Consumer Credit Balances versus Better Ofgem Regulation

Chrysalis

If you guys only made as much effort into thinking of your own alternative solutions instead of trying to shoot the one person down who offered one, then maybe there would be more ideas.

Or is it the case you think whats happening now is fine?

matt_drummer

Chrysalis said:

You looking at it in black and white.

You think because they cant cease supply it gives them an excuse to not open dialogue with the customer?  Plus waiting a number of months first.

It is black and white.

If you are an energy supplier the maths is simple.

If you profits are capped at 2% then if more than one in fifty of your customers do not pay you go bust.

With reports in the media this year of millions of households struggling with rising energy costs, one in fifty customers not being able to pay is easy to imagine.

My opinion is that they should do everything possible to resolve that situation and that they probably do have to continue to supply in most cases.

I also think that this should not be at their risk, other customers will have to pick up the bill, either through the standing charge, an additional charge of some kind or from taxation.

Chrysalis

matt_drummer said:

Chrysalis said:

You looking at it in black and white.

You think because they cant cease supply it gives them an excuse to not open dialogue with the customer?  Plus waiting a number of months first.

It is black and white.

If you are an energy supplier the maths is simple.

If you profits are capped at 2% then if more than one in fifty of your customers do not pay you go bust.

With reports in the media this year of millions of households struggling with rising energy costs, one in fifty customers not being able to pay is easy to imagine.

My opinion is that they should do everything possible to resolve that situation and that they probably do have to continue to supply in most cases.

I also think that this should not be at their risk, other customers will have to pick up the bill, either through the standing charge, an additional charge of some kind or from taxation.

If you can only think in black and white then I think its hard to debate with you on this, there is always a middle ground on things.

Businesses should never be protected from all risk by the state unless the state gets shares in return for its bailout, you end up with situations where profits are privatised but losses are socialised.

One of my proposals was to increase the allowed profit level (on unit rates), Yes I did recognise there needed to be some compensation for the extra costs involved,  this allowed profit margin for suppliers isnt the current cause of the problems in my opinion.

Thanks for offering thoughts on what you think could be done.

MattMattMattUK

Chrysalis said:

matt_drummer said:

Chrysalis said:

You looking at it in black and white.

You think because they cant cease supply it gives them an excuse to not open dialogue with the customer?  Plus waiting a number of months first.

It is black and white.

If you are an energy supplier the maths is simple.

If you profits are capped at 2% then if more than one in fifty of your customers do not pay you go bust.

With reports in the media this year of millions of households struggling with rising energy costs, one in fifty customers not being able to pay is easy to imagine.

My opinion is that they should do everything possible to resolve that situation and that they probably do have to continue to supply in most cases.

I also think that this should not be at their risk, other customers will have to pick up the bill, either through the standing charge, an additional charge of some kind or from taxation.

If you can only think in black and white then I think its hard to debate with you on this, there is always a middle ground on things.

Businesses should never be protected from all risk by the state unless the state gets shares in return for its bailout, you end up with situations where profits are privatised but losses are socialised.

The difference with energy and almost all other businesses is that energy suppliers are required to allow customers to continue to run up debts whilst not paying and their debt recovery abilities are severely constrained, that is the part you seem to keep conveniently ignoring.

Chrysalis said:

One of my proposals was to increase the allowed profit level (on unit rates), Yes I did recognise there needed to be some compensation for the extra costs involved,  this allowed profit margin for suppliers isnt the current cause of the problems in my opinion.

Adding the cost to the unit rate would penalise average and higher users disproportionately. The narrow margin is not the problem in isolation, but it is when tied with Ofgem effectively blocking debt recovery. Sectors with higher risk of non-recovery need higher margins to account for that. If you want energy suppliers to shoulder the risk of bad debts you also need to let them take actions to stop debts being run up and the power to take effective recovery action. 

gbhxu

The obvious answer would be for there to be some sort of insurance against non-payers similar to some Landlord insurance when you get non paying renters

[Deleted User]

gbhxu said:

The obvious answer would be for there to be some sort of insurance against non-payers similar to some Landlord insurance when you get non paying renters

That would work but it would end up as a cost to all energy consumers.

Alnat1

The really obvious answer would be for everyone to be on pay as you go meters. Nobody could get into debt and nobody would be complaining their energy account was too much in credit. 

Would probably mean less CS service staff were having to answer calls because there'd be way less for customers to be concerned or complain about.

MattMattMattUK

Alnat1 said:

The really obvious answer would be for everyone to be on pay as you go meters. Nobody could get into debt and nobody would be complaining their energy account was too much in credit. 

Would probably mean less CS service staff were having to answer calls because there'd be way less for customers to be concerned or complain about.

This has been suggested and it did seem that most people did not have a problem with it, especially with smart meters it would be easy to keep an account in credit, it could even be managed via Direct Debit for most people. The suppliers would like it because there would be very little bad debt (only standing charges with no top ups) and consumer would benefit from little or no potential SoLR costs and reduced cost of bad debts. 

It would largely be a win-win, so I am sure someone will be along to claim that it would be the end of the world.

[Deleted User]

MattMattMattUK said:

Alnat1 said:

The really obvious answer would be for everyone to be on pay as you go meters. Nobody could get into debt and nobody would be complaining their energy account was too much in credit. 

Would probably mean less CS service staff were having to answer calls because there'd be way less for customers to be concerned or complain about.

This has been suggested and it did seem that most people did not have a problem with it, especially with smart meters it would be easy to keep an account in credit, it could even be managed via Direct Debit for most people. The suppliers would like it because there would be very little bad debt (only standing charges with no top ups) and consumer would benefit from little or no potential SoLR costs and reduced cost of bad debts. 

It would largely be a win-win, so I am sure someone will be along to claim that it would be the end of the world.

There is a technical issue. Sadly, our smart meter system is far from mature. I had a comms hub issue earlier this year which took me two weeks to resolve and only then because I persuaded a meter installation engineer who was working next door to carryout a comms hub reboot by pulling the house main fuse for 15 minutes. 

What happens if a smart meter in pre-payment mode loses comms with the supplier? Presumably, once the credit runs out the meter disconnects the supply! It follows that the industry would have to be able to respond more quickly to smart meter faults than is the case today for the above suggestion to work.

MattMattMattUK

[Deleted User] said:

MattMattMattUK said:

Alnat1 said:

The really obvious answer would be for everyone to be on pay as you go meters. Nobody could get into debt and nobody would be complaining their energy account was too much in credit. 

Would probably mean less CS service staff were having to answer calls because there'd be way less for customers to be concerned or complain about.

This has been suggested and it did seem that most people did not have a problem with it, especially with smart meters it would be easy to keep an account in credit, it could even be managed via Direct Debit for most people. The suppliers would like it because there would be very little bad debt (only standing charges with no top ups) and consumer would benefit from little or no potential SoLR costs and reduced cost of bad debts. 

It would largely be a win-win, so I am sure someone will be along to claim that it would be the end of the world.

There is a technical issue. Sadly, our smart meter system is far from mature. I had a comms hub issue earlier this year which took me two weeks to resolve and only then because I persuaded a meter installation engineer who was working next door to carryout a comms hub reboot by pulling the house main fuse for 15 minutes. 

What happens if a smart meter in pre-payment mode loses comms with the supplier? Presumably, once the credit runs out the meter disconnects the supply! It follows that the industry would have to be able to respond more quickly to smart meter faults than is the case today for the above suggestion to work.

I do not think that anyone was proposing an immediate change, I certainly am not, but it could be a proposal to work towards once the issues are ironed out with smart meters and the support infrastructure is fully operational. Any changes would need to be consulted upon, followed by a full implementation plan and milestones to be hit before a regional rollout so any issues can be resolved. Alternatively a better plan may be devised which works better and that can be implemented instead.