facing money worries – but the measures have been inconsistent across the country.

Now with poverty levels soaring across the UK the energy watchdog is moving forward with proposals to strengthen the protections for people, particularly those on prepayment meters, working new measures into a permanent licence requirement for companies. They said that despite effort by some companies, who were handing out vouchers for £5-20 top-ups, too many people were still seeing their energy supplies disconnected.

It will mean suppliers must offer emergency and ‘friendly hours’ credit, which covers overnight, weekends and public holidays when top-up points might be closed. This is set to be extended to all customers on a prepayment meter.

Customers usually have to repay the credit with their next top-up but Ofgem said people’s ability to pay should be considered by companies and an affordable rate set for those who will find the repayment tough.

The watchdog also wants suppliers to give extra credit to people in vulnerable circumstances to allow “breathing space” while alternative payment arrangements are being worked out – for those who temporarily can’t afford to top up as well as people unable to go to their local shop to pay due to mobility issues of self-isolation.

In the plans to make these support measures mandatory, companies will also be expected to do a better job of identifying customers struggling to pay bills and either rationing their energy use to make credit last longer or letting their meter run down entirely and going without gas and electricity.

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Ofgem chief executive Jonathan Brearley said: “I want to thank suppliers for their efforts during this crisis in keeping essential energy supplies flowing to customers, particularly those in vulnerable situations.

“These permanent protections will reduce the number of prepayment customers temporarily going without energy because they cannot afford to top up.

“It is always best for customers to keep up with their energy bills if they can. But at this time when many may face financial hardship, these proposals mean those who are struggling to keep up are assured of some breathing space.”

Money worries are being accelerated by mass job and income loss as a result of the pandemic, but the problems people face keeping up with their energy bills aren’t new. Last year an Ofgem survey showed that of the four million households using prepayment meters, roughly one in seven had self-disconnected their energy over the previous year.

Researchers found that people in debt and in poverty were hardest hit by unaffordable energy bills and were most likely to let the meter run down.

Dame Gillian Guy, chief executive of Citizens Advice, said the struggles faced by people using prepayment meters have been a big concern for the charity for a long time. Its End of the Beginning report showed that the Covid-19 crisis and subsequent economic shutdown has been a “deeply challenging” time for the people they support.

She added: “It was heartening to see the industry rally round when the coronavirus pandemic struck. A series of measures was put in place to help people struggling with their energy bills – whether that was because they were shielding and finding it difficult to top up; or they’d seen a sudden and dramatic cut in their income.

“It’s even more welcome to see the protections we’ve been arguing for made permanent. It’s a recognition that as we move out of this first phase of the pandemic, many people will still need a more flexible approach to keeping up with their payments.

“Energy is an essential service – we all need it for basics such as home heating, and cooking and washing. At a time when more people are building up debts, everyone should be confident they’ll be given time and support to get their finances in order without the risk of disconnection.”

Ofgem’s plans are part of an ongoing consultation period due to finish at the end of August before the protection packages is made mandatory.

Covering utilities has also played a big role in The Big Issue’s efforts to help vendors during the Covid-19 lockdown.