UK regulator Ofgem has published the results of surveys conducted to understand the impact of COVID-19 social distancing measures on residential consumer energy usage and financial well-being.
The surveys investigated customer experiences on energy, awareness of government aid initiatives, and customer switching of retailers in search of better energy deals and services.
Key study findings include:
Increase in consumer energy usage
The study found that consumers increased their energy consumption in March 2021 compared to previous years with nearly three-in-five (58%) consumers agreeing that they were using more energy than normal for the time of year.
Although in previous years, energy usage normally spikes during the period due to winter as consumers heat their homes, this year the increase is mainly due to stay-at-home regulations, according to Ofgem. As a result of people spending more time at their homes, their energy usage also tends to increase.
Consumers are aware of their energy usage and impact on bills
As a result of the increase in energy usage, consumer bills also spiked. This resulted in financial burdens for energy users. Owing to this, a pocket of UK residential consumers reduced their energy consumption to reduce financial stress.
Around one-in-seven (14%) consumers decreased their energy use compared to 9% who did so in May 2020. Up to 28% of consumers who were worried that either they or their partner will lose their job reduced their energy use, while 26% of those who lost their job had done this. The majority of the consumers who reduced their energy use due to financial stress are younger (16 to 24 years), according to the study.
Commenting on the findings of the report, Jo Allen, an expert on utility customer experience management at Pegasystems and who previously worked on customer engagement system programmes at British Gas, said: “The latest wave is interesting in how it reveals younger customers are struggling to pay. This does remind me of how challenged energy providers are in understanding their individual customers at critical moments, be ready to provide help ahead of time, and not let vulnerable younger customers slip into fuel poverty. More should be done to empower customer service agents and managers to spot problems early and be able to offer tailored help for customers. It is always in the best interests of providers to keep and nurture customers.
“Developments in real-time AI-powered analytics mean that agents can better understand individual customer needs. Many of these younger consumers prefer digital channels and the same principle of applying AI to online and app interactions to automatically engage them in the same solutions the agent is proposing will help
One interesting area is voice AI that kicks in when a customer calls an agent, perhaps to talk about bill payment problems. The AI can listen, automatically understand the need and suggest next best actions. Voice AI can accurately and unobtrusively determine the state of mind of the customer and where the conversation with the agent is going. As a result, an agent isn’t on the back foot in handling the call, and is able to proactively offer help by tailoring a constructive solution to the customer’s problems.”
Despite consumers fearing they will not be able to top up their prepayment meters, only a few fell behind on their bills.
Amongst those surveyed, only 12% said they had their meter disconnected. At the same time, significantly fewer customers with prepayment meters drew on emergency credit in March 2021 (27%) compared to October 2020 (35%). The number of people who had meters disconnected and who drew up an emergency credit was low owing to the ability of consumers in improving their energy efficiency in fear of not being able to top up, the study has found. Consumers prefer to reduce energy use rather than deferring payment for it.
Customers aware of utility and government aid schemes
Although the number is not as high, a significant number of customers are aware of the financial aid available to them from their retailers and the government. Up to 30% of consumers with a credit meter knew they could ask suppliers to
reduce payments or provide payment holidays, and almost a quarter (23%) knew their energy supply can’t be
cut off if they fall into arrears on bills.
However, the opposite is true amongst customers with prepayment meters. One in six (16%) consumers are aware that suppliers can provide assistance with topping up for those unable to leave home for work.
Consumer switching continues to rise
In March 2021, 26% of consumers were thinking about switching suppliers while 13% were in the process of
switching or actively looking for a new supplier.
The surveys were conducted between April 2020 and March 2021.