Government’s choice of energy regulator boss criticised as ‘putting the fox in charge of the hen house’
A former North Sea oil and gas boss has been lined up to chair Great Britain’s energy regulator, Ofgem, in a move criticised as “putting the fox in charge of the hen house”.
The government said Mark McAllister, who founded two oil and gas companies, Fairfield Energy and Acorn Oil & Gas, had “vital expertise” that would help him in the role.
The Lib Dems said it was not a suitable choice given McAllister’s history in the oil and gas industry at a time when companies have been criticised for making huge profits on the back of high energy prices. At the same time, households have been struggling with record gas and electricity bills over the last year, with the government providing about £40bn in support for consumers and businesses.
OFGEM’S new prepayment meter rules “fail to deal” with the energy debt mountain facing struggling households, campaigners have warned, as the watchdog revealed a new code of practice for suppliers today.
The body said that energy firms in England, Scotland and Wales had agreed to the code, which includes a ban on forcibly installing prepayment meters in the homes of people over the age of 85.
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End Fuel Poverty Coalition coordinator Simon Francis also said the code does not go far enough, and that the voluntary aspect “undermines its objective.”
He said: “There are really vulnerable groups which have been omitted from its full protection and we have serious concerns about how it will be implemented, such as how people will prove their medical conditions without being humiliated by an energy firm health inspection.
“The plans also fail to deal with the elephant in the room — the growing household energy debt mountain.”
Exclusive: Energy regulator did nothing about mountain of complaints until British Gas prepayment scandal was revealed
More than 30,000 complaints were about the disconnection and forced installation of prepayment meters. Image of banknotes and a prepayment meter key
Energy companies received more than 700,000 complaints about their treatment of debt-ridden customers over the last five years, openDemocracy can reveal.
In the last year alone, the energy regulator Ofgem was made aware of 40,000 complaints relating to the controversial forced fitting or disconnecting of pre-payment meters.
Yet the watchdog was only forced into action earlier this month when an undercover Times investigation found British Gas had sent bailiffs to break into vulnerable people’s homes and fit the meters by force. Following the expose, it suspended the practice until the end of March.
Centrica, the owner of British Gas, announced today that its profit had hit £3.3bn for 2022 – more than triple the £948m it made in 2021 – just weeks after the regulator launched an investigation into its use of bailiffs against at-risk customers.
Now, data obtained by openDemocracy through a Freedom of Information request has revealed for the first time the scale of alleged mistreatment of vulnerable customers since the energy price cap was first hiked in April.
“Ofgem has known about this crisis for years, and so have the companies themselves. Suppliers are not being honest when they act like they’ve just discovered it and they’re shocked, like the CEO of Centrica did,” Ruth London, co-founder of the Fuel Poverty Action campaign group, told openDemocracy.
Energy companies are required to report the number of complaints they receive from customers every month to Ofgem. Last year, they received 161,103 complaints related to disconnection and debt issues – of which 40,458 were about pre-payment meters – though Ofgem has consistently refused to tell us which suppliers received the most.
The category includes complaints from customers about their energy supply being disconnected or having a prepayment meter installed forcibly without a warrant or despite them being vulnerable.
Other examples of complaints include customers being disconnected by error or without due process and being put on debt repayment plans that are unsuitable or unaffordable.
The true number of people being ill-treated is likely to be much higher. Ofgem revealed at the beginning of February that customers were being left on hold for hours by energy companies, leading to more than half hanging up before they could report an issue.
Ofgem said revealing how many complaints different companies had received would breach Section 105 of the 2000 Utilities Act, which states that the public disclosure of information companies supply to the regulator is prohibited in order to protect national security. The law has previously been criticised for preventing whistleblowers from raising issues about the energy sector that are in the public interest.
The regulator said after the British Gas scandal broke that it was “unacceptable” to forcibly install prepayment meters before all other options had been exhausted.
But charities have criticised it for ignoring calls to end the practice for months.
“Lives have been and are being lost because of their silence and refusal to act on the truth they have long known,” said London.
Clare Moriarty, the chief executive of Citizens Advice, said it “should not have taken this long” for Ofgem to act.
The charity said it saw more people unable to afford to top up their pre-payment metre last year than for the entirety of the previous decade combined.
The Times reported that British Gas customers who had prepayment meters forcibly installed had included a woman in her 50s who the company’s bailiffs were told had severe mental health problems and a mother whose “daughter is disabled and has a hoist and electric wheelchair”.
The paper’s undercover investigation also alleged that the Arvato Financial Solutions employees were incentivised with bonuses to fit prepayment meters. The boss of British Gas owner Centrica apologised and said he was “disappointed, livid and gutted”.
Peter Smith, policy director at the charity National Energy Action, said: “The recent announcement by major suppliers that they would temporarily pause forced installations of pre-payment meters is welcome, but this was prompted by public shaming of suppliers and there is still no market-wide ban.
“We also desperately need a coherent plan to help millions of people already trapped on prepayment meters. This means rewiring the energy market to provide more affordable tariffs and finding new ways to address the underlying debt issues which are rife due to soaring energy costs.”
Richard Lane, Director of External Affairs at StepChange Debt Charity, said: “We welcome Ofgem’s move to suspend the forced installation of prepayment meters (PPMs), but it’s clear that thousands of households have been struggling with energy bills for some time now, which is evident in our own client data.
“For the people that have already been moved onto PPMs, there must be better protection to prevent self-disconnection and extreme energy rationing.”
Updated, 16 February 2023:This story has been amended to include fresh data obtained through freedom of information law on the number of complaints notified to Ofgem between 2018 and 2022. Previously, it just contained data for 10 months of 2022.
Energy companies received more than 140,000 complaints about their treatment of customers in debt last year alone, openDemocracy can reveal.
They included 33,000 complaints about the fitting or disconnecting of pre-payment meters.
Yet the energy regulator Ofgem was only forced into action this week when an undercover Times investigation found British Gas had sent bailiffs to break into vulnerable people’s homes and fit the meters by force. It has now asked energy companies to pause the practice.
The data, obtained by openDemocracy through a Freedom of Information request, has revealed for the first time the scale of alleged mistreatment of vulnerable customers since the energy price cap was first hiked in April.
“Ofgem has known about this crisis for years, and so have the companies themselves. Suppliers are not being honest when they act like they’ve just discovered it and they’re shocked, like the CEO of Centrica did yesterday,” Ruth London, co-founder of the Fuel Poverty Action campaign group, told openDemocracy.
Energy companies are required to report the number of complaints they receive from customers every month to Ofgem. Between January and October last year, they received 146,046 complaints related to disconnection and debt issues – though Ofgem has refused to tell us which suppliers received the most.
The category includes complaints from customers about their energy supply being disconnected or having a prepayment meter installed forcibly without a warrant or despite them being vulnerable.
Other examples of complaints include customers being disconnected by error or without due process and being put on debt repayment plans that are unsuitable or unaffordable.
The true number of people being ill-treated is likely to be much higher. Ofgem revealed yesterday that customers were being left on hold for hours by energy companies, leading to more than half hanging up before they could report an issue.
Ofgem said revealing how many complaints different companies had received would breach Section 105 of the 2000 Utilities Act, which states that the public disclosure of information companies supply to the regulator is prohibited in order to protect national security. The law has previously been criticised for preventing whistleblowers from raising issues about the energy sector that are in the public interest.
The regulator said yesterday that it was “unacceptable” to forcibly install prepayment meters before all other options had been exhausted, and has launched an urgent investigation into British Gas.
But charities have criticised the regulator for ignoring calls to end the practice for months.
“Lives have been and are being lost because of their silence and refusal to act on the truth they have long known,” said London.
Clare Moriarty, the chief executive of Citizens Advice, said it “should not have taken this long” for Ofgem to act.
The charity said it saw more people unable to afford to top up their pre-payment metre last year than for the entirety of the previous decade combined.
The Times reported this week that British Gas customers who had prepayment meters forcibly installed included a woman in her 50s who the company’s bailiffs were told had severe mental health problems and a mother whose “daughter is disabled and has a hoist and electric wheelchair”.
The paper’s undercover investigation also alleged that the Arvato Financial Solutions employees were incentivised with bonuses to fit prepayment meters. The boss of British Gas owner Centrica apologised and said he was “disappointed, livid and gutted” on Thursday.
Peter Smith, policy director at the charity National Energy Action, said: “The recent announcement by major suppliers that they would temporarily pause forced installations of pre-payment meters is welcome, but this was prompted by public shaming of suppliers and there is still no market-wide ban.
“We also desperately need a coherent plan to help millions of people already trapped on prepayment meters. This means rewiring the energy market to provide more affordable tariffs and finding new ways to address the underlying debt issues which are rife due to soaring energy costs.”
Richard Lane, Director of External Affairs at StepChange Debt Charity, said: “We welcome Ofgem’s move to suspend the forced installation of prepayment meters (PPMs), but it’s clear that thousands of households have been struggling with energy bills for some time now, which is evident in our own client data.
“For the people that have already been moved onto PPMs, there must be better protection to prevent self-disconnection and extreme energy rationing.”
Move follows allegations that third-party agents ignored vulnerabilities of customers and broke in to install equipment
British Gas has suspended the use of court warrants to force the installation of prepayment meters after evidence that agents working on its behalf ignored customers’ vulnerabilities.
MPs and consumer groups had raised concerns that elderly and disabled people were being forced on to prepayment meters and then routinely cut off from heat and power as they could not afford to top up.
Wednesday’s decision came after an investigation by the Times alleged that Arvato Financial Solutions, a company used by British Gas to pursue debts, had broken into homes to fit meters when there were signs that young children and people with disabilities lived in the property. AFS employees are incentivised with bonuses to fit prepayment meters.
“These are extremely serious allegations from The Times. We are launching an urgent investigation into British Gas and we won’t hesitate to take firm enforcement action.
“It is unacceptable for any supplier to impose forced installations on vulnerable customers struggling to pay their bills before all other options have been exhausted and without carrying out thorough checks to ensure it is safe and practicable to do so.
“We have launched a major market-wide review investigating the rapid growth in prepayment meter installations and potential breaches of licences driving it.
“We are clear that suppliers must work hard to look after their customers at this time, especially those who are vulnerable. The energy crisis is no excuse for unacceptable behaviour towards any customer, particularly those in vulnerable circumstances.”
