PAGE 1 ENERGY SWITCHING TOOLKIT HELPING TENANTS REDUCE THEIR GAS AND ELECTRICITY BILLS

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1 PAGE 1 ENERGY SWITCHING TOOLKIT HELPING TENANTS REDUCE THEIR GAS AND ELECTRICITY BILLS

2 PAGE 2 This toolkit is built on the lessons that energywatch has learned from working with Castle Vale Housing Association to assist tenants in changing energy supplier. FOREWORD BY ALLAN ASHER, FORMER CHIEF EXECUTIVE ENERGYWATCH Despite its many wins for consumers, one of my few regrets as we close is that energywatch s seven years of vigorous campaigning on the way that pre-payment meters (PPM) force the poor to pay more has not persuaded government of the need to demand fair prices for pre-payment meter users. Pre-payment meters remain the energy market s most expensive payment method, yet their use is concentrated in low-income households. They are particularly common in housing association properties. Action to tackle this injustice has become even more vital at a time when high prices have resulted in more than five million households facing the misery of fuel poverty this winter. The National Housing Federation has worked with energywatch for close to two years now to campaign for a better deal for pre-payment meter users and, I m pleased to say, will continue to campaign vigorously on this front. Despite paying a premium price, pre-payment meter users receive a distinctly non-premium service. It doesn t have to be this way, though. There is potential for PPM users to obtain significant savings and better service by switching supplier. However, changing supplier is often viewed with cynicism or suspicion by the very people it stands to help most, often following a bad experience in the past. Housing associations with their strong links and respected brand could play a major role in helping their tenants get the best deal in the market, and in doing so apply pressure on suppliers to up their game and bring pre-payment meter prices into line with other payment methods. This toolkit is built on the lessons that energywatch has learned from working with Castle Vale Housing Association to assist tenants in changing energy supplier. I am hopeful it will succeed in enabling other housing associations to deliver practical assistance and help tenants win themselves a much better deal from energy suppliers. PAGE 3

3 PAGE 4 FORWARD BY DAVID ORR, CHIEF EXECUTIVE, NATIONAL HOUSING FEDERATION One in three social housing tenants use pre-payment energy meters. Many pay hundreds of pounds a year more for their energy than those getting the best online direct debit deal. The National Housing Federation believes that housing associations can collectively fight this injustice. We are proud that, on average, housing association homes have a higher energy efficiency rating than any other type whether owned or rented. They also work to maximise tenants incomes through employment training, skills opportunities and advice on benefits and energy costs. For its part, the government has invested in improving homes, increasing incomes and encouraging the kinds of services I have described. The third side of the triangle is the energy companies. Every time they announce a hefty price increase, millions of pounds worth of our work and investment is undone. We have the most liberalised energy price market in Europe. At a time of global uncertainty, huge price rises and the collapse of economic giants, can the government continue to cling to the idea that competition alone can deliver a fair market in energy? If there was ever a time to challenge received wisdom of this sort, it is surely now. David Orr - Chief Executive Scrapping the premium paid by pre-payment meter customers is only part of the answer, but it would signal a symbolic shift in the balance of power between the energy companies and the rest of society. I would like to pay tribute to energywatch, which has now been merged into the new Consumer Focus. The passion, expertise and dedication of its staff, who helped run the Castle Vale pilot, write this toolkit and keep energy injustice in the public eye, cannot be underestimated. It will be a great loss to the thousands of people who need a trusted guide through a complex and confusing energy market. My thanks also go to the staff and tenants of Castle Vale Community Housing Association, whose efforts and experiences have yielded valuable lessons about the provision of energy advice. I hope this toolkit will help you provide your staff and tenants with the information they need to get the best possible energy deal this winter. At a time of global uncertainty, huge price rises and the collapse of economic giants, can the government continue to cling to the idea that competition alone can deliver a fair market in energy? EXECUTIVE SUMMARY The gas and electricity markets in England, Wales and Scotland are extremely complicated, with many different suppliers, price plans and payment methods. The poorest consumers tend to pay proportionally more than the richest, because they are unable or reluctant to take advantage of the best energy deals on offer. Consumers using pre-payment meters (PPM) are often paying the most of all up to 400 more a year than customers on the most favourable tariffs. This is particularly worrying in view of the fact that about a million households using PPMs are now classified as fuel poor. Other categories of consumers, particularly those paying by weekly or monthly budget cards, or by cash or cheque when the bill arrives, could also potentially make cost savings by changing supplier and/or payment method. All these consumers can be assisted by outreach projects helping them identify the best deals and the best suppliers for them, as well as handling more general queries they may have about their gas and electricity accounts. Many consumers using pre-payment meters are tenants of housing associations, so the housing association is well placed to advise and assist them on gas and electricity matters. Energywatch, the National Housing Federation and Castle Vale Community Housing Association held a pilot project in Castle Vale, Birmingham, between February and April 2008, to investigate the best way of carrying out such energy outreach projects. Focus groups were also conducted by MORI with local residents to glean opinions about the methods used. The results of the Castle Vale project form the basis for this toolkit. The most important findings were that: a) The success of such projects depends on persuading people to attend advice sessions and convincing them that the advice is impartial, unbiased and not provided by commercial energy companies for financial gain; b) Project staff need sufficient knowledge and access to information to answer a range of queries people have concerning their energy bills and suppliers. During the project energywatch advisers were on hand at a number of venues, including the local housing association premises, shopping centres and outside schools, to talk to members of the public about the possibility of switching supplier. The project was publicised by sending out postcards to named individuals through the post, handing out printed flyers and brochures to the public, and via personal contacts. These methods met with varying degrees of success. At some sessions, consumers were helped to use comparison websites to search for the best energy deal (which proved particularly effective), or to phone energy suppliers direct to make enquiries. While a high number of people canvassed did not switch suppliers on the spot, the advisers found that many people raised other energy queries not immediately related to switching supplier, and they were able to help resolve these problems. The success of any such outreach project depends on the quality of advice given by the staff. Owing to the complexity of the gas and electricity markets, it is essential for advisers to have up-to-date and detailed information on how the gas and electricity markets work, how metering is carried out, the various types of tariff available, how to switch suppliers, how to switch method of payment, and other methods that consumers can use to reduce their energy bills (such as dual fuel deals, Economy 7 and Economy 10 tariffs, accessing social tariffs, the Priority Services Register, etc.). This toolkit provides detailed advice on all these areas, as well as a guide to Green tariffs. It also lists contact details for all gas and electricity suppliers and other organisations, besides the new consumer representation body Consumer Focus, that can provide advice and assistance to energy consumers. Not least, it explains how to raise a complaint with the energy company should the need arise. This advice is particularly relevant at a time when energy prices are rising and fuel poverty is on the increase. PAGE 5

4 PAGE 6 ENERGY SWITCHING TOOLKIT PAGE 7 SECTION 1 INTRODUCTION About energywatch New consumer representation arrangements SECTION 2. WHY SHOULD PRE-PAYMENT METER USERS SWITCH SUPPLIER AND HOW MUCH CAN THEY SAVE? Introduction Who uses pre-payment meters? Types of gas and electricity meter Change the way to pay and look for special tariffs and reward schemes How companies charge for gas and electricity EBICo Dual fuel deals Fixed and capped price deals How to find out about the best prices in your area Comparing Economy 7 and Economy Limitations on switching Consumer debt Dynamic teleswitching Green tariffs How tenants can benefit from cheaper energy without switching Priority Services Register Timing and location of advice sessions Strike whilst the iron is hot Helpline Text back service Helping consumers find the best deal for them Incentives Discussing switching with consumers in the street Working in shopping centres Working outside schools Parents with grown-up children Ideal length of project Door-to-door selling Informal contacts and follow-up Using the media Impact of price rises during the project Historical gas and electricity prices MORI focus groups Do consumers switch anyway? Advice for making similar projects work Learning from the success of Beat the Cold Other advice Project costs and value for money SECTION 3 HOW TO SAVE MONEY BY CHANGING PAYMENT METHOD OR SUPPLIER. 18 Introduction Change to a cheaper payment method Energy Tariffs (sometimes called Price Plans or payment methods) Changing from a pre-payment meter to a Credit Meter Change to a different gas and electricity supplier Use social tariffs and assistance schemes where possible How to complain and who to complain to Making a complaint over the telephone Writing to your company Tips on making a more effective complaint Complaint handling standards SECTION 4 LEARNING FROM THE CASTLE VALE PROJECT Introduction Practical aspects of the project Advice sessions and street outreach Publicity material Sessions held in housing association offices SECTION 5 HOW TO DEAL WITH COMMON PROBLEMS Tips and useful information for pre-payment meter customers SECTION 6 HOW TO CONTACT THE ENERGY COMPANIES General contact information Contact numbers for pre-payment meter customers Emergency contact numbers for all consumers SECTION 7 WHO ELSE CAN HELP?: EXTERNAL RESOURCES FOR HOUSING ASSOCIATIONS SECTION 8 GREEN TARIFF GUIDE Green source Green source (large hydro) Green fund (new renewables) Green fund (other environmental) Carbon offset How to compare green tariffs

5 PAGE 8 SECTION 1. INTRODUCTION The gas and electricity market in England, Wales and Scotland (Northern Ireland has a different system) is complicated, with consumers having to pick their way through a maze of different offers, price plans and ways to pay. Too many consumers pay more than they need to for their gas and electricity because they are reluctant or unable to take advantage of the best offers available. This toolkit is aimed at housing associations that want to run projects to help tenants reduce their gas and electricity bill by changing which company supplies their energy and the way they pay for it. Potentially there are huge savings to be made: up to 500 a year for some consumers. Changing payment method and supplier should be an easy process and providing relevant and comprehensive advice should take no more than 15 minutes per consumer. This makes any successful project easy to justify in terms of value for money. The tenants who will benefit most are those who: Pay using a pre-payment meter Pay using a weekly or monthly budget card Pay by cash or cheque when the bill comes. The toolkit is based on a pilot project carried out by the National Housing Federation, energywatch and Castle Vale Community Housing Association in the Castle Vale area of Birmingham between February and April The project identified two main issues that are crucial to the success of such schemes: 1. Persuading people to participate in the project and seek advice about the best deals on offer. In Castle Vale this appeared to hinge on establishing the credibility and independence of the project and the advice being given. Residents were extremely cynical about anyone giving advice on the price of energy, fearing that it was biased in favour of a particular energy company, or that it was part of a sales drive by an energy company. 2. Having the knowledge to answer questions and to help solve the variety of problems people experience in relation to their gas and electricity supply. This toolkit describes how the project tried to overcome these issues. It also tells you where to find information to help consumers solve their gas and electricity problems. The toolkit is split into several sections: Section 2 explains how the gas and electricity market works, gives some basic details on metering and discusses the various types of tariff available. Because pre-payment meters use a particular type of meter it is important to know the basics before giving advice to consumers. Section 3 explains the basics of how to switch supplier and/ or change payment method. Section 4 discusses the Castle Vale project and the lessons learned from this approach to outreach, providing hints and tips for people running similar projects. Section 5 explains how to deal with common problems which tenants may have with the gas and electricity supply and includes links to other advice agencies. Section 6 and Section 7 contains a list of contact details for the energy companies, and a directory of other sources of assistance. Section 8 is a guide to green tariffs. ABOUT ENERGYWATCH Until recently, energywatch was the independent gas and electricity watchdog, set up by Parliament in November 2000 to protect and promote the interests of all gas and electricity consumers. Energywatch provided free, impartial information and advice and took up complaints on behalf of consumers who were having difficulty resolving problems directly with their energy companies. Energywatch used the intelligence it gathered through the complaint-handling process to develop a real understanding of the issues affecting consumers and their impact on their day-to-day lives. They were a powerful voice for consumers, campaigning for a better deal for energy consumers. NEW CONSUMER REPRESENTATION ARRANGEMENTS As part of the changes in consumer representation arrangements introduced by the Consumers, Estate Agents and Redress Act 2007 (CEAR) on 1 October 2008 the existing National Consumer Council, energywatch and Postwatch merged to form the new body Consumer Focus. Consumer Focus deals with all aspects of consumer representation and maintains an advocacy role on behalf of consumers. It investigates complaints from energy consumers relating to a disconnection or a threat of disconnection, or complaints made by or on behalf of vulnerable consumers. However, the comprehensive consumer advice and representation service offered by energywatch have been largely discontinued. Consumers will still be able to get advice and assistance from Consumer Direct. More information on Consumer Direct can be found at the website and they can be contacted by phone on (for a Welsh-speaking adviser call ). Minicom users should dial Consumer Focus went live on 1 October The contents of the energywatch website will be transferred to the Consumer Focus website and a new web interface will be established for advisers and specialists. The Consumer Focus website will be: And the specialist web interface will be: PAGE 9 SECTION 1

6 SECTION 2. WHY SHOULD PRE-PAYMENT METER USERS SWITCH SUPPLIER AND HOW MUCH CAN THEY SAVE? INTRODUCTION People who pay for their gas and electricity using a pre-payment meter are stuck in a segment of Great Britain s energy market which is devoid of effective competition. Hence they frequently suffer from the market s highest prices and poor service. The key points of the pre-payment market are: Pre-payment meters are the most expensive way to pay, often by 300 to 400 a year Pre-payment meter users have limited awareness of the competitive market and of price variations between suppliers and payment methods. energywatch research suggests that over one third of pre-payment meter users do not realise they are paying more to use a pre-payment meter Only around half of pre-payment meter users have ever changed supplier, leaving those who have not switched, in general, buying their gas and electricity from the most expensive companies Every company charges different prices for pre-payment meter users and typically the most expensive supplier is about 20% dearer than the cheapest supplier Ofgem has identified that over half of the pre-payment meter users who do switch supplier actually switch to the three most expensive suppliers Pre-payment meter users rely heavily on door-to-door sales agents for their information on energy prices, leaving them considerably exposed to mis-selling. This means that most pre-payment meter users would clearly benefit from further information on the market and assistance in using the market to their advantage. Consumers in social housing have a very high tendency to use prepayment meters, meaning housing associations are well placed to provide assistance to the people who need it most. People who pay their bill quarterly by cash or cheque (a method referred to as standard credit) rely heavily on door-to-door sales agents and so face a similar risk as pre-payment meter users. Standard credit is also becoming an increasingly expensive way to pay, which means that these customers need advice on how the market can work to their advantage. WHO USES PRE-PAYMENT METERS? Nearly six million pre-payment meters are in use in Great Britain, predominantly in low-income households. This means that a high proportion of pre-payment meter users are people living on a budget who need to limit their energy expenditure, yet are left paying the market s premium prices. Pre-payment meter use is high amongst housing association tenants, and some research suggests that housing association tenants are three times more likely to use a pre-payment meter than the average householder. Even conservative estimates indicate that the number of fuel-poor households that also use pre-payment meters is now approaching the one million mark. TYPES OF GAS AND ELECTRICITY METER There are two types of meter in use: the prepayment meter and the credit meter. A credit meter is the most common type. It simply records the energy used. The meter will be read by a representative of the energy company and the consumer will receive a bill, or have their direct debit payment varied, based on the meter reading. People who have a credit meter can usually sign up for any tariff (price plan) from any energy company (page 20) People who use a pre-payment meter need to pay for their energy in advance using some form of card or key which they top up in a shop or post office. These meters restrict users to pre-payment tariffs which are almost always the most expensive. Pre-payment meters will only supply energy up to the amount that has been paid in advance, leaving users disconnected if the credit runs out. SECTION 2 PAGE 11

7 PAGE 12 Consumers on Economy 7, Economy 10 1 and similar tariffs can also use a pre-payment meter. Some electricity pre-payment meters use an old technology that takes disposable paper tokens. Those who use a token pre-payment meter may not be able to switch to a different supplier unless they have a more modern meter fitted as a replacement. Companies must do this for free and any consumer who has a token prepayment meter is recommended to get it changed as quickly as possible. Energywatch has produced a leaflet with advice for token pre-payment meter users called Using an electricity token meter? Don't get a Debt Shock! Make sure your meter is up to date, which can be found on the Consumer Focus web interface. CHANGE THE WAY TO PAY AND LOOK FOR SPECIAL TARIFFS AND REWARD SCHEMES Consumers can save money by changing the way they pay for gas and electricity. Direct debit is usually the cheapest and pre-payment meter is usually the most expensive. Direct debit is even cheaper if consumers can manage their account online. Many suppliers have special tariffs and reward schemes. Examples include: Reward and cash back schemes. Some suppliers offer an incentive to change to them (e.g. cash back) or for staying with them (e.g. air miles) Tariffs for older people Internet tariffs Green tariffs. Some suppliers have tariffs that can help the environment Prompt Pay. Some suppliers offer discounts if the bill is paid within a specified period To find out more about these schemes contact the supplier directly or check the additional information sections on one of the comparison websites (see Page 14). HOW COMPANIES CHARGE FOR GAS AND ELECTRICITY There are essentially four main ways to pay for gas and electricity: Direct debit and managing your account online Standard direct debit, paying by direct debit but still getting paper bills. This usually involves paying a set amount each month Standard credit, paying by cash or cheque every quarter when the bill arrives. Some consumers have a payment card and they pay a set weekly or monthly amount, usually in cash at the post office Pre-payment meter, paying in advance to top up a card or key which is then used to charge the meter. This requires a different type of meter to be installed in the property. Pre-payment is, almost without exception, the most expensive payment method often by as much as a year. There are other ways to pay, such as Fuel Direct which is a safety net against disconnection for recipients of qualifying benefits as Department for Work and Pensions (DWP) pay energy bills direct from a consumer s benefits. Major energy suppliers have an obligation to accept payment by Fuel Direct, provided DWP approves the application. Using Fuel Direct is often a good way to repay a debt and avoid having a pre-payment meter imposed. Some consumers pay by weekly card or use a bill payment company such as One Bill. EBICO EBICo is a not-for-profit energy supplier that currently charges the same rate no matter how its customers pay. This means that pre-payment meter customers could potentially get a good deal from EBICo. More information on their tariffs: Equipower, Equigas and Equidual, can be found on the website See advice on the impact of price rises in Section Four: Learning from the Castle Vale Project. DUAL FUEL DEALS Dual fuel deals are where suppliers offer a discount to customers who buy both gas and electricity from them. In some cases this discount can be 60 a year. However, only EDF Energy offers a dual fuel discount to prepayment meter users, meaning it is generally not advantageous to have only one supplier. Until early 2008, consumers who were able to pay by direct debit frequently found that it was cheaper to sign up to a Dual Fuel deal. However, this may no longer be the case and consumers should look at the cheapest deals for gas and electricity as a single fuel as well as the cheapest dual fuel deal. FIXED AND CAPPED PRICE DEALS Fixed and capped price deals are not usually available to pre-payment meter users. However, they might be useful for consumers who can switch payment method. A capped price tariff offers the guarantee that the price per kilowatt hour (kwh) for electricity or gas will not rise beyond the cap for a set period of time. The price paid for electricity or gas could fall if a company s standard prices decrease during the period. The bill amount will still vary depending on how much energy is used each month. A fixed price tariff offers the guarantee that the price per kwh for electricity or gas will not rise for a set period of time. However, the tariff price will not fall during the fixed period if the company s standard prices fall. The bill amount will still vary depending on how much energy is used each month. Once the capped or fixed price offer expires, consumers will usually be moved on to the supplier s standard price tariff, which might not be the cheapest tariff that supplier offers. Capped or fixed price tariffs are usually more expensive (in price per kwh) than a company s current standard tariff. The price premium at the start of the fixed or capped price offer might cost more than the savings made towards the end of the offer. Consumers might be subject to a termination fee for switching away from these sorts of offers before the end of the fixed period. These types of offers may be suitable for consumers who: Are on a fixed income and want to be able to budget how much they will pay for their energy usage over the year Think that energy prices are likely to rise further in the future. Please note that many of these deals are not available to pre-payment meter customers. PAGE 13 SECTION 2 1 See page 15 for more information on Economy tariffs.

8 PAGE 14 HOW TO FIND OUT ABOUT THE BEST PRICES IN YOUR AREA With energy companies now offering a bewildering range of different deals, it's easy to become confused about what's on offer. The easiest way to find the best deal is to use one of the internet price comparison services which are accredited to the energywatch Confidence Code a voluntary code of practice for price comparison services. Compliance with the Confidence Code is regularly audited, which means that the prices quoted on accredited websites can be trusted. The following companies have been accredited, as they have been able to demonstrate compliance with all nine requirements of the Confidence Code. These accredited sites now display the Confidence Code logo on their site. The best results will be obtained if actual consumption figures, in kwh, are used when undertaking a price comparison. These can be found on a bill or statement. Try to avoid using just winter consumption or summer consumption to estimate for a whole year. Accredited website Contact Contact telephone customerservices@energylinx.co.uk energyhelpline@firsthelpline.com contact@homeadvisoryservice.com general@moneyexpert.com customerservices@moneysupermarket.com customerservice@saveonyourbills.co.uk customerservice@simplyswitch.com swwqueries@which.co.uk help@theenergyshop.com Info@ukpower.co.uk CustomerServices@uswitch.com energy@unravelit.com gareth@confused.com COMPARING ECONOMY 7 AND ECONOMY 10 Economy 7 and Economy 10 are electricity tariffs which offer cheap electricity at night and more expensive electricity during the day. Economy 10 also offers a short period of cheap daytime electricity. Generally these tariffs are used by people who have storage heaters fitted. When comparing Economy 7 and Economy 10 tariffs it is very important to use actual consumption data. Because each supplier charges very different rates for night and day use, how much is used at night and how much is used during the day makes a very important difference to which company will be cheapest. Try to avoid using the industry estimate of 55% night time use as it can give a very misleading result. Most comparison websites ask for total electricity use per year in kwh and a night time percentage. To find out the night time percentage use bills or statements to work out how much electricity in kwh has been used for day and night use and add them together to find the total consumption in kwh. The night time percentage is calculated by dividing the night time consumption in kwh by the total consumption in kwh and then multiplying by 100. It is vitally important that consumers understand how to use these tariffs and transfer as much of their electricity use to the cheap periods as possible. This may require the use of timers on certain devices and making sure that consumers understand how to use the timers. Economy 7 and Economy 10 consumers who use a lot of electricity during the day will find that they get very large bills. CONSUMER DEBT Consumers who use a standard credit meter cannot switch their gas and electricity supplier if they have an outstanding balance on their account. This is normally overcome by the old supplier sending out a final bill and the consumer paying the balance. However, for people with large debts the energy supplier may object to the transfer, resulting in the switch failing. In theory, pre-payment meter users can still switch supplier if they owe less than 100 by using the Debt Assignment Protocol. This is an industry-agreed process that allows debts below this level to transfer with the customer to the new supplier. The consumer will then continue to pay off the debt in the same way as before. When a pre-payment meter user with a debt applies to change supplier the existing supplier will object to the transfer and it will be put on hold whilst the consumer is asked to give consent for the new supplier to have access to their current supplier s account records. Failure to agree through signing and returning the permission letter means the switch will fail. This system is very rarely used and usually fails when consumers do not agree to the transfer of data, meaning the consumer stays with their existing supplier. Potentially, the Debt Assignment Protocol is a very useful way for consumers with less than 100 debt to reduce their weekly costs and so pay off their debt sooner. Advisers should explain the process before initiating the switch so that consumers do agree to the transfer of data records. Ofgem should be advised of any failed switches due to suppliers refusing to use the Debt Assignment Protocol. Ofgem can be contacted through its website, PAGE 15 LIMITATIONS ON SWITCHING There are certain circumstances where consumers cannot switch to a new gas and electricity supplier. SECTION 2

9 PAGE 16 DYNAMIC TELESWITCHING Some consumers have meters installed in their home which limit the price plans they can sign up to because there are a limited number of suppliers who offer suitable tariffs. Examples of this type of meter are Dynamic Teleswitched meters (DTS) or three rate meters, which are usually found in Scotland. DTS users might find that switching websites do not show their tariff package or that there are no competitive tariffs available from other suppliers. It may not be practical to change the metering and home heating systems to change to a normal tariff. In general it is not possible to find out whether consumers on these tariffs are getting a good deal or not. GREEN TARIFFS Although not all pre-payment meter users can sign up to green tariffs it may be that consumers who switch supplier want to sign up to one. A guide to Green tariffs is included in Section 8. Few consumers have signed up to green tariffs, and consumer confusion may be one reason for this lack of take-up. Unless consumers start producing their own energy using solar panels, wind turbines or the like, it is difficult to see how they can go green. Consumers still need to get their energy from a supplier and that will need to come via their existing pipes and wires. Gas can t be green because it comes from fossil fuel, and any electricity produced from a renewable source is not guaranteed to get into your home as it goes into the mix of electricity from nuclear and fossil fuels. HOW TENANTS CAN BENEFIT FROM CHEAPER ENERGY WITHOUT SWITCHING Switching supplier and payment method may not be suitable for all tenants and some tenants may switch back to more expensive suppliers due to door-to-door sales activity. Some housing associations have sought to overcome this through forming a company to buy gas and electricity wholesale and sell it on to their tenants. Aggregation deals such as EnergyExtra ( offer an opportunity for housing associations to help their tenants access cheap gas and electricity without having to continually change supplier. PRIORITY SERVICE REGISTER The Priority Service Register (PSR) can assist some vulnerable consumers in their engagement with energy suppliers by providing a suite of free services that improve safety, security and communication. These registers also help inform suppliers who their vulnerable consumers are. Energy suppliers are obliged to offer these services, although some suppliers have rebranded their registers. Domestic consumers will qualify for the register if one or more of the following applies to them: Of pensionable age Have a disability Chronically sick Are hearing and/or visually impaired. The free services offered by the Priority Service Register are: Password protection scheme: This scheme helps reassure consumers that a caller is genuine. Consumers agree a unique password with their gas and electricity supplier(s) that will be used whenever their staff visit their home Meter reading: It is very important that bills are based on the energy used. If no one is able to read the gas or electricity meter, the gas and electricity supplier will arrange for the meter to be read every quarter and bills sent out based on these readings. Without accurate readings, people can be faced with catch-up bills running into thousands of pounds Accessing pre-payment meters: If a prepayment meter cannot be accessed then, providing that it is safe and practicable, the gas or electricity supplier can move the meter to a more accessible location, free of charge Special help if the gas supply is disrupted: If the gas supply has been disrupted or turned off for safety reasons and if ALL adults living in the household are eligible for the Priority Service Register, the gas supplier will provide alternative cooking and heating facilities Advance notice if the electricity supply has to be interrupted: Consumers who rely on electricity to power vital medical equipment can get advance notice if the electricity supply has to be interrupted for planned work Bill nominee scheme: A copy of gas and electricity bills can be sent to a friend, relative, or the address of a carer so they can help the consumer read and check or pay the bill Services for visually impaired, or hearing impaired consumers: The gas or electricity supplier can provide consumer information, including meter reading and bills, in a suitable format, e.g. braille, large print, audio tape, textphone or typetalk. Energywatch has produced a leaflet explaining the Priority Services Register and the free help it provides. The leaflet can be found on the Consumer Focus web interface at It is strongly recommended that eligible tenants are urged to register. Registration for the service is undertaken on request by the energy supplier. Each energy company has a different name for the Priority Service Register. These are given below. British Gas Home Energy Care Register; EDF Energy Priority Services Register; or E.ON Priority Services Register; or register online at: uk.com/ ContactForms/ priorityservices.aspx npower Warm Response Service which can be contacted via the Warm Response Line on Scottish Power and Manweb Carefree Priority Services Register; or /products-services/for-your-home/documents /priority_services.pdf Scottish Hydro, Souther Electric and SWALEC Careline; PAGE 17 SECTION 2

10 SECTION 3. HOW TO SAVE MONEY BY CHANGING PAYMENT METHOD OR SUPPLIER INTRODUCTION There are three ways to switch and save money: Change to a cheaper way to pay for gas and electricity Change to a different gas and electricity supplier or a better tariff/ price plan If eligible, change to a social tariff. CHANGE TO A CHEAPER PAYMENT METHOD Changing the payment method is the most effective way to save money. The price differences between payment methods vary between company and can be very large indeed. The cheapest way to buy gas and electricity is to pay by monthly direct debit with an account managed online. Changing to this payment method will, at current prices, save hundreds of pounds a year. ENERGY TARIFFS (SOMETIMES CALLED PRICE PLANS OR PAYMENT METHODS) In general there are six different types of energy price plan: Pre-payment meter Paying by cash/ cheque when the bill comes Paying by direct debit. Figure 6 Payment methods for gas and electricity, December 2007 Monthly Direct Debit (online or offline) Pre-Payment meter Quarterly Cash Cheque Signing up to an online tariff, managing the account online and paying by direct debit Fixed price or capped price tariffs for a set period of time. This usually requires the ability to manage the account online and to pay by monthly direct debit. Fuel Direct 4 Budgeting payment schemes (weekly/fortnightly or other flexible payment schemes). The table in Figure 6 shows the latest information on how people pay for gas and electricity. People who can manage their account online and pay by direct debit will access the cheapest tariffs currently available in the market. There are special offers available to online customers and the best way to work out the cheapest deal is to use a comparison website. See How to find out about the best prices in your area in Section 2. Some suppliers will allow other payment methods for their online accounts, but these do not attract the same low prices as paying by direct debit. Managing an account online is straightforward. All it means is that consumers will get bills sent to them by or through a secure website (much like internet banking), and they will be asked to enter meter readings online. Consumers will need to access the internet only a few times a year to manage their account effectively. Fuel Direct Budgeting Payment Schemes Gas 47.1% 13.8% 34.0% 0.1% 2.1% 2.9% Electricity 50.6% 10.9% 33.3% 0.1% 2.5% 2.6% Source: Ofgem report Monitoring Company Performance Q Fuel Direct is a payment method for those consumers on income support where the government puts aside some of their benefits to pay for energy bills. Other SECTION 3 PAGE

11 PAGE 20 Paying by offline, conventional direct debit is the next cheapest option, which still offers savings over paying by cash/ cheque. Paying by cash or cheque is becoming almost as expensive as using a pre-payment meter. Around a third of consumers still pay this way. Some consumers have concerns about using direct debits, often caused by the unpredictability of the payments and the fear that a larger than expected direct debit payment could cause a bank account to become overdrawn. Pre-payment tariffs are nearly always the most expensive tariffs. An average consumer able to sign up to an internet tariff, manage their account online and pay by direct debit should be able to save around 300 to 500 a year compared with using a pre-payment meter. Changing from a pre-payment meter to payment by any other method will require a change of meter. There is more information on meter types on Page 11. Consumers must be certain that they can budget effectively without a pre-payment meter as the costs of going into debt and having a pre-payment meter reinstalled can be considerable. CHANGING FROM A PRE- PAYMENT METER TO A CREDIT METER While pre-payment meters are the preferred payment method for some people, if they are able to budget without the use of the meter and they have no debt or recent history of debt, it should be relatively easy for them to exchange their PPM for a credit meter. Most energy companies reserve the right to charge to install a credit meter, but usually they will do it for free. Some companies insist that people switch to direct debit when they change a prepayment meter. Companies may undertake a credit check and as a result ask some people for a security deposit. Energywatch is aware that some consumers have encountered difficulties when trying to exchange a pre-payment meter for a credit meter. This is usually because the company will initially refuse to complete the exchange or will deny that it is possible to exchange a prepayment meter for a credit meter. It is not clear why people sometimes encounter these problems. All the energy companies have confirmed to energywatch that they will exchange any pre-payment meter for a credit meter using the following policies: British Gas Npower E.ON No charge for exchange if consumer has no debt and they pass a credit check. No charge for changing prepayment meter if customer has no debt, and meets certain credit checks or has a 12-month payment history with supplier. No charge to people who inherit a pre-payment meter through moving into a home which already has one installed and change to npower. No charge for vulnerable consumers. Others consumers may be charged 70 for gas and 50 for electricity exchange. Won t exchange pre-payment meter if it still has a debt. No charge for people who inherit a pre-payment meter through moving into a home which already has one installed provided they pass a credit check. Supplier may charge others up to 50. Will charge the full cost if have to reinstall a pre-payment meter. Scottish Power Scottish Hydro, Southern EDF Energy Electric SWALEC No charge if consumer has no debt, but Scottish Power may charge a security deposit for people with a poor payment history. No charge provided a suitable payment arrangement which minimises chances of building up a debt is secured. No charge for consumers who have used a pre-payment meter for more than 12 months and have cleared their debt or at change of tenancy or shortly after changing to EDF Energy. CHANGE TO A DIFFERENT GAS AND ELECTRICITY SUPPLIER Changing supplier should be a simple process which can be done over the phone in one short phone call and the whole process should take about six weeks to complete. It should be no more difficult than changing mobile phone provider. The new supplier will organise everything and once the consumer has agreed to switch, the only thing they need to do for the process to complete is take a meter reading on the transfer day. Most companies will confirm the new deal by letter, which the consumer might be required to sign and return. The new supplier should keep the consumer informed about how the transfer is progressing and tell them the date on which they will change energy company. Once the most suitable deal has been identified, changing supplier follows the steps below: Step 1: Consumers should get in touch with the new supplier(s) and agree to buy their gas and/ or electricity from them. It will help if the consumer has their electricity and gas meter readings as well as a recent statement or bill to hand when they call. Step 2: To make the process go more smoothly, consumers are advised to inform their old supplier(s) of their intention to leave. (The new supplier will automatically inform the old supplier of the impending transfer.) Consumers should initially do this by telephone and then follow up with written confirmation. Step 3: In theory pre-payment meter users can still switch supplier even if they have an energy debt of up to 100. Any debt transfers to the new energy supplier and is paid back in the same way as before. It won t cost anything to transfer a debt, but the new electricity or gas company will need some information about the debt before the transfer can take place. This process is available to consumers but has hardly ever been used successfully. Step 4: The consumer should take a meter reading on the day they change supplier (the date advised to them by their new supplier). The consumer should confirm the final meter reading to their new supplier. Consumers keep the same meter when they change their energy supplier. Pre-payment meter users will receive a new smartcard or key in the post a few days before the transfer day. Prepayment meter users MUST NOT continue using their old key or card after the transfer date as the payments will go to their old, rather than their new supplier. It can be a complicated and drawn out process to get these misdirected payments transferred from the old supplier to the new supplier, potentially leaving the consumer in debt and without the gas or electricity that they have paid for. USE SOCIAL TARIFFS AND ASSISTANCE SCHEMES WHERE POSSIBLE Some companies offer reduced price tariffs to people who are fuel poor. Eligibility is usually related to the receipt of an income-related benefit or being over a certain age. Some suppliers also offer trust funds which award grants to help people clear their debts. Some suppliers also offer one off rebates. Consumers cannot change supplier to access a social tariff. Currently, only customers of Scottish and Southern Energy and EDF Energy can access social tariffs that represent a better deal than any other tariff they offer. The other suppliers offer social products which are at best equal to, but in some cases more expensive than, their cheapest deal. Consumers should check if they could save more money by switching to the best online deal rather than by subscribing to a social tariff. In some areas British Gas customers who use a pre-payment meter will save more money switching to EBICo and keeping their pre-payment meter than subscribing to the British Gas social product called Essentials. There is no comprehensive database of social tariffs on offer from the suppliers, nor is there currently any clarity on the exact eligibility criteria for social tariffs, rebates or grants from trust funds. Following the closure of energywatch on 30 September 2008, up to date information about social tariffs can be found on the new Consumer Focus website at org.uk/en/content/cms/energy_help Advice/You r_energy_question/your_energy_question.aspx. Social tariffs and other tariff assistance programmes might be the best option for people who cannot switch because they are in debt or cannot take advantage of online deals. PAGE 21 SECTION 3

12 PAGE 22 HOW TO COMPLAIN AND WHO TO COMPLAIN TO Consumers should first take any complaint to their energy company. Consumer Direct can give advice on how to do this. The new consumer representation body Consumer Focus can investigate complaints relating to a disconnection or a threat of disconnection or complaints made by or on behalf of vulnerable consumers. When consumers cannot agree a resolution with their energy supply company they can take their complaint to the Energy Supply Ombudsman (ESO) who will settle the case. However, there are strict criteria governing which complaints the ombudsman will accept and consumers should make sure they understand these early in the complaint procedure. More information on the ESO can be found at: MAKING A COMPLAINT OVER THE TELEPHONE Consumers should make sure they have a copy of all documents they may need, e.g. relevant letters, bills and notes from previous calls, etc. to hand Consumers should make a note of what they want to say before making the call Consumers should stay calm and speak clearly about how they want the problem resolved. Consumers should make a note of the name of the person they speak to, the telephone number called, the date and time of day and what was said. At the end of the conversation, consumers should make sure the company explains what will happen next and when by, and note this down. WRITING TO YOUR COMPANY The address to send the complaint to can be found on a bill or statement or by asking the energy company The letter should include the consumer s name, address and account number as well as a telephone number The letter should explain the problem fully, including key dates and times of incidents as well as how the consumer wants it resolved Consumers should keep photocopies of evidence such as receipts, photos, letters and bills that support the complaint Consumers should always keep a copy of letters they send to their energy supplier. Energywatch has a letter wizard to help construct letters of complaint. It is now available on the Consumer Focus website. TIPS ON MAKING A MORE EFFECTIVE COMPLAINT Consumers should find out about the supplier s complaint handling procedure. The procedure can be found on the supplier s website or the supplier can be asked for a copy Consumers should ensure that the company logs the complaint and that they keep a note of the reference number Consumers should keep track of the complaint and keep records of every contact. Energy companies can lose records, forget about the complaint or even deny all knowledge of the complaint If the consumer is not satisfied with the way the complaint is being dealt with, they should ask for it to be escalated. Sometimes the supplier s Customer Services department will help resolve a complaint more effectively than, say, the Debt Recovery department If the complaint is unresolved after 8 weeks, or if it is not possible to reach an agreement about the complaint, then the supplier must issue a deadlock letter. This letter will state the company s final position Once a deadlock letter has been received, the complaint can be sent to the Energy Supply Ombudsman asking them to investigate the issue. More details about the Energy Supply Ombudsman can be found on bills or statements or on the website COMPLAINT HANDLING STANDARDS The gas and electricity regulator Ofgem has set complaint handling and redress standards that are binding upon energy suppliers. These became live on 1 October The key elements which Ofgem has included in the complaints handling standards regulations are: A common definition of a complaint A requirement to record complaints upon receipt and subsequently A requirement to have a complaints handling procedure A requirement to signpost the complaints handling procedure A requirement to signpost the redress scheme A requirement to agree arrangements with Consumer Focus for handling vulnerable consumers and threatened or actual disconnections A requirement to agree arrangements with Consumer Direct for referrals A requirement to deal with consumer complaints in an efficient and timely manner A requirement to publish information on complaints. PAGE 23 SECTION 3

13 SECTION 4. LEARNING FROM THE CASTLE VALE PROJECT INTRODUCTION Energywatch and Castle Vale Community Housing Association (CVCHA) ran a joint project between February and April 2008 to encourage people using pre-payment meters to change to the cheapest gas and electricity supplier. The project was a pilot and one of its aims was to learn valuable lessons. One-to-one advice sessions were offered across the Castle Vale area using specialist independent advisers from energywatch. The project aimed to assist two hundred and fifty households in moving to a better deal but actually only provided detailed support to 40 households, and resulted in just 19 consumers changing supplier. It is estimated that on average consumers who switched supplier when advised by the project saved about 90 on their electricity accounts and about 125 on their gas accounts per year. Because the project only measured outcomes (consumers who switched supplier or received assistance from energywatch), at first glance it appears to have had a very low success rate when compared to other projects that report the number of contacts. However, from energywatch s perspective the project was a real success and taught us valuable lessons: It saved those consumers who did switch considerable sums of money for a relatively modest outlay It achieved very positive outcomes for some consumers who otherwise would not have known how to get help with the problems they were experiencing (e.g. preventing a disconnection for debt; instigating transfers to suppliers social tariffs; moving eligible customers to Fuel Direct wherever appropriate, and securing debt write-offs in some instances). Any similar project should either put in place the capability to help consumers directly with their account problems, or establish a defined referral route to specialist advisers for consumers in need. The next section explains what was attempted, what worked and what didn t work, and what we learned from follow-up focus groups run by MORI. It also gives some ideas for improving the effectiveness and reach of similar projects. PRACTICAL ASPECTS OF THE PROJECT Advice sessions and street outreach The project ran 19 different advice sessions for Castle Vale residents. Thirteen were held in the offices of CVCHA, either on a Tuesday or Thursday between 2pm and 4pm. An afternoon launch event and two evening sessions (5:30-7:30pm) were held in the local community centre. Three days of street outreach were held using a mobile advice centre at various locations around Castle Vale where residents congregated such as schools, the high street, swimming pool, etc. At the advice sessions, trained energywatch advisers gave one-to-one advice on which supplier would be the cheapest and either helped the consumer to complete an application form to transfer to the identified supplier, or helped them contact that supplier by telephone in a private area. Actually helping consumers to switch there and then, rather than just providing advice and leaving it up to people to act, was considered to be important in ensuring people did actually make the switch. Consumers were also offered advice to help them deal with any other problems with their gas or electricity accounts. This actually proved to be the most popular aspect of the project, as over half the consumers who attended the advice sessions came primarily to get advice to help resolve an ongoing problem. Many consumers who came for advice were unaware that energywatch existed and had struggled to solve their account problems themselves. The outreach identified consumers with account problems at a rate of approximately 40 times the number energywatch would expect to find in an area the size of Castle Vale. The types of problems the project helped resolve were mostly related to bad billing, misselling, debt or metering issues. These problems should be relatively simple to resolve. The MORI focus groups identified a lack of awareness of the project, apathy about changing supplier and lack of knowledge of the energy market as the main reasons why the project failed to engage the numbers of consumers which had been hoped for. SECTION 4 PAGE 25

14 PAGE 26 Each advice session attracted a number of consumers who were looking for information but unwilling to commit to transfer there and then. Some returned for further advice a number of times and then committed to change, while others took the advice away, stating that they would then discuss it with their partners. The most successful aspect of the outreach was when residents gave personal referrals to the project. One Castle Vale residents association endorsed the project, meaning many of the residents of that particular area subsequently engaged with the project and switched supplier. The MORI focus groups identified that most of the publicity material had failed to engage residents. Coloured flyers on card were seen as the most effective medium, as these contained short, punchy messages which people could use to make decisions. The flyer shown in Figure 1 was considered to be the most effective one. The focus group felt it was striking, clearly identified energywatch as independent and not one of the energy companies, and explained which suppliers were the cheapest, enabling people to make simple but informed decisions. PAGE 27 PUBLICITY MATERIAL Energywatch used a range of publicity material. Some 1300 postcards (addressed to named individuals) were delivered by Royal Mail, and over 500 leaflets were hand delivered or given out in the street. Flyers advertising the project were also left at popular locations in the area and posters were put up in all blocks of flats and other venues such as the library, neighbourhood office and some local shops. CVCHA rent statement letters also included information about the project. Figure 1 energywatch flyer used in Castle Vale project: back Figure 1 energywatch flyer used in Castle Vale project: front The MORI focus groups identified a general apathy towards leaflets or letters discussing energy, and few residents read any of the additional information which accompanied rent statements. This was reflected in the fact that even though the postcard had been endorsed by the focus group and sent to 1300 residents, only five residents actually attended the sessions it advertised. The majority discarded all publicity material which came through their door. As an alternative, residents suggested local radio adverts, bus posters and posters on lamp posts on the main routes through the area. The example of posters used to advertise a circus found widespread favour in the focus group. Residents wanted to be told by a body they trusted that they should switch supplier or payment method; and they wanted to be reminded of this simple message repeatedly. The need for repeated advice was something the project team noticed through the number of people who returned for advice on several occasions. SESSIONS HELD IN HOUSING ASSOCIATION OFFICES The sessions in the CVCHA offices were held in the entrance foyer, with access to private consulting rooms and the internet. There were enough advisers to ensure that no one waited for more than a few moments for advice. Using the internet to show consumers which supplier would be cheapest for them proved very popular. Generally when consumers saw the results on screen of a quote made through a switching website they were far more likely to trust the information that X company would be the cheapest. This was often reinforced when several quotes were obtained from different websites. This was much more effective than using comparison sheets or printouts of prices based on standard consumption patterns. On this basis, it is vital that any project providing advice on how to switch supplier has ready access to the internet. No use was made of telephone comparison services. SECTION 4

15 PAGE 28 TIMING AND LOCATION OF ADVICE SESSIONS None of the advice sessions proved more popular than the others. The MORI focus groups identified a desire for morning sessions to be held in neutral or community venues as a few residents felt they didn t want to come to the housing association offices for advice sessions. The MORI focus groups concluded that the main reason for poor attendance was that people failed to notice the events were being held, despite major publicity efforts. STRIKE WHILST THE IRON IS HOT The project generally saw two types of contacts: those people who had decided they trusted the project and would act on the advice given; and those who were thinking about changing energy supplier and would take away the advice for further consideration. The project worked hard to create confidence in the latter group, so that they would actually make the switch. The project made sure that people could switch during the advice session, either by completing and signing a form which the project would send the relevant supplier or by using one of the project s phones to call the supplier and switch. Experience gained by the project strongly suggests that having readily accessible and simple routes to switch supplier, at the point advice is given, is vital to the effectiveness of any switching project. Only EBICo allows all pre-payment meter users to switch online. British Gas, npower and Scottish Power allow some PPM users to switch online depending on the type of pre-payment meter they use, but the other suppliers prefer pre-payment meter users to call them so they can informally vet new customers. It is suggested that the difficulty of providing secure internet connections and the limitations of switching online means that it is more effective to offer tenants a telephone to use to switch during an advice session than to try and switch them online. It is useful to use comparison websites to produce bespoke quotes for consumers thinking of switching. HELPLINE The project made use of the national energywatch helpline, because it is staffed outside normal hours and it proved difficult to get a new number specifically for the project within a reasonable timescale. TEXT BACK SERVICE Due to the cost of calling 08 numbers from mobile phones and the low incidence of landlines amongst some socio-economic groups, the project set up a service using an ordinary mobile phone where interested people could text in their phone number and the project team would call them back. Despite widespread publicity, this service was not used by anyone. However, the MORI focus groups identified that this service might be very popular. HELPING CONSUMERS FIND THE BEST DEAL FOR THEM The project advised consumers of the best deal for them through the use of the price comparison websites. This was effective and when consumers could see the options in front of them it gave them increased confidence that the advice was sound. Finding the best deal requires advisers to understand the consumer s consumption patterns; this is especially important for Economy 7 users. This is best achieved by studying of the customer s bills or statements, and consumers should be urged to bring bills or statements along to advice sessions. For more information see How to find out about the best prices in your area on Page 14. INCENTIVES A 10 cash incentive proved insufficient to get people to engage with the project and complete diaries of their switching experience to aid project evaluation. Only two diaries were returned. People were engaged by free light bulbs and these proved to be a popular draw on the street outreach. Free light bulbs can often be sourced from energy companies as part of the expenditure under the governmentmandated Carbon Emission Reduction Target (CERT) scheme, especially if housing associations are able to certify that these light bulbs will be distributed to low-income, elderly or other additionally disadvantaged groups. Behavioural economics suggests that gifts are a more effective incentive than money, even when they are of a lower value. On average it was expected that people who switched to the cheapest pre-payment deal would save around 200 a year and this figure was used prominently and extensively in the publicity material. However, this did not appear to be a spur to action, possibly because people did not actually believe they would save money a cynical view expressed by some consumers in the MORI focus groups. It may be more effective to translate this figure into a weekly saving or comparing it to a product, such as X weeks free bus travel or X weeks free energy (at current prices 200 translates to about two months expenditure for an average gas and electricity PPM user). DISCUSSING SWITCHING WITH CONSUMERS IN THE STREET Energywatch found it very difficult to discuss gas and electricity issues with people in the street due to the public s general lack of interest and their unwillingness to talk to people they thought were energy company sales staff. Residents of the area regularly confused energywatch staff with energy company door-to-door sales agents and, perhaps understandably, people did not understand why an organisation would come to the area to give advice without there being a catch. People remained sceptical even when the energywatch advisers explained that they worked for an agency paid for by government and were paid to represent the interests of consumers. Usually residents were convinced of the independence of energywatch when reassured by a member of CVCHA staff. It is vital to the success of any similar project to make sure that people trust the independence of the advisers and do not associate them with an energy supplier. The work necessary to achieve this should not be underestimated, but the use of branded housing association clothing and familiarity with any advisers built up during a longer-term project should go some way to achieving this. People were not prepared to be referred to a different location such as an office or private room for a more detailed consultation, so that it proved impossible to give advice using the internet during street outreach. It is not recommended that street outreach work for this kind of project is attempted outdoors and without access to the internet. PAGE 29 SECTION 4

16 PAGE 30 WORKING IN SHOPPING CENTRES The Castle Vale area has two separate shopping areas: a short high street with small shops, a library and the CVCHA offices, and a medium sized retail park which contains a Sainsbury s supermarket, post office, pharmacist and other stores. The project was unable to gain permission to work on the retail park and the outreach on the high street was ineffective because of the very low number of people who used the high street on the outreach day. Sainsbury s has its own energy brand and was actively selling gas and electricity in its store on the retail park. Getting permission to promote switching on retail parks where retailers themselves sell energy may be problematic. However, work by the University of East Anglia, supported by energywatch, in the Forum shopping centre in Norwich in March 2008 attracted 80 participants, demonstrating that this kind of outreach can be successful in some instances. WORKING OUTSIDE SCHOOLS It was the project s intention to engage parents outside the three primary schools in the area after they had dropped their children off in the morning, or before they collected them at home time. The use of a mobile advice centre parked outside the schools was intended to allow parents to understand what the outreach workers were doing. Schools and the local police were informed ahead of the sessions. The days chosen for this work were blighted by very cold, windy weather. In addition, in the previous two days young people had been abducted on their way home from schools. This made for a very distrustful atmosphere and prevented almost any engagement with parents when they had their children with them. This makes it very difficult to evaluate whether this kind of outreach would be effective in other circumstances. Parents did seem more prepared to engage with the project when the mobile advice centre was adjacent to the advisers. Working without familiar branding seemed to be ineffective. The project did find that parents were willing to engage in the morning after they had dropped their children off, but not for sufficient time to allow a detailed advice session there and then. Therefore leaflets were produced which explained the project and why it was important to act and gave contact details for the project. These were then distributed to passing parents. Very few parents responded to these handouts by seeking further advice. PARENTS WITH GROWN-UP CHILDREN Parents of working age children as well as consumers with elderly parents showed a real interest in helping their relatives and friends to switch to a cheaper deal. These people wanted information on how to find the cheapest deal and how to change to that deal so they could pass the information on. It is extremely difficult to provide a concise summary of this topic due to the complicated nature of the energy market and the range of possible personal circumstances. The energywatch website currently has an advice section which explains how to find the best deal and how to switch. This section will be transferred to the new Consumer Focus web interface and it is suggested that people are urged to consult this when they want to advise friends or relatives. Where people want to help parents switch to the cheapest deal it is recommended that they are advised to enrol their parents on the Priority Service Register (PSR see Page 17). This also offers a service for managing their parents account through the Bill Nominee Scheme. Once this has been completed they can then change their parents energy supplier for them. This has the potential to enable people who cannot use the internet, but whose children do have access to the internet, to benefit from much cheaper online tariffs. IDEAL LENGTH OF PROJECT The project was designed to be intensive, of a short duration and to build momentum. It also had to be completed during the life of energywatch. This gave little time to learn and modify the way the project delivered advice sessions. In retrospect, a less intensive but longer project, conducted during the summer when the weather would have been better, may have delivered greater effectiveness. DOOR-TO-DOOR SELLING Neither energywatch nor CVCHA felt comfortable engaging in door knocking to offer advice to people in their own homes. The main reason was the very poor reputation that door step selling agents have acquired; the advisers did not want to tarnish their organisations reputations by association. That said, door step selling remains the main channel that pre-payment meter users use to get information when deciding on which supplier to choose. Surveys 2 suggest that up to two thirds of pre-payment meter users use door-to-door sales agents as their only source of information on gas and electricity prices. This leaves PPM users open to mis-selling. Ofgem, the gas and electricity regulator found that in % of electricity and 56% of gas prepayment meter consumers who switched supplier actually switched to one of the three most expensive suppliers, which suggests that mis-selling has taken place to some extent. The project itself suffered from mis-selling, as a number of consumers who it had helped switch to the best deal subsequently switched to much more expensive deals. It is suggested that any project helping people to change supplier is accompanied by work about the pitfalls of door step sales agents. The local Trading Standards office should be able to assist in this respect. PAGE 31 SECTION 4 2 Ofgem report Switching Rates for Vulnerable Consumers March

17 PAGE 32 INFORMAL CONTACTS AND FOLLOW-UP Many people came to find out how to get the best deal and received informal advice from the project. Getting people to actually switch to a better deal was a challenge within the time available, and in the informal setting that this approach used. Many people want their own time and space to consider any advice given and a number of people seen by the project came for advice two or three times, so it is possible that there is a large pool of people who are considering switching and will need follow-up assistance to act. This project did not have the resources to collect names and addresses and follow up informal contacts. It was also felt that cold calling informal contacts from the energywatch call centre would not be effective. However, housing associations are in the unique position of knowing, or at least being known to, many of the individuals seeking advice and so will be able to follow up informal contacts in a more effective manner. Getting this follow-up process right will be one of the key issues in making any switching project work. USING THE MEDIA The project made a decision during the design phase to limit work to Castle Vale area residents. This meant not using radio or newspaper publicity because this may have driven demand from other areas and potentially overloaded the resources of the project. A front page article did appear in the local newspaper at the start of the project, but no residents cited this as a reason for attending one of the sessions and no one at the MORI focus groups recalled having seen the article. The focus group did believe that local radio coverage would have generated more interest. The value of national media coverage in raising awareness of this issue is doubted because during the course of the project energywatch secured significant national publicity for the problems faced by pre-payment meter users. This included a front page article in The Times which was published on one of the days when the project held street outreach sessions. Neither this article nor any other newspaper articles were mentioned by any people spoken to during the advice sessions. This questions the value of print media work, with only the relative success of the local radio phone-ins undertaken by Beat the Cold (page 36) as a guide to what media work might be effective. IMPACT OF PRICE RISES DURING THE PROJECT During the design stage of the project British Gas and npower (the two dominant suppliers in the target area) raised their prices and three of the other four major suppliers did so in the weeks leading up to the project launch. This generated significant publicity for the issue with many newspapers and other media outlets leading with price rise stories that mentioned how these would impact on pre-payment meter users. Just before the project ceased its advice sessions the last of the big six suppliers raised its prices, which in turn forced EBICo to raise its prices. 3 For Economy 7 users the EBICo price rise was so high that EBICo moved from being the cheapest supplier to the third most expensive supplier, depending on how much electricity was used. This meant that what had been sound advice given in good faith was now inaccurate and all the affected consumers were contacted by energywatch and advised to change again to the new cheapest supplier. On this basis, it is suggested that projects are not run during a period of price changes. So that projects do not fall foul of unforeseen price rises it is also suggested that they maintain a robust record system so that advice can be followed up with consumers if need be. HISTORICAL GAS AND ELECTRICITY PRICES Unsurprisingly, the project encountered many consumers who were cynical about gas and electricity prices. They believed that whichever supplier was currently the cheapest would also soon increase their prices and lose this advantage. To help counteract this belief, energywatch produced a series of charts which showed how prices had changed since A graph showing gas prices by supplier is given in Figure 2, and one for electricity prices in Figure 3. Figure 2 Gas prices, medium user, Midlands Jan 2008 These graphs clearly show that for pre-payment meter users in the Castle Vale area (the West Midlands electricity region), British Gas and npower have consistently been the most expensive suppliers, and that Scottish and Southern Electric, Scottish Power and EDF Energy have a history of offering lower prices. (EBICo is not shown on these charts because the data was not available.) Data is not available to produce similar graphs for all areas and although history is no predictor of the future, the historically cheaper and more expensive suppliers can be seen in Figures 2 and 3. PAGE 33 SECTION 4 3 EBICo works in partnership with Scottish and Southern Energy (SSE), one of the big 6 energy supply companies, as their licensed supplier. This means that when SSE raises its prices the wholesale costs of EBICo rise and they have to pass these price rises on. When consumers switch to EBICo, they receive a welcome pack that bears the logos of both SSE and EBICo.

18 PAGE 34 PAGE 35 Figure 3 Electricity prices, medium user, Midlands, Jan 2008 Figure 5 GB average cost of electricity, medium user, PPM There are no commercially available databases of historical prices which housing associations can use to demonstrate historical pricing trends. Figures 4 and 5 show the trend of GB average prices since April They generally show British Gas as the most expensive supplier of gas and npower as the most expensive supplier of electricity to the PPM market. These figures do not show EBICo prices. National average prices can be misleading. Advisers should stress this and use current local prices when advising consumers. The best comparisons will be made from one of the switching websites (see Page 14). MORI FOCUS GROUPS As part of the evaluation of this project, energywatch commissioned MORI to undertake two focus groups. These looked at Castle Vale residents attitudes towards the project and sought to find out why they had or hadn t engaged with it. Energywatch will publish the full MORI report on its website and on the Consumer Focus website. It is suggested that any project to encourage pre-payment meter users to switch energy supplier is accompanied by a campaign or advice on the pitfalls of door step selling agents. Your local Trading Standards office may be able to help organise such a campaign. ADVICE FOR MAKING SIMILAR PROJECTS WORK Figure 4 GB average cost of gas, medium user, PPM DO CONSUMERS SWITCH ANYWAY? Some pre-payment meter users do indeed switch supplier and do so regularly, usually at the prompting of door-to-door sales agents. Indeed, the project found that shortly after our advice sessions had started npower ran a successful sales drive which prompted consumers to switch to them, including some of those people who had been advised by the project that EBICo was the cheapest supplier for them. Ofgem has published its own research showing that over half of the prepayment meter users who do switch supplier actually switch to the three most expensive suppliers. Energywatch believes that this is, in large part, a reflection of door-to-door misselling by those energy companies and has consistently campaigned to stamp out misselling by suppliers. Learning from the success of Beat the Cold Beat the Cold is an independent charity in Stoke on Trent that has run similar outreach events in the towns of the area. Energywatch supported three such events in the summer of 2008, which proved to be more effective than the outreach project in Castle Vale. The following are some of the factors which energywatch believes contributed to the success of these events: Beat the Cold has a higher local profile than energywatch, possibly because it is local and has a history of working in the area. This may mean consumers were willing to believe that the sessions were worth attending The advice sessions were a partnership between Beat the Cold, energywatch and the Stoke on Trent Warm Zone. Each partner offered a different service, which meant consumers attending got more out of the event than simple advice on how to switch SECTION 4

19 PAGE 36 Beat the Cold engaged a local PR firm to raise publicity ahead of the outreach sessions, including advice sessions and interviews on local radio The advice sessions were planned for days when many people would be out and about. Venues were easily accessible to other scheduled events such as the local market day, or held in a library which was hosting a family history research day Beat the Cold used several workers who worked the local streets around their outreach events encouraging people to attend (the energywatch/ CVCHA project also employed this technique and found that it required known CVCHA staff to do this if it was to be effective). in house should increase buy-in and referrals from across the housing association and partners. Section 7 lists organisations that could help with training. Using a longer-term project with well-known champions is also likely to be able to provide more effective support and follow-up to people considering switching, but who need more than one advice session to convince them to switch. The Castle Vale project found it very difficult to fully engage the public and third sector organisations in the area and to get them to refer their clients. It is suggested that this was a major failing of the project and that other projects would be more successful if they could get full buy-in from a wide range of organisations that work with the residents of the area. To trade on the effectiveness of personal recommendations, the initial leaflets carried an endorsement of the project from a local person. This proved very effective with people who knew the person involved but completely ineffective with other residents. Where there is a lack of universally known and trusted local figures it may be that a number of different endorsements are needed. Castle Vale high street has a very low footfall during the day and the MORI focus groups were split on the best locations for street outreach work. Other similar projects in Liverpool and Norwich have encountered differing results with street outreach in shopping areas. However, one factor in common with the work in Castle Vale is that people are very resistant to being referred to a different location for further advice, even if it is only a very short distance away. The obvious solution would be to use internet price comparison tools in the street, but this presents a number of technical and security difficulties. The most effective outreach appears to be conducted in public buildings with a high turnover of people and with secure access to the internet and a private area should people wish to discuss a confidential issue. PROJECT COSTS AND VALUE FOR MONEY Energywatch spent approximately 12,000 on this project including about 8,000 worth of adviser time on outreach sessions and in resolving the problems generated when back in the office. Similar projects could be managed on much smaller budgets, as most advice sessions were considerably overstaffed. It is estimated that the 19 advice sessions could have been provided with the same level of support for 5,000 if the number of advisers had been optimised. It is estimated that on average consumers who switched supplier when advised by the project saved about 90 a year on their electricity accounts and about 125 on their gas accounts. This level of saving means that the project would have needed to help just 55 consumers switch their gas and electricity supplier in order to have saved the residents more than was spent on the project. However, the savings made by just 23 consumers switching their gas and electricity supplier would be more than the cost of a smaller project, which is estimated to be about 5,000. This analysis does not take into account savings residents will have made through energywatch securing debt write-offs and /or compensation payments when resolving the account problems identified in the outreach. PAGE 37 OTHER ADVICE The most successful way of encouraging people to take advantage of our outreach was word of mouth. A number of people used the project based on the strength of a personal recommendation. This could have been from a friend or neighbour, or a trusted member of CVCHA staff. It is suggested that similar projects adopt an approach to advice delivery that features champions for the cause, through either: Training a small number of local residents to do the outreach and advice themselves in their immediate area. This cascade outreach has the advantage of trusted communication routes and the ability to give bespoke advice as and when local residents want it. It should also leave the skills in the community, meaning that people continue to switch to the best deal. The disadvantage is that people may not want to discuss account problems or debt with their friends or neighbours. This could be overcome with a referral route to other advisers Training members of staff within the housing association, or groups of housing associations, to become energy experts. These staff could then provide a wide range of advice over a longer period of time and in a less intensive way, enabling them to learn what methods are effective. It would also provide the time to build and maintain credibility with residents. Keeping the project SECTION 4

20 SECTION 5. HOW TO DEAL WITH COMMON PROBLEMS Energywatch has published a reference manual and an internet-based tool to help people understand how to resolve the different problems that commonly affect gas and electricity consumers. These tools, as well as leaflets and reports from energywatch, are hosted on the website of the new Consumer Focus and can be accessed at TIPS AND USEFUL INFORMATION FOR PRE- PAYMENT METER CUSTOMERS PPM users going on holiday should make sure they charge their cards with plenty of money to ensure the supply is not interrupted over the holidays PPM users should contact their supplier immediately if the meter develops a fault and should not wait for the emergency credit to run out before speaking to the supplier If a pre-payment meter develops a fault, suppliers are obliged to call to repair the fault within four hours Emergency credit is the amount of credit preprogrammed into the meter to ensure the supply remains on for a short period until more credit is added A wind on is the amount of credit an engineer can add to the meter if they need to come to fix a meter fault. Please note emergency credit or a wind on may need to be repaid If a pre-payment card or key is lost, stolen or faulty, some suppliers offer a service where consumers can collect a replacement from the local PayPoint/ Payzone or Post Office. This will restore supply without the need to call out an engineer. SECTION 5 PAGE 39