Energy Suppliers: Customer Credit

Clive Betts Excerpts

Wednesday 22nd February 2023 Westminster Hall

[Patrick Grady (Glasgow North) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Betts. I am grateful to be called at relatively short notice. I echo a lot of what my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) has said and I congratulate him on securing the debate.

Many people nowadays are used to paying subscription models for services or products, for mobile phones or the use of the gym, or for online streaming services, but, by and large, what you pay for is what you get. The energy model is slightly more uncommon.

Of course it is very helpful for customers’ budgeting and planning to know that if they are on a direct debit and paying into that model, a regular amount will come out of their bank account over the course of the year. Yes, perhaps there will be a small credit balance, because generally energy usage during the summer will be slightly less than during the winter, but over the course of the year we would expect that to balance out. But what my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey has demonstrated—and what many of our own inboxes will demonstrate as customers start to pay close attention to their bills because of the high cost of energy and the other increasing costs of living—is that people are starting to discover a very significant failure in that model. Perhaps, as the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) has suggested, they are even discovering failures more widely in the energy market and system as a whole.

What is particularly disappointing is the number of issues that people seem to be having with their smart meters. By the sound of things, several of us here have personal experience of these matters, let alone the cases that come to our surgeries and our inboxes. Smart meters were supposed to make all these issues a thing of the past; people would know exactly what their usage was and would pay exactly for what they had used, and as a result would be incentivised to be more efficient with their energy use, which is better for their own personal finances—and, of course, much better for the environment, if we can reduce energy consumption and emissions.

Instead, people are getting readings that make no sense—that do not appear to match with their own perceived usage, at least—and the energy companies, for whatever reason, are using the opportunity to adjust direct debits, sometimes without any say-so; people sign up in advance for an adjustment of a direct debit and suddenly find that it has gone up, or maybe gone down. That negates the whole point of smart meters enabling them to budget. Smart meters were supposed to avoid such problems entirely, but in fact those problems seem to be increasing.

I heard from a gas engineer that some models of smart meter were designed to operate in climates that are very different from ours, so if they have been installed outside that can be a reason why readings do not make an awful lot of sense or do not appear to match up.

As I said in an intervention on my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey, although we are largely talking about people who pay by direct debit or in arrears, this situation is also affecting customers who pay by prepayment meters. The issue of prepayment meters has been discussed at great length, so I know the Government are aware of it and are trying to take action, but we have all argued repeatedly that there is more that they can do, which comes back to my hon. Friend’s recommendations.

For people who use prepayment meters in the way that they are designed to be used, the companies are getting that money up front—when the energy has not even been used. That is one of the key questions that the energy companies ought to answer and perhaps ought to be required to answer, either by the Government or Ofgem, or by any other mechanism by which they can be held to account. What are they doing with that money? I ask that question because, as I said in my intervention on my hon. Friend, it is not a balance just sitting there on an account; it is clearly not there for a customer to draw down as they see fit. It is clearly being used for other purposes: either to prop up the company elsewhere in its operations, or to earn very tidy interest because of course interest rates are going up. It is either contributing to the vast profits of the company or it is being used to shore up other parts of the company that may be having difficulties.

If the energy companies were required, as we suggested, to consider what benefit they gain from maintaining that money in their accounts, and had to recognise that in the form of discounts or an interest payment back to the customer, perhaps they would suddenly start moving a lot faster.

I agree with all the recommendations that my hon. Friend has made about how bills should be published and presented to consumers, so that they know exactly what their balance is and have the opportunity to draw that money down as quickly and on demand as they want. The company should have an obligation to do that. If they do not have such an obligation, we should look at how they can be incentivised to do so, or penalised if they are not going to respect their consumers. We want an energy market that functions effectively and well. We want to encourage people to reduce their demand on the system, which helps the environment, the ageing infrastructure, and the bank balances of our constituents—the consumers. The energy companies have to realise that they have got away with a lot of these things for too long, and the wider market now needs to be scrutinised in serious detail.

I end by quoting my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey, who said several times during the debate: this is not the energy companies’ money; this is money that our constituents—their consumers—have earned and have paid, expecting a service in return. It is not for companies to keep and profiteer from that money. If it is not being spent and does not reflect the consumer’s energy usage, it should be returned to the consumer so that they can use it to meet the increasing cost of living and other personal expenditure.

[Mr Clive Betts (in the Chair)]

We move on to the Front-Bench spokespeople. They have about 20 minutes each if they really want to take it, but that is entirely up to them.