Energy Consumers: ministerial meetings minutes - September 2024

Attendees and apologies

• Dr Alasdair Allan MSP, Minister for Climate Action
• Kaukab Stewart MSP, Minister for Equalities
• EDF
• EON
• Scottish Power
• Centrica
• OVO
• Octopus
• Energy UK
• Ofgem
• Scottish Federation of Housing Associations (SFHA) 
• Scottish Confederation Of Park Home Residents Associations (SCOPHRA)
• Smart Energy GB
• Energy Ombudsman
• Consumer Scotland
• Energy Consumers Network
• Advice Direct Scotland (ADS) 
• Citizens Advice Scotland (CAS)
• Energy Action Scotland
• Fuel Bank Foundation
• Inclusion Scotland
• Scottish Fuel Poverty Advisory Panel
• Glasgow Disability Alliance
• Home Energy Scotland
• Age Scotland
• Federation of Small Businesses
• South of Scotland Enterprise

Items and actions

Introduction

The Minister thanked stakeholders for taking part in engagement prior to the roundtable. Engagement with the UK Minister for Energy Consumers, Miatta Fahnbulleh, will follow the roundtable.

Dr Allan also thanked energy suppliers for their engagement on the issue of vacant (void) properties, and their agreement to work on matters such as reconnecting meters and managing debt to speed up households moving into vacant homes.

Energy debt and affordability

The Minister noted the announced increase in the price cap from October, which will cause concern for consumers. Reform is needed that protects all, but in particular priority consumers, from affordability challenges and increasing debt.

The Scottish Government believes a social tariff would provide support to those that need it the most and is keen to explore whether a single priority services register (PSR) could be used as a central source of information of vulnerability.

The following issues were raised:

Debt

• considerable support is already provided by suppliers to customers, however the reality is that debt is increasing rapidly and difficult for suppliers, particularly small suppliers, to manage
• it is difficult to reach vulnerable consumers who are less likely to engage, often out of fear of disconnection or unmanageable repayment plans
• access and joining up of government data (this includes some data held by Social Security Scotland) with data from stakeholders could help identify vulnerable consumers, and target households more accurately
• for example, Home Energy Scotland (HES) offered their support, as they can accurately predict where the lowest energy efficiency housing is, and where highest areas of fuel poverty are – government data would further their reach
• it can be difficult for suppliers to differentiate between those who can’t and those who won’t pay. If this data were made available, suppliers could focus help on those who can’t pay
• trusted support networks in Scotland, such as local authorities, could be used to encourage customers to go to suppliers at the earliest possible point when they are struggling with debt
• a social tariff mechanism would make energy affordability a priority, however an immediate solution to current debt is still needed; usually those in energy debt have significant other debt

Social tariff

• energy prices remain stubbornly high and there is work to do to ensure that renewable energy reduces both prices as well as market volatility
• development of a compelling case for change will encourage action and the proposed social tariff working group could act as first step
• as with debt, access to data remains a key issue and UKG have been asked to consider the feasibility of providing household income data
• a social tariff should target the right people. Single working age adults make up a third of consumer advocacy groups’ clients, despite typically being a group that fall outwith the additional support mechanism
• a social tariff would either need to be funded by the UK Government or through energy consumer bills, however the latter would add to the affordability challenge people are already facing, and this should be avoided

Fuel poverty

• we should not look at ‘fuel poverty’ but poverty as a whole
• fuel poverty is more pronounced in rural areas as consumers can be off the gas grid and dependant on electricity, which is currently more expensive
• a long term solution is sustained improvement in housing and energy efficiency, future proofing houses. The Warm Home Scotland programme provides significant investment in housing, and consumers must be made aware of that. Sustained support is needed from UKG and SG

Consumer support

• supplier support varies across the market. The Ombudsman can work with individual suppliers and the market as a whole to develop a more consistent approach to advice and signposting
• The Energy Ombudsman will soon extend its remit to cover small businesses with 50 employees or less, up from 10 or less
• disabled consumers incur high costs. More targeted and accessible communications are needed, as is greater investment in customer facing roles, and suppliers must not assume digital by default
• it would be beneficial for suppliers to use trusted organisations to communicate with disabled people to ensure help is advertised. Disability equality training would also be useful for suppliers, provided by disabled peoples organisations (DPO’s)

Radio Teleswitch Service (RTS)

The Minister noted concerns around the potential impact of the RTS suspension on consumers, particularly in rural and island areas of Scotland, and sought assurance from suppliers that all meters will be replaced in time.

Coordinated and consistent messaging is needed to raise awareness of the switch-off and communicate the benefits of smart meters from trusted voices.

The following issues were raised:

• one quarter of all RTS customers reside in Scotland (disproportionally higher than our population share) and on current estimates it could take till 2028 to transfer all existing RTS consumers to alternatives
• the smart meter rollout programme is not meeting UKG targets – important to remember that targets also include schools and businesses
• in some cases, despite meters being installed, there are issues with the network. Geographically, places most affected are rural and island areas. Another issue in these areas is that suppliers are not able to share engineers
• many consumers do not know what RTS is and do not understand what is being asked of them. There is also a degree of refusal to engage on smart meters, despite the efforts of certain suppliers. Some do not want a meter as they would then see the energy they are using
• consumer confidence and trust in suppliers is low and therefore uptake is low. Some don’t believe the end date of 30 June 2025 is final
• Government, Ofgem and consumer groups should work together to engage these consumers with a single voice / message. This should include a proactive information campaign, and SG should continue to press UKG to put protections in place for rural and island areas
• suppliers can help customers, for example through schemes such as the ECO. A Scottish Government convened group (housing associations etc.) could help coordinate and identify opportunities to carry out several upgrades at once
• Ofgem assured that it is taking this issue very seriously. Suppliers have shared ‘hot spot’ RTS areas with Ofgem and there will be a follow up comms campaign soon. Whilst the campaign will be national, Ofgem will target hot stop areas
• Ofgem is also considering shared engineers and will provide updates in due course

Market reform

The Scottish Government is committed to working with the UK Government, energy suppliers, Ofgem, and the third sector to develop detailed and deliverable proposals for reform.  Standing charge reform is required as well as addressing the current differential in gas and electricity prices.

The following issues were raised:

• opinions varied on standing charges with support voiced for various reform positions including complete abolishment; general reduction in cost; a separation of policy costs contained within standing charges; or, costs to be absorbed into general taxation
• absorbing standing charges into unit costs could have a negative impact on higher energy users e.g. people with disabilities, families with young children, older people
• some attendees agreed that if standing charge reform is delivered, this should not be progressed in isolation, and that a form of affordability support (e.g. a social tariff or similar mechanism) should be implemented alongside
• reform must also consider the needs of non-domestic consumers who currently do not benefit from the price cap or many of the tariffs open to domestic consumers. UKG must recognise the specific challenges for small businesses
• energy efficiency measures will help in the long term and suppliers should be encouraging customers to make these changes
• there is a range of views regarding the review of electricity market arrangements (REMA). Some argued that because locational pricing would not be in place before the end of the decade, we need an interim solution delivered by next winter
• consumer stakeholders are happy to share relevant data ,and support all information and education opportunities
• regional variations in Scotland add complexity e.g. temperature ranges, accessibility to supply and consequential use of unregulated fuels such as LPG

Closing remarks

The Minister thanked attendees for their contributions. The outputs from this will feature in future engagement with Ms Fahnbulleh, which is hoped to take place well in advance of the UK budget statement on 30 October.

The Scottish Government stands ready to work with the UKG to identify priorities where both governments can work in partnership to meet the specific needs of Scottish consumers. Further detail will be circulated to stakeholders on the social tariff working group in due course.

Actions

• SG officials to investigate the possibility of developing data sharing agreements to better target support that is both supplier and government led
• SG officials (energy policy and equalities) to engage with suppliers to develop best practices in customer engagement and accessibility
• SG officials to engage with stakeholders on developing a holistic approach to debt
• SG officials to issue formal invitations and a draft terms of reference (ToR) for the working group on a social tariff mechanism
• following the publication of Ofgem’s findings, SG officials to meet with UKG to clarify the UKG position on RTS and smart-meter rollout, including the implications of sharing engineers
• Ofgem to lead on the delivery of a joint comms campaign to be developed with trusted voices to produce ‘single version of the truth’ that can be signposted
• SG officials to maintain regular engagement with Ofgem, suppliers, and consumer organisations on the RTS programme, offering constructive support where appropriate and helpful
• SG energy officials to engage with SG and UKG digital colleagues on signalling challenges, coordinating with Ofgem who regulates the DCC
• SG officials to engage with Ofgem and other policy on the feasibility of convening a group of individuals (housing associations etc.) that could coordinate and identify opportunities to carry out several upgrades at once and drive productivity
• SG officials to remain engaged with UKG officials on market reform
• SG officials to establish a separate forum for discussing non-domestic consumer issues to recognise their discreet challenges
• SG officials to engage with Ofgem on their standing charges options paper
• Minister for Climate Action to write again to the Minister for Energy Consumers, Miatta Fahnbulleh, in advance of the UKG budget on 30 October