Ofgem reveals customer vulnerability and impact of competition


Competition is benefiting more energy consumers but many others, especially the vulnerable, are still getting a poor deal, according to Ofgem’s annual State of the Energy Market report.

A quarter (25%) of customers are with small and medium-sized suppliers as more people switched to get a better deal.

The market share of the six largest suppliers has fallen to a new low as a result and their annual profits fell last year for the first since 2014, by 10% to £900 million.

However, as of April this year, more than half (54%) of households were still on a poor value default deal, compared to three in five (57%) households in October last year. Many customers in vulnerable circumstances continue are paying over the odds for their energy.

In 2018, two in five (41%) respondents to our latest annual Consumer Engagement Survey said they had engaged in the market to some degree, for example by switching.

But only a third (32%) of customers living in rented social housing had engaged with the market, and a third (32%) of households using prepayment meters.

The report also found that one in five (19.4%) customers living in private rented housing are in fuel poverty, higher than any other type of households and almost twice the overall average.

Ofgem has been working with suppliers to make sure vulnerable consumers get more support. Last year only 17 households had their electricity or gas disconnected, down from its peak of 8,300 a decade ago, and suppliers provided over 1.5 million “Priority Services Register” services (for example providing energy bills in braille) to vulnerable consumers, up by 25% compared to 2016.

Last year average household energy consumption continued its long-term decline, falling by 5.5% for gas and 3.3% for electricity.

The decline is down in part to homes being better insulated and milder winters but may also be driven by customers turning off heating and lights to save money.

Ofgem’s Consumer Engagement Survey, of over 70,000 customers, found that one in ten prepayment meter customers “self-disconnected” from their electricity or gas supply because they did not top up their meters.

Ofgem will be launching a call for evidence next month to find out more about self-disconnection, including whether suppliers are doing enough to help these customers.

Between 2010 and 2017, the majority of the reductions in carbon emissions came from the electricity generation as the amount of coal-fired generation fell to historic lows and wind and solar power increased.

The single biggest contributor to emission reductions was the carbon price, which penalises coal, gas and oil-fired power stations, accounting for around half of the reductions.

The ‘Beast from the East’ in March increased heating demand across the country to its highest level since 2010. The electricity and gas networks were proven to be resilient, with sufficient capacity to meet demand.

Dermot Nolan, chief executive at Ofgem, said: “We have witnessed many positive developments in energy over the last year, but the market is still not delivering good outcomes for all, especially the vulnerable.

“Ofgem has introduced the safeguard tariff which ensures that 5 million households, including some of the most vulnerable, pay a fairer price for their energy. Price protection will be extended to a further 11 million customers on the worst deals.

“We will continue to facilitate the transformation of the energy market to ensure that benefits are captured for all consumers and ensure no-one is left behind.”