Scottish Fuel Poverty Forum

18 August 2008

Maxine Frerk

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Ofgem’s Role

• Protect consumers by promoting competition and regulating the energy network monopoly companies.

• Social Action Strategy sets out how we seek to meet our social responsibilities and help Government meet its targets for eradicating fuel poverty, by:

1. Securing compliance with regulatory obligations and effective monitoring and reporting;

2. Encouraging best practice and using research to identify effective ways to address fuel poverty and help vulnerable customers;

3. Influencing the debate about measures to help tackle fuel poverty; working with other stakeholders, helping to promote a holistic approach; and

4. Informing customers about ways to reduce their energy bills.

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The Three Primary Causes of Fuel Poverty

1. Low Household Income

2. Poor Quality of Housing

3. Energy Prices

• Fuel Poverty remains largely a symptom of low incomes and poor housing which rests with the Government to tackle.

• Competition helps to protect consumers from high energy prices caused by high wholesale prices and rising environmental costs.

• Suppliers contribute through their CERT and social spend commitments.

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Ofgem’s work to help the vulnerable & fuel poor

• Regulation: Energy Supply Markets Probe; licence obligations (advantage and disadvantages of PPMs, timely recalibration, ability to pay); complaint handling; facilitating gas network extensions; discretionary reward schemes for networks; smart metering and microgeneration.

• Best practice / research: suppliers’ social spend; debt & disconnection; complaint handling; barriers to switching; Consumer Panel.

• Influencing the debate: Energy Summit; Supplier Obligation; social tariffs; Europe; Sustainable Development Report.

• Consumer information: Consumer First; switching campaigns; Energy Best Deal with CAB; work with switching sites.

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Ofgem’s Energy Supply Markets Probe• Launched on 21 February in response to mounting consumer

and public concern over the competitiveness of the energy market.

• Probe is investigating:

Whether the market is working well for all domestic and small business customers;

Consumer’s experience of the market including access to information and barriers to switching;

Payment differentials and whether these are fair and justified;

Open letter on PPM customers switching to more expensive deals.

• Probe will report its initial findings in September.

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Ofgem’s Fuel Poverty Action Programme• Energy Summit on 23 April brought together Ministers, Government

officials, energy suppliers and consumer organisations.

• The outcome was a raft of commitments, set out in our Fuel Poverty Action Programme, to improve the targeting of existing help to those in fuel poverty and to help more vulnerable energy consumers participate more effectively in the energy market. Tariff advice and referral pilot with eaga (Scotland not able to

take part) Data Sharing: Pensions Bill amendment BERR funding roll out of CAB Energy Best Deal campaign Better information and advice about available assistance Better access to switching sites / switching information Regional press campaigns

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Suppliers’ social programmes• Suppliers agreed with Government to increase their collective

expenditure on their social programmes to £150m per annum by 2011 – an additional £225m over 2008-11.

• Ofgem’s framework sets out what can be counted towards this spend commitment.

• Includes stricter definition for social tariffs, so that they must be the lowest a supplier offers in that region.

• Allows for innovation and flexibility in how suppliers achieve their spend targets: social & discounted tariffs; rebates; trust funds; partnerships; energy efficiency initiatives additional to CERT; and joint industry initiatives (ERA Home Heat Helpline, Winter mail-outs with DWP data).

• Does not include suppliers’ PPM equalisation policies.

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CERT: Scotland data and spend• Suppliers are not required to monitor their activity by the

Devolved nations, we are therefore not in a position to confirm how much activity has been carried out in Scotland.

• Certain parts of Scotland do suffer from poor targeting because of their rural nature and harder-to-treat properties.

• The Scottish Government has set up a working group to consider the options for getting the suppliers to carry out more activity in Scotland.

• Data that is submitted to the EST's Home Energy Efficiency Database (HEED)would allow monitoring by the devolved nations in future.

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Conclusions…

• Recognise that there are particular challenges to tackling fuel poverty in Scotland.

• Many (but not all) Ofgem initiatives apply to Scotland.

• Welcome opportunities to work on Scottish specific issues and initiatives.

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