Industry initiatives and the work
of Ofgem
3. In addition to its general principal responsibility
to protect the interests of consumers, the regulator of the gas
and electricity industries, Ofgem, has been given specific duties
to take account of the interests of consumers who are disabled
or chronically sick, those of pensionable age, or on low incomes,
and those living in rural areas.[2]
Ofgem's strategy for protecting these customers is set out in
its Social Action Plan. Under the Plan, it reports regularly on
progress in dealing with fuel poverty;[3]
publicises the energy efficiency, debt counselling and other customer-support
schemes undertaken by the various energy supply companies; promotes
best practice; and, to a certain extent, seeks to shame the less
active companies into making more effort to meet their social
obligations.
4. In September 2002, Ofgem and Energywatch, the
consumer protection body, jointly produced good practice guidelines
on Preventing debt and disconnection.[4]
Ofgem and Energywatch identified six key areas where the energy
supply companies needed to make "greater efforts": minimising
billing errors; using incoming calls from customers to identify
those who would benefit from energy efficiency advice or other
help; using customer records on consumption and payment patterns
to target energy efficiency advice and measures; adopting more
flexible responses to debt recovery; working with other agencies
to help customers with multiple debts; and helping consumers who
were unable to manage their affairs. We return to these issues
later in our Report.
5. Following the deaths of the pensioners, and during
the passage of the Energy Bill, the Chairman of Ofgem issued a
challenge to the energy industry to do more to identify vulnerable
customers and to help prevent disconnection of their fuel supply.
Following discussions with its members,[5]
the electricity and gas supply companies, the Energy Retail Association
("ERA") responded by producing a consultation paper
entitled A strategy to define and prevent the disconnection
of vulnerable customers, which was published by Ofgem on 26
April 2004.[6] The ERA's
paper concentrated on the problems of identifying, and then dealing
with, vulnerable consumers. In essence, the paper:
— attempted
to deal with the confusion arising from the fact that different
energy companies and other organisations had used differing definitions
of 'vulnerable customer' by providing a clear definition that
all suppliers could use;
— offered
a model safety net procedure for dealing with such vulnerable
customers; and
— provided guidance from the Information
Commissioner on the circumstances under which suppliers can legally
disclose personal information about vulnerable customers (with
or without the customers' consent) to Social Services and/or charities.
No new proposals were made about how companies might
prevent customers from getting into debt in the first place; and
the ERA stated that while "[e]nergy suppliers avoid disconnection
where there are alternative arrangements to recover debt…
they wish to retain the right to disconnect customers who won't
pay".[7]
6. The deadline for responses to the ERA's consultation
paper was 4 June 2004. We took oral evidence on the problem of
fuel disconnections on 22 June. As a result of the responses to
the consultation paper and of comments made to and by us during
the course of the oral evidence session, on 10 September 2004
the ERA issued a second paper, Protecting vulnerable customers
from disconnection.[8]
Our Report is based not only on the oral and written evidence
we received but also on the two papers issued by the ERA.
2 
