Weekly News Review - 20th February 2023
Forced meter installations suspended for six weeks
Energy regulator Ofgem has advised suppliers to suspend the forced installation of prepayment meters until the end of March while a full investigation takes place. This follows reports that a company acting on behalf of British Gas had been entering into customers’ homes to install the new meters even when there were signs of vulnerable people living there. Ofgem said that all domestic suppliers had agreed to the request.
An Ofgem spokesperson said: “The allegations against British Gas are shocking. Ofgem is focused on protecting vulnerable customers and that’s why we acted swiftly to ask all suppliers to pause forced installations of prepayment meters whilst we conduct a deeper review into the issues.
Following the reports, Centrica boss Chris O’Shea said: “The contractor that we’ve employed, Arvato, has let us down but I am accountable for this. This happened when people were acting on behalf of British Gas. There is nothing that can be said to excuse it.”
Ofgem are currently undertaking a review on prepayment meter warrant installations and remote mode switching and will publish an update next week. They have asked all suppliers to suspend these practises for at least the next six weeks and may introduce a permanent ban. However, suppliers say that installing prepayment meters allows them to recover debts and stops consumers amassing larger amounts of debt.
Ofgem’s chief executive, Jonathan Brearley, said: “We are aware of the difficult balance here as unrecoverable debts from some customers may then be recovered from the bills of paying customers, many of whom are themselves struggling with paying their bills given the wider affordability issue.”
However, charities have called for Mr Brearley to resign over his handling of the prepayment meter scandal. Ruth London, co-director of Fuel Poverty Action, said: “The chief executive should step down because the regulator has failed to act for the people it is supposed to be protecting. Instead, suppliers have been given a free hand to basically break and enter people’s homes and install a meter that will leave them in the cold and dark.”
British Gas owner Centrica reports annual profits of £3.3bn
British Gas owner Centrica has announced annual profits of £3.3bn for 2022 following the surge in energy prices over the past 12 months. The figure is more than three times the £948m it made in 2021 and follows oil and gas giants Shell and BP both reporting record annual profits in recent weeks.
The majority of the group’s profits came from its energy marketing and trading, North Sea gas production and a share in nuclear power generation. In the statement, Centrica said it has paid around £1bn in tax in 2022, but also revealed it would increase its share buyback scheme by £300m and pay out a full-year dividend of 3p a share.
British Gas has faced heavy criticism recently following reports of forced installations of prepayment meters for some of its most vulnerable customers. Chris O’Shea, Centrica chief executive, said: “The energy crisis and cost of living pressures have created a challenging environment for customers and communities, but we have been able to provide much needed stability and support.”
Sharon Graham, general secretary of the Unite union, said: “British Gas owner Centrica has been coining it in from our massive energy bills while sending bailiffs to prey on vulnerable consumers the length and breadth of the country. These energy companies are showing us everything that is wrong with the UK’s broken economy.”
“Rishi Sunak should get a grip – pull the plug on rampaging energy profiteering, impose a meaningful, tough windfall tax and give the NHS a pay rise with the proceeds.”
Shadow climate secretary Ed Miliband said: “It cannot be right that, as oil and gas giants rake in the windfalls of war, Rishi Sunak’s Conservatives refuse to implement a proper windfall tax that would make them pay their fair share. Labour would use a real windfall tax to stop the energy price cap going up in April.”
Millions of households could switch energy supplier from July
Energy suppliers are set to start offering more competitive deals from July as a result of the fall in wholesale prices in recent months. This could encourage millions of households to switch their energy supplier as they seek to cut their energy bills.
Energy prices began rising in the second half of 2021, which resulted in a number of suppliers going bust and meant the remaining suppliers could only offer fixed deals that were higher than standard variable rates. As a result, the number of households switching supplier fell from an average of 496,000 per month in 2019 to just 85,000 per month in 2022.
Prices have increased further in the last year following Russia’s invasion of Ukraine. This led to the introduction of the government’s Energy Price Guarantee which capped a typical household bill at £2,500 a year between October 2022 and March 2023. This figure is set to increase to £3,000 a year from April after the level of support was decreased by Chancellor Jeremy Hunt.
In their most recent forecast energy consultancy Cornwall Insight predicted that Ofgem’s energy price cap will have fallen from the current level of £4,279 to £3,208 in April and then further decrease to around £2,200 in July. If wholesale prices continue to fall after the new price cap levels are fixed then energy suppliers will be able to offer more competitive deals.
Kate Mulvany, senior consultant at Cornwall Insight, said: “There is a good chance that suppliers will be able to offer fixed tariffs that compete with the capped government prices, reviving the benefits of switching suppliers. Although such an outcome is subject to wholesale market volatility, early indications are that suppliers may be able to offer competitively priced tariffs within a matter of weeks.”
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