APPENDIX 4
Memorandum by the Centre for Utility Consumer
Law, University of Leicester
The Centre for Utility Consumer Law, University
of Leicester, conducts research into the regulation of the water,
energy, and communications industries and campaigns for social
justice in the provision of these amenities.
1. It would be a mistake to imagine that
fuel disconnection can be viewed in isolation and fixed quickly.
A cluster of matters needs to be considered simultaneously and
dealt with over an extended period. The cluster includes: disconnection,
prepayment, debt blocking, energy efficiency, and alternative
remedies for non-payment.
2. Fuel disconnection is unsupportable in
principle because it deprives a household of an essential service.
Prepayment, which may, and frequently does—albeit for a
more or less limited period—deprive a household of this
essential service, is similarly unsupportable. These arguments
have been accepted in the UK for water and it is anomalous that
fuel disconnection remains. The regulator is currently consulting
on the proposal of the Energy Retailers Association that "vulnerable"
consumers be protected from disconnection. Ultimately, the procedure
will depend on the subjective judgements of energy company staff;
if they get it wrong people will be cut off and may fall ill from
cold-related illness or die. The proposals are unsafe. Identifying
only some of us as "vulnerable" to disconnection of
energy supplies is ill conceived, and no more than an industry
tactic to cling to this callous sanction—sadly, supported
by the regulator. We are all vulnerable in this respect; dividing
those of us who are more vulnerable from those of us who are less
so is impractical as well as objectionable.
3. Fuel disconnection is socially unjust
because it is only householders who are poorly off who bear the
brunt of disconnection, or the threat of disconnection. Comfortably
off householders may be fleetingly inconvenienced by the threat
of disconnection, or even occasionally the reality, but they have
the resources quickly to overcome the setback.
4. The availability of debt blocking, together
with the disconnection sanction, makes it possible for energy
supply companies to trade on credit in an undisciplined manner.
(Debt blocking allows companies to prohibit consumers from switching
supplier if they are in debt. A very limited relaxation of the
rule has operated from February; it remains to be seen how effective
this will be.) The companies know they can recover payment however
lax they are about credit referencing, billing, or collecting.
The removal of debt blocking, together with a ban on disconnection,
would concentrate companies' minds on debt avoidance.
5. The avoidance of energy debt by attention
to housing quality and energy efficiency is established public
policy, for environmental as well as for social reasons. But it
is a long way from having an impact sufficiently developed to
make fuel affordable to all. Bold thinking is called for, including
consideration being given to financing affordable energy through
cross subsidy. For example, obliging companies to make available
energy service packages of energy efficiency measures plus energy,
priced at affordable levels, might be considered. ("Affordable"
meaning priced for households who would be unable to afford the
market price at no more than a defined amount; no more, say, than
twice the median spend on energy proportionate to income.) The
social dimension of sustainable development would be well served
by funding shortfalls arising from the take up of such energy
service deals by low income households being made good by a charge
on the generality of energy consumers—a "SEC"
perhaps, Social Energy Commitment, in parallel with the EEC, Energy
Efficiency Commitment that we all pay for through our energy bills.
6. The "problem" of fuel disconnection
is symptomatic of income inequality, frequently linked with energy
inefficient housing. Removing disconnection and prepayment would
suppress that symptom, only to have the underlying issues present
themselves as rising energy debt. (This is thought to be the case
following the removal of the water disconnection sanction, though
it is believed the data showing its degree are unreliable.) The
accumulation of such debt would amount to a "back door SEC",
tolerable perhaps at low levels, but otherwise requiring conversion
into a formal "SEC". A strategic matter for public policy
is choosing which symptom to tolerate while "the causes of
disconnection" are being addressed; that is, choosing between
informal or formal cross subsidy on the one hand and the continuance
of disconnection on the other.
7. Alternative ways of enforcing payment
through the Courts are well known, and are available to energy
companies. The measures are undeniably of little effect in the
case of householders without resources. But if we fail to understand
that energy debt cries out for social protection, not the disconnection
sanction, we are unlikely to get far in dealing with disconnection
of fuel supply.
June 2004
|
