Energy sector struggles to identify vulnerable customers

Courtney Goldsmith
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Ofgem has put measures in place for suppliers to identify vulnerable customers (Source: Getty)

The energy market regulator and suppliers have admitted they are struggling to define which customers are the most vulnerable.

The Business, Energy and Industrial Strategy (Beis) committee today questioned Ofgem and three energy suppliers to gather evidence about different energy price cap proposals and their implications for customers, prices and competition.

The government plans to pass legislation to cap energy prices until at least 2020 in order to reduce "rip off" energy bills and protect vulnerable customers.

“Defining and identifying customers in vulnerable is not a straightforward task,” said Ofgem senior partner Rachel Fletcher.

When asked how Ofgem could regulate and supervise suppliers if it could not identify vulnerability, she it was not Ofgem’s place to assess it.

Fletcher said Ofgem has put wide-ranging obligations in place for suppliers to go out of their way to identify their vulnerable customers, but she added that Ofgem would start looking into a more sophisticated approach to identifying those customers.

However, Ovo Energy chief executive Stephen Fitzpatrick said one of the biggest challenges for energy suppliers was identifying which customers are vulnerable.

"We have a high proportion of prepayment meter customers, but I would say in actual fact there's an assumed correlation between prepayment customers and vulnerable customers," Fitzpatrick said.

"It is difficult for us as energy suppliers to know which customers are vulnerable. The vulnerability is defined by measures set by the government and the data's not shared with us."

Catherine Waddams, professor of economic regulation at Norwich Business School, who was also being questioned by Beis, said:

The nature of changing. It is very difficult to identify which consumers are vulnerable.

Waddams said initial findings of her work looking into fuel poverty found there was a lack of consistency in who was labelled as "vulnerable".

"People move in and out of various measures of vulnerability, so it may be rather difficult to have a firm database if this is such a fluid group."

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