Energy poverty Consumer vulnerability and energy 5 th MEDREG Consumer Issue Working Group Jonathan Stearn Director, Consumer Vulnerability Citizens Advice Tuesday 4 November 2014
Consumer Futures In April 2014 Consumer Futures became part of the Citizens Advice service in England and Wales - represents consumers across regulated markets
Consumer vulnerability markets, companies, suppliers what s the link? Individual circumstances Supplier behaviour Markets Consumer vulnerability http://www.consumerfutures.org.uk/reports/tackling-consumer-vulnerability-an-action-plan-for-empowerment Dec 2012 People who cannot choose or access essential products and services which are suitable for their needs, or cannot do so without disproportionate effort/cost/time.
Consumers are individuals All consumers are different, with a wide range of needs, abilities and personal circumstances. Vulnerability is not a constant state applying to set groups of people with certain characteristics Individual circumstances This is the challenge for suppliers how do they know and understand the personal circumstances of individual consumers?
Consumers live in different homes and locations All consumers homes are different - could be energy inefficient, damp, in rural locations, off gas, Energy vulnerability has at its heart energy efficiency but other issues can have an impact location, type of building, ownership Home and location This is the challenge for suppliers what do they know about their customer s homes and their location?
Suppliers need to understand impact of their behaviour All consumers are different, so company behaviour pricing policy, debt, engagement will have different impacts on different consumers Companies/suppliers should ask if they are treating all consumers fairly? Are they being inclusive? Who is losing out? Supplier behaviour This is the challenge for companies and suppliers how do they know and understand the personal circumstances of individual consumers and treat all consumers fairly?
Consumers and energy That it is why it is important for companies/suppliers to understand people s circumstances Home
Energy suppliers But realise consumer vulnerability is not just down to individual circumstances Companies/suppliers and the market
Consumer vulnerability and energy poverty the link? Individual circumstances Home Energy supplier policy Consumer and energy vulnerability In the UK we have focused on income, energy efficiency, and fuel prices. In 2012, 2.28 million households in England were classed as being in fuel poverty.
Inside the energy supplier understand customers Pricing Look at pricing do the poor pay more? Affordability Be fair and equitable Debt Engage before it escalates The art of conversation and understanding Don t just expect consumers to reveal their situation! Energy Efficiency Homes need to be energy efficient People need to keep warm (cool) in the most energy efficient way
Suppliers can think outside the box Case study: Until recently Peter paid all his bills by direct debit but kept going overdrawn and incurring bank charges. So I m tending to pay them in cash I am obviously paying more but I feel more in control But just think what could happen if banks and energy suppliers engaged with each other. Banks could tell their customers when their funds were low and bills due, provide a direct contact number for customers to help sort payments with energy supplier. Energy suppliers and other companies could help consumers manage payments and consumers would not incur bank charges and everyone benefits.
Regulator and government Information Fair treatment for all Correct market failure Price and affordability Companies Govt Regulators EU Social tariffs Energy Efficiency Derived from Addressing the poverty premium for Consumer Futures by JRF Donald Hirsch 2013
Impact of energy poverty Consumers making impossible decisions food vs fuel vs debt Low income consumers paying a poverty premium 10% extra in the UK Poor health excess winter deaths
Costs of energy poverty The cost of essential goods and services form a high proportion of low-income households budgets, soared by 28 per cent in the UK since 2008, Cost to NHS in England arising from the increase in hospital admissions and additional GP consultations is around 1.36 billion per year
http://endfuelpoverty.org.uk/downloads/2014_manifesto.pdf Frontline solutions but each has a background story Income : Average earnings have risen by only 9 per cent Pricing: Affordable energy no poverty premium Energy efficiency: 36% of fuel poor homes are D rated 46% are E rated, 14% being F or G rated In England.
Consumer vulnerability and energy poverty Thank you Jonathan Stearn 4 November 2014