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Scotland’s Changing energy market poses challenges for providers and consumers alike

By Dr. Jamie Stewart, Citizens Advice Scotland.

NB This article was published in the Herald newspaper on 26 February 2020.

Today Citizens Advice Scotland has published our ‘Power to the People’ report, outlining a set of recommendations to energy providers and urging them to put consumers first. We’ve done this work after observing some significant changes in the Scottish energy market over the past three years.

For a start, people are voting with their feet and moving to smaller suppliers away from the traditional ‘big six’. This may be a result of rising bills, with 12 per cent of consumers feeling their bills were unaffordable.

However, people heading to a smaller supplier for cheaper bills may in fact end up not getting the cheapest deal, because they’ll miss out on the Warm Homes Discount. This is a government-backed scheme which takes £140 off energy bills for eligible customers, but only suppliers with over 200,000 customers are obliged to provide it. So before switching, we’d encourage consumers to check if they are eligible for the scheme and if their new supplier offers this support. 

Fair pricing, debt support and access to this discount are key recommendations in our report today. The Citizens Advice network regularly sees people who are in debt to their energy supplier and its important to understand the challenges that this presents; people can’t simply switch to a different provider if they are in debt to their current one, for example.

The consumers who are least likely to switch are also more likely to be vulnerable and in fuel poverty. So while there is absolutely a place for switching in the market for people to get the best deals, more needs to be done to encourage those who might be struggling with their bills to seek advice and support to see if switching is a good option for them.

We want to see better customer service and support across energy suppliers. Customers shouldn’t be left in the dark or hanging on the phone when they have an issue, and they should get clear and accurate bills – not be left confused about their charges or facing unexpected bill shocks.

In particular it is vital that vulnerable consumers get better support. Our research has revealed a disparity between people who qualify for extra support on the priority services register, and those who are actually on it.

These may all seem relatively simple recommendations, but there are clearly challenges in the energy market, with as many as 16 companies failing in the past few years. With OVO taking over SSE’s retail business in Scotland the market here will change again, and that is before any further progress is made with the mooted publicly energy company the Scottish Government is currently developing.

There’s a fundamental need for suppliers to get the basics right, because the market itself will face huge challenges in the years to come, beyond just consumer choice.

The now urgent threat of climate change and the need to de-carbonise the heating of our homes is a vital issue for the market. We need a switch to renewables, but our research actually reveals the opposite is happening, with a slight drift away from people using electricity and instead using gas to heat their homes. We know that almost half of people with electric heating are in fuel poverty and we know customer satisfaction ratings aren’t as good for electric compared to gas.

Confronting this problem will be the major challenge facing government and industry over the next twenty years. The ambitions of net zero, and the urgent need for action is understood, but there needs to be protection and support for people who are struggling to heat their homes today. That’s why we’re pleased to see a rise in energy efficiency spending in the Scottish budget, albeit not as large an increase as we had hoped for.  Making homes more energy efficient is the crucial first step on the road to making homes easier to heat and therefore lowering emissions.

Those two things simply have to go hand in hand, because while 12 per cent may feel their bills are unaffordable, that would suggest lots of people don’t realise they are paying too much, with over 600,000 households in Scotland in fuel poverty, and over 200,000 in extreme fuel poverty as a result of paying over a fifth of their income on energy bills.

Perhaps the public just think energy bills are expensive and see high bills as something that has to be accepted. Whether that’s something industry and government find acceptable is another matter.

In any case Citizens Advice Scotland will continue to advocate for a fairer energy markets which work for all consumers, especially the poor and the vulnerable. Last year the Citizens Advice network in Scotland saved our clients on average £232 off their energy bills. We continue to offer that free, confidential and impartial support to anyone who needs it.