NEA CYMRU FUEL DEBT BULLETIN January 2014

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1 NEA CYMRU FUEL DEBT BULLETIN January 2014 Welcome to the latest NEA Cymru Fuel Debt Bulletin. To start the New Year the energy regulator Ofgem has introduced a number of changes to energy tariffs with the aim of creating a simpler and clearer energy market for consumers. Suppliers will be limited to offering just four tariffs for gas, and four tariffs for electricity. Ofgem says its banning of confusing and complex tariffs will help to rebuild consumer trust. Further details on the changes are contained in the article on Retail Market Reforms. Many people who have borrowed money to pay for presents and food and drink this Christmas will get into debt in the early New Year as bills start to arrive through the letterbox. Added to this, winter is now upon us and increased energy prices will start to impact on households, making it even more likely that debt levels for energy will continue to rise. A report recently published by Consumer Futures titled Cutting Back: The impact of the cost of energy on Welsh households highlights a number of key findings and the choices people have to make in trying to manage their energy bills. These include: More than one in five households said they were actively struggling to pay their energy bills in March 2013, compared to one in eight in June % of households in Wales were worried about being able to afford energy bills if prices rose again (86% of low income households) To cope with energy bills One in six had cut back on food One in five had cut back on essentials like clothing, or other bills Half had reduced how much they heated their home turning down the thermostat or heating a single room. The full report can be found at

2 NEA s quarterly bulletin will cover the latest news, information and issues that affect the provision of fuel debt advice nationally and in Wales. This edition includes: Wales Collective Switching A word from our Sponsor Warm Homes Discount Scheme Reports Retail Market Reforms New contribution to tackling fuel poverty Wales Collective Switching Cyd Cymru - Wales Together Collective Energy Switching Scheme The "Cyd Cymru" scheme has been developed and supported by stakeholders across Wales to help people take part in collective energy switching. At a time when energy costs are rising, ways to save money have never been so important. Collective energy switching allows people to group together to negotiate better deals with energy providers. To register go to or call Please note that Registering to join Cyd Cymru is simply an expression of interest in obtaining a new energy deal and being part of the energy switching collective. The scheme is: Free to register and to switch There is no obligation to switch Registration is available to everyone who lives in Wales Registration is available to all households who pay their energy bill directly to an energy company, regardless of household income or property type The scheme is supported by Cardiff Council, the Vale of Glamorgan Council and a number of other partners across Wales

3 For more information on the scheme go to Warm Homes Discount Scheme (Update) There has been some confusion regarding the continuation of the Warm Home Discount Scheme (WHDS) and reports that it will be paid for via taxation following the Chancellor s Autumn Statement in early December. The Scheme will continue in its present form and continue to help millions of vulnerable households with an automatic 135 rebate off their electric bill for the Core Group and help many other low income households through the Broader Group with a 135 rebate (subject to qualifying via the individual supplier s criteria). NEA welcomed the intention to continue the scheme in its present form as it was impossible to see how the programme could have been tax funded and yet continue to retain the necessary involvement of energy suppliers to provide the automatic discounts (provision of support for the Core Group ). In addition, NEA were concerned that any possible move to tax fund the policy would result in a loss of the distinction between the WHDS and the support provided by the Winter Fuel Payment (WFP), which may have become muddled by Government and other stakeholders. The current situation for Broader Group applications is as follows: British Gas - close date is 31 st January 2014 EDF - no close date but have advised that they are close to the number of clients who can apply so closure is imminent Eon - have closed their books for applications Npower - have advised their closure date is 31 st March 2014 but may change ScottishPower - close date is 31 st January 2014 SSE - state they may close the scheme at short notice Retail Market Reforms (Update) Simpler - Clearer - Fairer Ofgem continue to roll out their Retail Market Reforms. Below is a timetable of the changes being implemented:

4 August 2013 Standards of Conduct The standards of conduct came into force on Monday, 26 August They require suppliers and any organisations that represent them, such as brokers or third party intermediaries, to ensure that each domestic customer is treated fairly. They cover three broad areas: Behaviour: suppliers must behave and carry out any actions in a fair, honest, transparent, appropriate and professional manner. Information: suppliers must provide information (whether in writing or orally) which is: complete, accurate and not misleading (in terms of the information provided or omitted); communicated in plain and intelligible language; relates to products or services that are appropriate to the customer to whom it is directed; and fair both in terms of its content and in terms of how it is presented (with more important information being given appropriate prominence). Process: suppliers must: make it easy for the consumer to contact them; act promptly and courteously to put things right when they make a mistake; and otherwise ensure that customer service arrangements and processes are complete, thorough, fit for purpose and transparent. October 2013 Fixed Term Tariffs Suppliers will be banned from increasing prices on fixed term deals or making other changes to fixed term tariffs (except trackers or structured price increases set out in advance which are fully in line with consumer protection law). Suppliers will also be banned from rolling forward household customers onto fixed term contracts without their consent.

5 Customers will be given a day window before the end date of their fixed term tariff to decide if they want to stay with the supplier or switch. December 2013 Limiting Tariffs Suppliers will be limited to offering up to four core tariffs per fuel (electricity and gas). This will apply to each payment type. Suppliers will also be allowed to offer any fixed term tariff, in addition to their four core tariffs, in collective switching schemes, subject to meeting Ofgem s criteria. All tariffs will have a standing charge and a single unit rate. Suppliers can set the standing charge at zero if they wish and some are doing this. Dual fuel and online account management discounts will remain. They will not be considered as core tariffs but as a discount. They will be simplified and will apply uniformly across all tariffs as /pence per year. For example, a supplier would be able to offer a direct debit customer a choice of no more than four electricity and four gas tariffs. The customer could then choose a dual fuel discount and an online account management discount. March 2014 Further Tariff / Information Suppliers will be required to give all their customers personalised information on the cheapest tariff they offer for them. This information will appear on each bill and on a range of other customer communications. New rules will be in place requiring all information suppliers send to consumers to be simplified, more engaging and personalised to them. Suppliers will use a new Tariff Comparison Rate (TCR), in all their communications to provide at a glance information to help customers compare tariffs. The TCR will be similar to the APR comparison rate used with credit cards. Ofgem is also requiring suppliers to provide personalised estimates which take account of a customer s usage to enable them to compare tariffs more accurately when switching. A new tariff information label will set out key terms and conditions as well as relevant information to help consumers compare across suppliers. June 2014 Ending of Dead Tariffs

6 All customers on existing, expensive dead tariffs (i.e. tariffs that are no longer marketed) must be transferred onto the cheapest variable rate. A supplier will only be able to keep consumers on dead tariffs if they are cheaper, or as cheap, as the supplier s lowest standard or evergreen tariff. New contribution to tackling the huge problem of fuel poverty A retired electrical engineer Martin Lewis from Monmouthshire, is hoping to help reduce fuel poverty in the UK by an invention inspired by his old car and helped by the Welsh Government s Business start-up service. He has developed a versatile low energy heated armchair seat cover which costs less than ½ pence per hour to use and could, he says, reduce household annual heating bills by several hundreds of pounds. The Welsh Government s Business Start Up service local provider, Centre for Business, assisted Mr Lewis in securing funding, including a Welsh Government Innovation Voucher for 10,000 while Usk-based design consultants GX helped him to develop the prototype. Mr Lewis worked on a design for an affordable and efficient armchair warmer after his wife Audrey, who suffers with arthritis, said she wished she could take the heated seats from the couple s SAAB car into the house. Mr Lewis explained: After my wife s comment we tried out lots of car seat heaters and looked at chair warming pads. But they were inefficient, short-lived or extremely expensive. Clearly there was a gap in the market, so I went back to basics. By calculating how much heat a body generates in watts while active and inactive and then reworking electric blanket designs, I came up with a model which I found could be run for just 0.5 pence an hour. Even in our old and cold stone cottage, using the B-warm we can drop the temperature to as low as 13 and be very warm when sitting. Our heating bills have dropped significantly as a result.

7 Mr Lewis said: Now the first batches are on sale, I hope to get further help from the Business Start Up service with things such as website sales development, but first I need to be sure that the demand is out there, and that we can fulfil that demand. At my age I don t intend to start employing people, but I m convinced that my product can make an important contribution to tackling the huge problem of fuel poverty in this country. A Word from our Sponsor Priority Assistance Fund The Priority Assistance Fund is the name of Swalec's Trust Fund. Swalec customers who are fuel poor, on a low income and vulnerable can apply for help with energy debt as part of a package of free assistance. Last year, nearly 3,000 customers received help with debt totaling around 2.3m What is it? Our Priority Assistance Fund is an internal trust fund which has been established to help our most vulnerable customers who are struggling with debt. The Fund aims to provide a holistic package of practical measures to qualifying households, including some or all of the following: Debt relief Income Maximisation Checks Energy Efficiency Advice and Measures, including free A-rated white goods Referrals for the Warm Home Discount, where appropriate Registration onto PSR and access to Careline Services Who is eligible?

8 In order to qualify for assistance from the Fund, your clients will need to be current Swalec customers and meet at least any two of the three criteria below: Have a total household income of 16,200 or less Be spending 10% or more of their income on energy costs Have some form of vulnerability in the household (born on or before 01/10/1951, child born on or after 01/04/1996, receiving some form of additional payment because they are sick or disabled) How can I refer my client? If you have a client who is an SSE customer and struggling with debt and you believe they would be eligible, you can make a referral by sending an to priorityassistanceteam@sse.com including the details below. Once we receive your referral, we will aim to issue an application form to your client within 14 days. To do so, the information we would require from you is: Your client s name Their full address, including postcode Their contact telephone number(s) Their approximate annual household income Details of any vulnerability or special requirements in the household Your contact details for any queries What happens next? Once we receive the completed application form, including proof of income, we will aim to process your client s application within 28 days. We will contact your client directly to let them know if they have been successful or not, and what help we are able to provide.

9 If you would like any more information regarding the scheme, would like to have application forms you can complete with your clients, or wish to be kept up to date with the status of the scheme, please do not hesitate to contact us on Reports NEA monitors all significant fuel debt advice-related publications some of which are listed below: Energy supplier performance (April to June 2013) How do the domestic energy suppliers compare on complaint handling? This annual report by the New Policy Institute gives a comprehensive picture of poverty in the UK, featuring analysis of low income, unemployment, low pay, homelessness and ill health. This briefing highlights the findings of three pieces of research commissioned by Consumer Futures. Each helped to monitor what impact, if any, recent energy price rises have had on the ability of people in Wales to afford their energy bills This report provides a summary of domestic suppliers performance in 2012 in relation to debt, disconnection, Prepayment Meters (PPMs) and services for customers in vulnerable positions

10 If you do not wish to receive future editions of the NEA Cymru Fuel Debt Advice Bulletin, please let us know by ing us at NEA is an independent charity reg. no Company limited by guarantee. Registered in England no Registered office: 6 th Floor (Elswick), West One, Forth Banks, Newcastle upon Tyne, NE1 3PA Tel: /Fax: / info@nea.org.uk / Web: