New protections outlined by the energy regulator will force suppliers to offer financial support to those in need through the winter months. The new regulations, set to go live on December 15th, will help those made most vulnerable by COVID-19.
Following a consultation period in June, energy regulator Ofgem will be introducing new licensing rules for energy suppliers that will be enforced from mid December.
The new regulations cover a range of credit and support options for customers on multiple payment methods. While most energy suppliers opted voluntarily to offer support in March of this year, the new rules will make this mandatory across the industry.
Suppliers are to offer emergency credit for those struggling to top up their prepay meters, many of whom are likely to be in vulnerable circumstances. For those who are struggling to pay their meter financially or those that are isolating will expect to be given additional allowance on their meters.
While this ‘emergency credit’ exists already, primarily in the form of ‘friendly hours’ and ‘additional support’ (depending on the supplier), making it mandatory will mean suppliers will be expected to extend this credit until a suitable repayment scheme can be established with the customer.
Ofgem hopes this will reduce the rate of self-disconnection and self-rationing, with 1 in 7 doing so in 2019 alone. A study by Citizens Advice found that of these; 29% were the result of not having enough money. 11% of disconnections were due to people being unable to top up due to self-isolating and 10% were due to the top-up shop being closed.
Another new licensing rule to be introduced on the 15th will mean all energy suppliers will be expected to put customers in energy bill debt on realistic and sustainable repayment plans. Suppliers will be expected to have appropriate repayment policies, set fair repayment rates based on ability to pay, and make proactive contact with struggling customers.
These repayment regulations are based on Ofgem’s already existing ‘Ability To Pay Principles’ and have been updated to reflect the ramifications caused by COVID-19 and to make them more future proof.
There has also been a proposal to include an additional principle to the list; placing an obligation on suppliers to give due consideration to re-engaging with a customer after an initial occurrence of a failed repayment arrangement. Again, this is put in place with the hope that it will deter customers from self-disconnection and self-rationing and help customers in financial difficulty feel more secure through the winter months.
Ofgem reinforced their aim to protect customers in a statement made by Ofgem’s Director of Retail, Philippa Pickford:
“Customers who are struggling to pay their bills should contact their supplier as soon as possible. The extra protections we have announced today will help ensure they get some breathing space this winter… Alongside our wider programme of support for vulnerable customers, Ofgem has also capped and reduced default tariffs so these customers always pay a fair price for their energy.”
These new regulations have been put in place to aid those in need during the winter months. If you will struggle paying your bills due to financial difficulty or due to COVID related difficulties, Ofgem encourages you to contact your energy provider as soon as possible. There may also be extra help available to you if you are struggling to pay energy bills.
In addition to this, the following sites offer help and advice on managing debt and what additional support may be available.
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