Ofgem ignored 700,000 debt complaints before British Gas scandal

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Original article by Adam Bychawski republished from openDemocracy under a Creative Commons Attribution-NonCommercial 4.0 International licence

Exclusive: Energy regulator did nothing about mountain of complaints until British Gas prepayment scandal was revealed

Image of banknotes and prepayment meter key
More than 30,000 complaints were about the disconnection and forced installation of prepayment meters.  Image of banknotes and a prepayment meter key

Energy companies received more than 700,000 complaints about their treatment of debt-ridden customers over the last five years, openDemocracy can reveal.

In the last year alone, the energy regulator Ofgem was made aware of 40,000 complaints relating to the controversial forced fitting or disconnecting of pre-payment meters.

Yet the watchdog was only forced into action earlier this month when an undercover Times investigation found British Gas had sent bailiffs to break into vulnerable people’s homes and fit the meters by force. Following the expose, it suspended the practice until the end of March.

Centrica, the owner of British Gas, announced today that its profit had hit £3.3bn for 2022 – more than triple the £948m it made in 2021 – just weeks after the regulator launched an investigation into its use of bailiffs against at-risk customers.

Now, data obtained by openDemocracy through a Freedom of Information request has revealed for the first time the scale of alleged mistreatment of vulnerable customers since the energy price cap was first hiked in April.

“Ofgem has known about this crisis for years, and so have the companies themselves. Suppliers are not being honest when they act like they’ve just discovered it and they’re shocked, like the CEO of Centrica did,” Ruth London, co-founder of the Fuel Poverty Action campaign group, told openDemocracy.

Energy companies are required to report the number of complaints they receive from customers every month to Ofgem. Last year, they received 161,103 complaints related to disconnection and debt issues – of which 40,458 were about pre-payment meters – though Ofgem has consistently refused to tell us which suppliers received the most.

The category includes complaints from customers about their energy supply being disconnected or having a prepayment meter installed forcibly without a warrant or despite them being vulnerable.

Other examples of complaints include customers being disconnected by error or without due process and being put on debt repayment plans that are unsuitable or unaffordable.

The true number of people being ill-treated is likely to be much higher. Ofgem revealed at the beginning of February that customers were being left on hold for hours by energy companies, leading to more than half hanging up before they could report an issue.

Ofgem said revealing how many complaints different companies had received would breach Section 105 of the 2000 Utilities Act, which states that the public disclosure of information companies supply to the regulator is prohibited in order to protect national security. The law has previously been criticised for preventing whistleblowers from raising issues about the energy sector that are in the public interest.

The regulator said after the British Gas scandal broke that it was “unacceptable” to forcibly install prepayment meters before all other options had been exhausted.

But charities have criticised it for ignoring calls to end the practice for months.

“Lives have been and are being lost because of their silence and refusal to act on the truth they have long known,” said London.

Clare Moriarty, the chief executive of Citizens Advice, said it “should not have taken this long” for Ofgem to act. 

The charity said it saw more people unable to afford to top up their pre-payment metre last year than for the entirety of the previous decade combined.

The Times reported that British Gas customers who had prepayment meters forcibly installed had included a woman in her 50s who the company’s bailiffs were told had severe mental health problems and a mother whose “daughter is disabled and has a hoist and electric wheelchair”.

The paper’s undercover investigation also alleged that the Arvato Financial Solutions employees were incentivised with bonuses to fit prepayment meters. The boss of British Gas owner Centrica apologised and said he was “disappointed, livid and gutted”.

Last year, a non-executive director at the regulator resigned saying Ofgem had “not struck the right balance between the interests of consumers and interests of suppliers”.

Peter Smith, policy director at the charity National Energy Action, said: “The recent announcement by major suppliers that they would temporarily pause forced installations of pre-payment meters is welcome, but this was prompted by public shaming of suppliers and there is still no market-wide ban.

“We also desperately need a coherent plan to help millions of people already trapped on prepayment meters. This means rewiring the energy market to provide more affordable tariffs and finding new ways to address the underlying debt issues which are rife due to soaring energy costs.”

Richard Lane, Director of External Affairs at StepChange Debt Charity, said: “We welcome Ofgem’s move to suspend the forced installation of prepayment meters (PPMs), but it’s clear that thousands of households have been struggling with energy bills for some time now, which is evident in our own client data.

“For the people that have already been moved onto PPMs, there must be better protection to prevent self-disconnection and extreme energy rationing.”


Updated, 16 February 2023: This story has been amended to include fresh data obtained through freedom of information law on the number of complaints notified to Ofgem between 2018 and 2022. Previously, it just contained data for 10 months of 2022.

Original article by Adam Bychawski republished from openDemocracy under a Creative Commons Attribution-NonCommercial 4.0 International licence

Continue ReadingOfgem ignored 700,000 debt complaints before British Gas scandal

Ofgem ignored 140,000 debt complaints before British Gas scandal

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Original article republished from open Democracy under Creative Commons Attribution-NonCommercial 4.0 International licence.

Image of banknotes and prepayment meter key
More than 30,000 complaints were about the disconnection and forced installation of prepayment meters. Image of banknotes and a prepayment meter key

Exclusive: Energy regulator forced into action this week did nothing about mountain of complaints last year

Adam Bychawski

3 February 2023, 1.53pm

Energy companies received more than 140,000 complaints about their treatment of customers in debt last year alone, openDemocracy can reveal.

They included 33,000 complaints about the fitting or disconnecting of pre-payment meters.

Yet the energy regulator Ofgem was only forced into action this week when an undercover Times investigation found British Gas had sent bailiffs to break into vulnerable people’s homes and fit the meters by force. It has now asked energy companies to pause the practice.

The data, obtained by openDemocracy through a Freedom of Information request, has revealed for the first time the scale of alleged mistreatment of vulnerable customers since the energy price cap was first hiked in April.

“Ofgem has known about this crisis for years, and so have the companies themselves. Suppliers are not being honest when they act like they’ve just discovered it and they’re shocked, like the CEO of Centrica did yesterday,” Ruth London, co-founder of the Fuel Poverty Action campaign group, told openDemocracy.

Energy companies are required to report the number of complaints they receive from customers every month to Ofgem. Between January and October last year, they received 146,046 complaints related to disconnection and debt issues – though Ofgem has refused to tell us which suppliers received the most.

The category includes complaints from customers about their energy supply being disconnected or having a prepayment meter installed forcibly without a warrant or despite them being vulnerable.

Other examples of complaints include customers being disconnected by error or without due process and being put on debt repayment plans that are unsuitable or unaffordable.

The true number of people being ill-treated is likely to be much higher. Ofgem revealed yesterday that customers were being left on hold for hours by energy companies, leading to more than half hanging up before they could report an issue.

Ofgem said revealing how many complaints different companies had received would breach Section 105 of the 2000 Utilities Act, which states that the public disclosure of information companies supply to the regulator is prohibited in order to protect national security. The law has previously been criticised for preventing whistleblowers from raising issues about the energy sector that are in the public interest.

The regulator said yesterday that it was “unacceptable” to forcibly install prepayment meters before all other options had been exhausted, and has launched an urgent investigation into British Gas

But charities have criticised the regulator for ignoring calls to end the practice for months.

“Lives have been and are being lost because of their silence and refusal to act on the truth they have long known,” said London.

Clare Moriarty, the chief executive of Citizens Advice, said it “should not have taken this long” for Ofgem to act. 

The charity said it saw more people unable to afford to top up their pre-payment metre last year than for the entirety of the previous decade combined.

The Times reported this week that British Gas customers who had prepayment meters forcibly installed included a woman in her 50s who the company’s bailiffs were told had severe mental health problems and a mother whose “daughter is disabled and has a hoist and electric wheelchair”.

The paper’s undercover investigation also alleged that the Arvato Financial Solutions employees were incentivised with bonuses to fit prepayment meters. The boss of British Gas owner Centrica apologised and said he was “disappointed, livid and gutted” on Thursday.

Last year, a non-executive director at the regulator resigned saying Ofgem had “not struck the right balance between the interests of consumers and interests of suppliers”.

Peter Smith, policy director at the charity National Energy Action, said: “The recent announcement by major suppliers that they would temporarily pause forced installations of pre-payment meters is welcome, but this was prompted by public shaming of suppliers and there is still no market-wide ban.

“We also desperately need a coherent plan to help millions of people already trapped on prepayment meters. This means rewiring the energy market to provide more affordable tariffs and finding new ways to address the underlying debt issues which are rife due to soaring energy costs.”

Richard Lane, Director of External Affairs at StepChange Debt Charity, said: “We welcome Ofgem’s move to suspend the forced installation of prepayment meters (PPMs), but it’s clear that thousands of households have been struggling with energy bills for some time now, which is evident in our own client data.

“For the people that have already been moved onto PPMs, there must be better protection to prevent self-disconnection and extreme energy rationing.”

Original article republished from open Democracy under Creative Commons Attribution-NonCommercial 4.0 International licence.

Continue ReadingOfgem ignored 140,000 debt complaints before British Gas scandal

British Gas halts use of warrants to force people on to prepayment meters

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https://www.theguardian.com/business/2023/feb/01/british-gas-halts-use-of-warrants-to-force-people-on-to-prepayment-meters-allegations-vulnerable-customers-break-in

Image of banknotes and prepayment meter key
Banknotes and a prepayment meter key

Move follows allegations that third-party agents ignored vulnerabilities of customers and broke in to install equipment

British Gas has suspended the use of court warrants to force the installation of prepayment meters after evidence that agents working on its behalf ignored customers’ vulnerabilities.

MPs and consumer groups had raised concerns that elderly and disabled people were being forced on to prepayment meters and then routinely cut off from heat and power as they could not afford to top up.

Wednesday’s decision came after an investigation by the Times alleged that Arvato Financial Solutions, a company used by British Gas to pursue debts, had broken into homes to fit meters when there were signs that young children and people with disabilities lived in the property. AFS employees are incentivised with bonuses to fit prepayment meters.

https://www.theguardian.com/business/2023/feb/01/british-gas-halts-use-of-warrants-to-force-people-on-to-prepayment-meters-allegations-vulnerable-customers-break-in

Ofgem statement on British Gas prepayment meter installations

“These are extremely serious allegations from The Times. We are launching an urgent investigation into British Gas and we won’t hesitate to take firm enforcement action.

“It is unacceptable for any supplier to impose forced installations on vulnerable customers struggling to pay their bills before all other options have been exhausted and without carrying out thorough checks to ensure it is safe and practicable to do so.

“We have launched a major market-wide review investigating the rapid growth in prepayment meter installations and potential breaches of licences driving it.

“We are clear that suppliers must work hard to look after their customers at this time, especially those who are vulnerable. The energy crisis is no excuse for unacceptable behaviour towards any customer, particularly those in vulnerable circumstances.”

Continue ReadingBritish Gas halts use of warrants to force people on to prepayment meters

What nationalising energy companies would cost – and how to do it

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UK could bring National Grid and retailers in-house and build public renewable energy, says ex-Labour policy chief

Andrew Fisher

17 August 2022, 12.01am

Image of banknotes and a prepayment meter key by Lydia, https://creativecommons.org/licenses/by/2.0/

Republished from OpenDemocracy under Creative Commons Attribution-NonCommercial 4.0 International licence.

When 62% of Conservative voters want energy run in the public sector, it’s fair to say the left has won the argument (75% of Labour voters agree, 68% of Lib Dems).

Yet public ownership is opposed passionately by the Conservative government, while the leader of the opposition has said he is “not in favour” of it – despite his election on a platform that committed to “bring rail, mail, water and energy into public ownership to end the great privatisation rip-off and save you money on your fares and bills”.

Public ownership is on the media’s radar, too. When Labour leader Keir Starmer announced his policy to freeze bills this week, he was asked why he wouldn’t also nationalise energy, replying that: “In a national emergency where people are struggling to pay their bills … the right choice is for every single penny to go to reducing those bills.”

But so long as energy remains privatised, every single penny won’t. Billions of pennies will keep going to shareholders instead.

The energy market was fractured under the mass privatisations of the Thatcher governments in the 1980s. It contains three sectors: producers or suppliers (those that produce energy), retailers (those that sell you energy), and distribution or transmission (the infrastructure that transports energy to your home).

It is important to bear this in mind when we’re talking about taking energy into public ownership. We need to be clear about what we want in public ownership and why.

By 2019, Labour had a detailed plan on how to do this – worked up by the teams around then shadow business and energy secretary Rebecca Long Bailey and then shadow chancellor John McDonnell. The plan is not the only way, but it illustrates what exists and how one could go about re-establishing a public energy ecosystem, run for people not profit.

The recent TUC report shows the cost of nationalising the ‘Big 5’ energy retailers – British Gas, E.ON, EDF, Scottish Power and Ovo – to be £2.8bn, which would go on buying all the companies’ shares. That’s a lot of money, equivalent to more than the annual budget of the Sure Start programme in 2009/10 (its peak year). But it’s a one-off cost, not an annual one.

And it’s not like the current privatised system doesn’t have its costs: since June 2021, the UK government has spent £2.7bn bailing out 28 energy companies that collapsed because they put short-term profits ahead of long-term stability – companies like Bulb Energy. We have spent billions of pounds already to get nothing in return. So £2.8bn is not a large amount of money to pay to gain these assets, rather than just bailing them out.

The big energy retail companies made £23bn in dividends between 2010 and 2020 according to Common Wealth, and £43bn if you include share buy-backs. What you choose to do with that surplus in public ownership is another matter: you could use it to invest in new clean energy or to lower bills or fund staff pay rises, rather than subject your workers to fire-and-rehire practices as British Gas did last year.

Labour’s previous plan also involved taking the distribution networks – the National Grid – into public ownership. This would end the profiteering at this level, too – with £13bn paid out in dividends over the five years prior to 2019. As Long Bailey said at the time, we need “public driven and coordinated action, without which we simply will not be able to tackle climate change”. Like previous nationalisations, the purchase of the grid and distribution networks could be achieved by swapping shares for government bonds. By international accounting standards, the cost is fiscally neutral as the state gains a revenue-generating asset, which more than pays for the bond yield.

The final part of the plan – and the most complicated – is production and supply. It would be impossible to nationalise the oilfields of Saudi Arabia or Qatar – and for good reasons we should want to leave fossil fuels in the ground, anyway, rather than contest their ownership.

And so what Labour proposed in 2019 was a mass investment in new renewable energy generation projects, with the public sector taking a stake and returning profits to the public. For example, under the ‘People’s Power Plan’, we proposed 37 new offshore wind farms with a 51% public stake, delivering 52GW alone by 2030, equivalent to 38 coal power stations. There were additional proposals for onshore wind, solar, and tidal schemes, as part of a 10-year £250bn Green Transformation Fund, which included other schemes like the Warm Homes insulation initiative.

Labour’s new shadow chancellor Rachel Reeves has promised a similar level of investment – a £28bn a year climate investment pledge.

Any surplus energy would then be sold on international markets, with a People’s Power Fund – a sort of sovereign wealth fund – to deliver public investment in local communities’ social infrastructure: a genuine levelling-up fund, perhaps.

Many people will say this can’t be done, but of course it has been before. The 1945 Attlee government nationalised energy and successive Conservative governments – including those of Churchill, MacMillan and Heath – were happy to have a nationalised asset. Harold MacMillan famously accused Margaret Thatcher of “selling off the family silver” when she privatised state industries.

When I was born in 1979, the National Coal Board, British Gas and British Petroleum were all publicly-owned or majority publicly-owned companies. Between them, they were the major suppliers of our energy. Our gas bills came from British Gas and our electricity bills from our regional electricity board (in my case Seeboard, the South Eastern Electricity Board), and coal and oil fuelled our power stations.

The regional electricity boards had been brought into being by the Attlee government’s Electricity Act 1947, when electricity companies were forcibly merged into regional area boards and nationalised. The Coal Industry Nationalisation Act 1946 and the Gas Act 1948 had together brought energy into public ownership.

Seeboard was privatised in 1990, and later became part of EDF Energy – ironically, the nationalised French energy company, whose profits from the UK’s stupidity are used to subsidise French consumers.

The French government has now fully nationalised EDF (previously it was 84% publicly owned), and household energy bills rose by just 4% this year – compared to over 50% in the UK and a forecast 200% by January 2023.

If Starmer doesn’t want to listen to me (or his own commitments from 2020), perhaps emulating the centrist Emmanuel Macron in this instance would be palatable?

From the depletion of fish stocks to the burning of the Amazon, profit has proved a failed regulator for use of our natural resources

In his later years, Robin Cook argued: “The market is incapable of respecting a common resource such as the environment, which provides no price signal to express the cost of its erosion nor to warn of the long-term dangers of its destruction.”

From the depletion of fish stocks to the burning of the Amazon, profit has proved a failed regulator for use of our natural resources. The market has also failed to decarbonise at pace, or to end the scourge of fuel poverty.

On the media this week, shadow energy secretary Ed Miliband said Labour is “continuing to look at what the right long-term solution is for our energy system”. It is up to all of us to campaign for that solution to be public ownership – whether that’s from within the Labour Party (like me) or from the outside.

Republished from OpenDemocracy under Creative Commons Attribution-NonCommercial 4.0 International licence.

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Continue ReadingWhat nationalising energy companies would cost – and how to do it