Supplier Compliance with Requirements for Customers with Restricted Meters

Read More..

Ofgem has taken action over suppliers’ compliance with the obligation to offer certain single rate tariffs to customers with restricted meters.

Ofgem has concluded compliance engagement with four suppliers in relation to Standard Licence Condition (“SLC”) 22G. This requires all suppliers with more than 50,000 customers (“Relevant Suppliers”) to offer Relevant Tariffs1 to customers with Restricted Meter Infrastructure2 (RMI) upon request, without charging multiple standing charges if a customer has multiple meters.

Summary of compliance engagement

In response to concerns that some Relevant Suppliers may not be offering RMI customers a single rate tariff, Ofgem reviewed supplier compliance with SLC 22G. Four suppliers have been charging customers multiple standing charges, impacting 1,665 customers between 2017 and 2020. The suppliers refunded customers and took remedial action, including compensating customers and have provided assurances that this will not reoccur. The total redress comprises:

  • Direct customer refunds totalling £126,947.25
  • Customer goodwill payments totalling £44,298.16

Ofgem considers overcharging customers a serious matter, however we are satisfied that the suppliers involved engaged positively and took prompt action once it was identified. A summary of redress paid is shown below.

Protections for Restricted Meter customers

In 2016, the Consumer and Markets Authority (“CMA”)3 found that customers with RMI faced actual and perceived barriers to accessing information, particularly around a lack of price transparency. They also faced barriers to switching, with some relevant suppliers requiring RMI consumers to change their meter. Many of these customers could have been better off on a competitively-priced single rate tariff. The remedy implemented following the CMA investigation requires Relevant Suppliers to allow consumers to switch to a non-RMI tariff without conditions and be treated the same as other customers on these tariffs.

Our consultation on extending the effective period of SLC 22G4 noted that many customers with RMI were likely to be in a vulnerable situation. As part of Ofgem’s strategy to protect consumers in vulnerable situations, ensuring that suppliers meet the obligation set out by SLC 22G is a priority.

Expectations

We expect all relevant suppliers to meet the requirements set out in the CMA Remedy5. This includes:

  • Signposting RMI customers to all relevant tariffs
  • Ensuring RMI customers’ requests for a single rate tariff are carried out
  • Ensuring RMI customers on single rate tariffs are treated the same as all other single rate customers

It is a requirement of SLC 22G that Relevant Suppliers make RMI customers aware of the options available to them, therefore suppliers should ensure they are able to adequately communicate to consumers about their options. It is not always the case that a single rate tariff will be the best option for a consumer. However, easy access to single rate tariffs will increase choice for these customers.

Suppliers with over 50,000 customers6 must ensure that customer service arrangements and systems are set up to enable RMI customers to access single rate tariffs, including where RMI customers switch from one supplier to another. This includes providing accurate information to prospective and existing customers and ensuring that customers on a single rate tariff have the correct charges applied.

The nature of RMI means that there is usually more than one electricity meter point (MPAN) at the property. When a RMI customer moves to a single rate tariff, the supplier should ensure that only one standing charge is applied, in line with how a customer with a single meter using the tariff would be treated. Suppliers must also ensure that their systems are able to correctly process switching requests from RMI customers by including all relevant MPANs in the switch, exercising particular care where customers are on a single rate tariff.

Implications with the price cap

The price cap includes a specific cap level for default customers on multi-register metering arrangements (which includes RMI customers)7. The requirements of the price cap (SLC 28AD.4) state that a default customer with a multi-register metering arrangement should not pay more than the relevant cap level for their meter type.

In circumstances where a supplier places a default RMI customer on a single rate tariff, suppliers must ensure the tariff complies with the relevant cap level for customers on multi-register metering arrangements.

Summary of redress

The redress set out in the table below reflects the cooperative nature of the compliance engagement. Ofgem will continue to engage with suppliers ensuring that the redress packages are progressed in full.

Supplier No. of customers Total Refunds Total Goodwill
EDF 487 £52,987.87 £18,851.00
Igloo Energy 364 £22,641.00 £8,880.00
OVO Energy 35 £6,325.04 £977.16
SO Energy 779 £44,993.34 £15,590.00

Customers should be offered ‘Relevant Tariffs’ (defined in SLC22G), meaning those that would be capable of being entered into by customers with a standard single rate meter instead of a restricted meter.

A restricted meter allows for electricity customers to be charged lower rates for electricity used at times with reduced overall demand but is normally only able to use a restricted selection of tariffs with a small number of suppliers.

More information on the CMA’s findings can be found on the energy market investigation page.

Statutory Consultation: Extending protections for non-E7 restricted meter customers (SLC 22G).

More information about the CMA Energy Market Investigation (Restricted Meters) Order 2016 can be found on the energy market investigation page.

List of suppliers with over 50,000 customers.

More information on the energy price cap.