Via email 18 July 2014 Government Electricity Rebate The Citizens Advice Service is pleased to respond to the Government s consultation on the proposal to provide eligible domestic electricity customers with a 12 rebate ( the rebate ) in 2014 and 2015. The rebate is a key element of the Government s policies to help reduce domestic energy bills, and whilst it will be helpful, we are concerned that it will only have a minor impact on affordability for low income consumers. Government must do more to improve the energy efficiency standards of their homes in order to bring down bills. We welcome the focus on efficiency and that the proposals seek to minimise any costs that suppliers may incur in delivery. The administration costs should not be onerous and must not be passed on to customers via future energy bills. We also recommend that the Government consider what else it could do in the future to the future to support consumers without gas heating, which would go some way to address the unfair burden of policy costs borne by households with electric heating 1. 1. Do you agree with the proposal for a single Qualifying Date? The Citizens Advice Service agrees that one single qualifying date is a sensible proposal. A single date is the clearest way to ensure which supplier is responsible for paying the rebate to its electricity customers, and will hopefully reduce the chance of payment being duplicated for consumers who are switching, or in circumstances where there is a change of tenancy/occupancy. 2. Do you agree that suppliers should be under a responsibility to take all reasonable steps to ensure that the eligible customers they supply on the Qualifying Date receive the rebate? Yes, we agree that the onus should be on suppliers to take all reasonable steps to ensure eligible customers receive the rebate in a timely manner. It is 1 As discussed in Hardest hit going beyond the mean. http://www.consumerfutures.org.uk/files/2013/05/the-hardest-hit.pdf Citizens Advice 3 rd Floor North 200 Aldersgate London EC1A 4HD Tel: 03000 231 231 www.citizensadvice.org.uk : 7833 2181
important the Government is aware of any extra cost burden that the rebate places on suppliers, and allow enough time for suppliers to provide the rebate. The Citizens Advice Service supports the proposal for a six week time limit from the single qualifying date, within which suppliers should have attempted to credit accounts or sent out vouchers and SAMs to all eligible domestic electricity customers. This will enable suppliers, Government, the regulator and other bodies to have a clear understanding of how many customer accounts have been successfully credited with the rebate and the number of exceptions that remain. Suppliers should at this point propose how they will be following up with the exceptions. It is also important that Government recognises the challenges that the suppliers face in reaching certain groups of consumers for example pre-payment customers who do not cash vouchers. 3. Do you agree that the direction should state that suppliers will only reimburse customers for one payment per eligible premises? Yes: we agree that this is a single rebate per account, per household/premises and should be treated as such. 4. Under what circumstances do you believe it will not be reasonably practical to provide the rebate? The Citizens Advice Service supports the principle of simple, cost-effective delivery as set out by the Government in the consultation document. To this end, it is essential that all eligible electricity accounts should receive the rebate. During the delivery of the rebate, suppliers may encounter circumstances where it is not reasonably practical and highlight these to the Government and the regulator. It is our view that these will probably be complex or unusual circumstances and the provision of the rebate should be considered based on the individual circumstances of each case. The consultation has set out some examples where it may not be practical to provide the rebate. The Government has set out a number of examples within the document of consumers who are in unusual situations and has provided clarity about the circumstances in which the customer is / is not eligible for the rebate. This is helpful and should be used as a guide by the suppliers. The Citizens Advice Service anticipates that as suppliers attempt to make payment they will come across customers who do not neatly fall into any of these examples they must be treated on a case by case basis, and the principles of the rebate applying to all domestic electricity customers must prevail and be honoured. 5. Do you have suggestions for how Government and suppliers can cost-effectively encourage prepayment meters customers to redeem the rebate? Prepayment meter (PPM) customers are often amongst the hardest to communicate with, and there is a significant risk that they will not take the actions necessary to receive the rebate. We are aware that PPM consumers
often do not open or read letters from their energy supplier 2, and that there are numerous other ways of communicating with these consumers which can be more effective e.g. via SMS/text messaging, email, using social media sites etc. It is important that all suppliers make an effort to understand how their customers prefer to communicate in order to increase engagement. The Government has encouraged suppliers to ensure that communication to their PPM customers is well-targeted and clear to help ensure that customers take action. It is essential that the Government work closely with all suppliers to ensure communications around the rebate are coordinated and clear in order to increase the chances of prepayment customers taking action to put the credit on their meter. The Citizens Advice Service will also support this communication where possible. In 2010 our research on PPM users 3 identified that PPM users are more likely to be on lower incomes than the average energy customer. The annual household income of PPM households was markedly lower than in those households without one. Of those with a PPM, 60 per cent had a household income of less than 17,500 compared to 38 per cent of those without a PPM. In 2010 more than half received some kind of means-tested benefit, or disability benefit, and the main income earner did not have a job in just under half of cases. Over one-third of PPM households were home to someone with a long-term physical or mental health condition or a disability. In 2013/14 when we repeated the research we found that 41 per cent of respondents to the omnibus survey were not economically active 4. The relative marginal gain from the rebate will be higher for PPM customers: therefore every effort must be made to ensure it is credited to their account. The Government acknowledges that regardless of communications efforts there is likely to be a large number of PPM customers who do not redeem the voucher or pick up the message on their meter and that there will be additional costs to any extra measures to encourage prepayment customers to take action after provision of the rebate. We urge the Government to share the responsibility to communicate to PPM customers with the suppliers, to encourage them to redeem the rebate: for example by highlighting and promoting the rebate in locations where PPM customers will seek to buy credit from PayPoint, Payzone or Post Offices. The Citizens Advice Service strongly urges the Government to work with the suppliers in order to ensure targeted communications, which encourage contact and offer options and support. Most suppliers maintain registers and flags where they know that a consumer (or member of the household) is in a 2 Making the Mark Consumer Focus (2011) found that PPM users were much less likely than credit consumers to be engaged with their energy bills. Only 44 per cent of respondents said they looked at their bill (or statement of account) to see how much they had to pay compared to 81per cent of credit meter consumers. http://www.consumerfocus.org.uk/files/2011/06/missing-the-mark.pdf 3 Cutting back, cutting down, cutting off Consumer futures 2010. http://www.consumerfocus.org.uk/assets/1/files/2010/02/cutting-back-cutting-down-cuttingoff.pdf 4 PPM households where main earner is not employed, retired or in education.
vulnerable situation it may be worth considering whether there is an efficient, tailored way to reach these consumers where possible. 6 Do you agree that as a minimum all customers should be informed of the credit via their bills, statements or receipts for crediting their prepayment meter keys, cards or tokens? Yes: It is important that the rebate is clearly set out on statements and receipts. A coordinated communications approach must be applied across the suppliers in order to minimize confusion and ensure that customers are aware of what the rebate is and why is has been applied. The Citizens Advice service will ensure that bureaux and the Consumer Helpline are briefed in order to respond to customers who may seek advice from a third party about it. We will also provide information about it on our website, adviceguide. 7 Do you agree with the broad proposals for seeking assurance for the rebate? The Citizens Advice service understands that the Government will need to seek assurance about its spending. The proposals must be fair and proportionate, and any additional costs that the suppliers are exposed to should not be passed on to consumers via energy bills. 8 Do you agree that suppliers should be under an obligation to provide information to the Secretary of State and Ofgem for the purpose of the direction? The Citizens Advice service understands that the Government will require information specified for the purpose of and in relation to compliance with the direction from suppliers. These information requirements must not be onerous and, and any additional costs that the suppliers are exposed to should not be passed on to consumers via energy bills. 10 Do you agree that suppliers should endeavour to credit all their customers accounts (or send vouchers and SAMs) with the rebate within 6 weeks of the qualifying date? The Citizens Advice Service supports the proposal to require suppliers to pay the rebate within 6 weeks of the qualifying date. Questions 11 17 The Citizens Advice Service has no comment to make in relation to questions 11 17. 18 Do you agree that suppliers should be under an obligation to return any refunds provided by Government in excess of the number of rebates that have been provided to customers? The Citizens Advice Service recommends the Government consider whether any refunds not paid to customers could be used to provide support to low
income households or provided to consumers with electric heating (11 per cent of all consumers) who are most affected by Government policies yet tend to have lower incomes than those with other forms of heating. These consumers pay 19 per cent of the total cost of energy policies yet only receive 7 per cent of the benefits 5. Questions 19-22 The Citizens Advice Service has no comment to make in relation to questions 19 22. If you have any questions or wish to discuss this response please contact Dhara Vyas on 03000 231 483 or email dhara.vyas@citizensadvice.org.uk End 5 http://www.consumerfutures.org.uk/files/2013/05/the-hardest-hit.pdf