APPENDIX 5
Memorandum by EDF Energy plc
1. EDF Energy welcomes the opportunity to
submit evidence to the Committee's Inquiry.
2. We are a vertically integrated company
with a balanced portfolio of business throughout the energy chain.
We own and operate electricity generation and the electricity
distribution networks serving London, the East and South East
of England. Around one third of the UK population rely on our
distribution networks for their electricity, in addition, and
of particular relevance to this inquiry we have 5 million electricity
and gas customer accounts throughout the UK supplied through our
retail brands, London Energy, Seeboard Energy and SWEB Energy.
3. EDF Energy is committed to finding the
right balance between providing sustainable financial returns
while continually investing in serving our customers better.
4. EDF Energy does not support a ban on
disconnections for electricity and gas customers. We bailey that
as a commercial company operating in a competitive market it would
be wrong for us to be. required to continue to supply goods indefinitely
if payment Is not being made. Furthermore, a ban on disconnections
would result In an Increase In costs for customers who do pay,
many of whom are on low Incomes.
5. However, EDF Energy recognises the particular
nature of its products and takes its responsibilities to the communities
it serves very seriously, particularly those who are vulnerable.
We have in the past dedicated and continue to dedicate considerable
resource and effort to developing and implementing strategies
for vulnerable customers. This includes working closely with all
interested parties, such as Social Services, to ensure the needs
of vulnerable customers are met. In relation to disconnections
this means we have put in place a number of policies and procedures
to minimise the need for disconnections altogether and to ensure
that vulnerable customers are protected. This paper outlines our
disconnections policy and procedures in relation to vulnerable
customers.
6. EDF Energy has also contributed to and
fully supports the safety net proposals that build on best practice,
such as our own, currently being put forward by the Energy Retail
Association (ERA) with regard to the protection of vulnerable
customers from disconnection. These proposals have the support
of Ofgem, the DTI and agencies concerned with the vulnerable.
7. EDF Energy goes to great lengths to avoid
disconnections, which by internal policy, law and licence obligation
are the very last resort. Our aim is to ensure that any situation
of non-payment can be resolved by means other than disconnection.
This determination can be demonstrated by the very small number
of cases of non payment that actually proceed to disconnection.
8. For example, during a typical year, our
field staff will undertake around 72,000 debt discussion visits
to customers who have not responded to the multiple stages of
automated reminder contacts and telephone calls that form our
standard debt recovery procedure. We also initiate around 28,000
applications for warrant entry beyond the discussion visit. The
number of actual disconnections in the last 12 months were 208
for electricity and 884 for gas. These figures evidence the low
level of disconnections in relation to overall debt recovery activity
with less than one per cent of field visits resulting in disconnection
of supply. The higher figure for gas reflects the inability to
fit a pre-payment meter if the customer is not present at warrant
execution. This is for safety reasons.
9. Throughout our debt follow up procedures,
safety net processes, including post disconnection contact, are
in place to ensure that we do not knowingly disconnect vulnerable
customers. Through these procedures we are confident we have not
knowingly left a vulnerable customer without an energy supply.
10. When a standard EDF Energy customer
or EDF Energy Priority Service customer falls into debt on their
gas or electricity account we instigate our normal debt follow
up procedures. These are:
— Up to three reminder letters.
— Attempt to contact by phone.
11. At any point in this cycle, if the customer
contacts us to agree a suitable payment arrangement, we would
accept this and put a halt to all debt proceedings.
12. However, following the first visit to
the customer's property a different course of action will be taken
for all Priority Service customers and any customer we are aware
of that may be classed as vulnerable.
13. In these instances details of the case
are referred to our specialist Priority Services team who will
contact the customer either by phone or, if this is not possible,
by letter. We will also endeavour to make a further home visit.
14. In limited circumstances where we have
not had a response from the customer, we will obtain a warrant
and look to proceed with disconnection action. However, we will
contact Social Services at this point about any customer where
we have concerns about their vulnerability, or we know that they
are living alone.
15. Generally, where we are aware that the
customer is a Priority Service customer, the situation is resolved
without the necessity to apply for a warrant.
16. All our disconnection and warrant officers
are trained to look out for signs of the customer being vulnerable
when visiting customer properties and, if they notice anything
that causes concern, at this stage we will refer this to Social
Services or the local Police.
17. Furthermore, throughout our debt follow
up processes, if it is apparent that the customer would be incapable
of dealing with the meter, a pre-payment meter would not be installed.
In these instances the cases would be referred to our Priority
Services team, who would make contact with the customer and agree
a more appropriate method of resolution. Where applicable or necessary
the Priority Services team would involve Social Services as above.
18. In some instances it is appropriate
to install a pre-payment meter for a Priority Service customer.
In these relatively few cases we contact the customer after the
meter has been installed and offer a home visit by the Priority
Services officer to explain how the meter works. In most cases
the offer of the visit is not accepted, as the customer has already
had the operation of the meter explained to them by the warrant
officer and is satisfied that they understand how to operate the
meter.
For all customers (either vulnerable or non-vulnerable)
where a pre-payment meter is installed on a warrant visit we will
monitor the account to ensure that the customer begins to credit
the meter within an appropriate time frame. If the customer does
not credit the meter we will try to contact them by phone or,
if this is unsuccessful, by letter and if necessary make a further
visit to the property.
19. All residential occupied disconnection
cases where the supply has not been reconnected or the customer
has not contacted us to make arrangements for this are monitored
by our debt risk management team. If contact has not been received
within three days of disconnection, they will make direct contact
with the customer by phone or letter and will also signpost the
customer to relevant third party bodies that may be able to assist
them, such as Money Advice Centres or the National Debt line.
If contact from the customer is still not received, a visit to
the customer's property will take place 10 days after disconnection.
The case will also be referred to the Priority Services team,
who will advise Social Services of the situation.
20. Our policy for disconnection for non-payment
of debt also states that, where we are aware of the customer's
circumstances, we will not disconnect the elderly, disabled or
chronically sick during the winter months from 1 October to 31
March.
21. EDF Energy is aware of concerns that
have sometimes been raised regarding the use of pre-payment meters.
However, EDF Energy research demonstrates that not only are 92%
of pre-payment customers not in debt but that they are our most
satisfied group of customers.
22. Our commitment to serving our five million
customers means we have a duty to help ensure they can afford
the power they need to live their lives in comfort. This means
helping them make best possible use of the energy they buy from
us. As part of this commitment EDF Energy was the first company
to equalise its tariffs for credit and pre payment meter customers.
Other initiatives include:
— Our ground breaking energy efficiency
Warm Zone, currently operating in Newham and soon to be extended
to the six London boroughs of Barking and Dagenham, Tower Hamlets,
Hackney, Waltham Forest, Havering and Redbridge. This is a commitment
to invest £9.5 million in energy efficiency measures in London.
This will help up to 800,000 homes in the capital to save money.
— Energetic Hands, an EDF Energy staff
initiative in partnership with the South West-based charity Care
and Repair. EDF Energy volunteers team up with Care and Repair
to visit elderly vulnerable customers' homes to give energy efficiency
advice, practical help and free products.
23. Furthermore, in an attempt to tackle
some of the problems faced by low income groups EDF Energy has
set up, with an initial donation of £2 million, an independently
run charity, the EDF Energy Trust, to help customers who are struggling
with their energy bills. Successful applicants to The EDF Energy
Trust are likely to have fallen into a debt spiral as a result
of unemployment, ill health or relationship breakdown. A team
of qualified assessors will closely consider each individual's
circumstances and also check whether they are claiming all existing
help available. As well as tackling immediate financial needs,
the EDF Energy Trust will provide money advice and energy efficiency
advice where appropriate. Further information is available at
www.edfenergytrust.org.uk
18 June 2004
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