Supplementary written evidence submitted by Octopus Energy (WIN0059)

 

Thank you for the opportunity to give evidence this week. Your Preparing for the Winter Inquiry is timely.  It will bring much needed attention to the difficulties people already face paying for energy - which will get harder over winter.

 

We fully agree with the harrowing picture the Consumer Bodies painted for the Committee on Wednesday. Every week, our teams interact with 350,000 customers across the country. Since the energy crisis began and wholesale prices have driven bills to unprecedented levels, an increasing number of these conversations are with people in very difficult circumstances, often in mental health crises, and sometimes suicidal. Our highly trained and empowered team is motivated and equipped to help people through these challenging times.

 

In Annex A, we set out the information you requested, including detail on how we support our customers, particularly when struggling to pay their bills, and the arrangements for training our Energy Specialists.

 

In addition, we want to make a few key points to support your sessions next week. In particular:

 

  1. Government should introduce a targeted energy bill support scheme for this winter as a matter of priority.  Energy suppliers must do all they can but as the Consumer Bodies have explained, the scale of the problem exceeds what can be properly addressed by suppliers.

 

  1. Ofgem needs to retain the price cap. It is the best way of keeping prices fair for everyone, even if they do not switch supplier. Bill support and a social tariff will help with affordability, but continued price protection for loyal customers is essential to maintain fair prices for all. 

 

  1. We understand the desire for Ofgem to set new standards for ease of customer contact this winter but urge them instead to create a “special measures” regime targeted at suppliers that are not performing. The proposed market-wide reforms are likely to create a ‘tick box’ compliance approach or a “levelling down” of service standards - neither of which serves customers.

 

  1. Ofgem can help people with their bills by lowering standing charges (a substantial amount of which are network costs under Ofgem’s purview) and insisting on the rapid phase out of outdated, expensive legacy prepay meter infrastructure.

 

  1. Ofgem’s financial resilience reforms need amendment as they limit our ability to absorb costs to give our customers lower prices. The reforms have in any case missed the key causes of failure in the energy market.

 

Finally, as noted in the session, the best way to shield customers from the geopolitical price shocks of the last 18 months is to move faster to a cheap, greener energy system. While the Chair is correct that fossil generators still often set the wholesale price, we note that:
 

  1. As it scales, renewable power is increasingly setting the price for electricity. Smart tariffs allow customers to benefit directly from low or even negative priced electricity when renewables dominate the market.  We are pleased to be the country’s foremost innovator in these tariffs which can benefit any customer with a smart meter (55% of the market), not only those with electric vehicles or heating;

 

  1. A move away from a single wholesale price for GB, to create local markets which more accurately reflect the regional generation mix, would allow more people to benefit directly from renewables.  Government’s Review of Electricity Market Arrangements provides an opportunity to make this vital change. 

 

To get to net zero faster we’d like to see Ofgem move faster to introduce the policies that will unblock the connection queue - they say they have insufficient resources to do this speedily - and allow more customers to benefit from smart tariffs.  More detail on this is set out in our response to the Committee’s inquiry into a Flexible Grid for the Future.

 

We would be happy to help should you require further information on the points above or the material in Annex A.

 

Yours sincerely

 

Rachel Fletcher

Director of Regulation and Economics

 

September 2023

 

Annex A: Follow-up information from Select Committee

 

Request 1: Detail on Octopus’ expanded support for customers struggling with bills

 

Every Octopus customer is provided the following services as standard:

 

        Highly trained and empowered energy specialist support team. Every one of our  Energy Specialists (the people who speak to customers every day) are given extensive training and support to identify and support customers in need.  Customers do not need to have been flagged on our system as “vulnerable” to obtain this support nor do they need to be lucky enough to find the right phone number to call.  Our model also means that when any customer calls us with payment difficulties, they are not passed from pillar to post within the company, but are helped there and then with an empathetic and highly trained specialist. Where calls come in to a newer member of staff, there is help on hand from “masters” and “gurus”, with extra senior support should the customer be facing a mental health emergency.  We have recently employed trained social workers to boost our expertise (see below for more detail).

 

Our Energy Specialists also have authority to provide customers with financial support such as debt forgiveness, bill credits, payment plans and standing charge holidays - without having to keep the customer waiting to obtain approval elsewhere. They are trained to signpost customers to specific support services including within walking distance of the customer's house and have the ability to help in other ways - for example, to issue food vouchers to help customers in dire straits.

 

Thanks to partnerships with experts, we’ve upskilled ALL our operations teams in Vulnerability Awareness, which includes a module on Suicide First Aid, and Customer Affordability.  This equips them with broader financial, emotional and practical skills and knowledge to deliver enhanced vulnerable customer support.

 

        Fair pricing for all our loyal customers. We continue to keep prices as low as possible for all our customers and provide a range of products and tariffs designed to enable households to make the most of their energy system. Over the past two years, we have absorbed over £200m in costs by pricing below the cap to support our loyal customers. All our customers are paying less than the price capped standing charge amount.  Our smart prepay tariff is also our cheapest tariff. We see the cap as a ceiling not a target.

 

 

We work hard to reach out quickly to any customer who is struggling to pay their bills and take a sensitive approach focused on engaging the customer to find a solution.  The steps set out below are in line with Ofgem’s new proposed standards on supporting customers in payment difficulties.

 

        We assume that anyone who has missed a payment may be struggling. We proactively and automatically contact customers in these circumstances. We reach out to customers if they miss a single payment, not once they have reached a £ or age threshold of debt. In all our communications with the customer we make it clear that we are able to help them.

        In the case of continuous missed payments, the customer enters our dunning process and we use a number of different ways to engage the customer, including letters, texts, emails and working with debt collection agencies. In line with our continuous improvement approach we regularly review our communication methods and messages to ensure they are effective.

        When we talk to the customer, we offer repayment plans, signposting and support in understanding how to set affordable budgets, and a range of additional support (detailed below). All of this is available at all times and delivered in house by our team.

        We take a flexible and sensitive approach to setting repayment plans for customers - we have no minimum payment value enabling customers to move to smaller more frequent payments if they wish, and we can pause payments in line. This can both be done in house by our agents or in partnership with third parties as part of the Government’s “Breathing Space” scheme.

 

We have a range of additional support programmes for customers struggling to pay their bills:

 

        £15m Octo Assist Fund. Through this fund, we help customers get direct financial support with their bills, by offering them credit on their account. It is specifically designed so anyone can easily apply for a range of support, based on circumstances and need – including access to monetary credits from the fund, or personalised account support (e.g. return of credit, change of tariff etc). Our credit team is constantly reviewing how we offer this support to ensure it is easily accessible and remains relevant. They have designed a highly responsive programme to ensure customers who take the first step (filling in an income and expenditure form for example) receive support and advice quickly.

 

        Standing charge payment holidays. As well as all customers automatically paying below the price cap standing charges, customers who need additional support are able to access 1,3 or 6 month standing charge payment holidays.

 

        Helping customers access unclaimed benefits. We have recently started offering a service which helps our customers check they are obtaining all the benefits they are entitled to and any assisted deals on their other bills (water social tariffs, council tax relief etc).  So far we have been able to help 2000 customers a month and they each report finding hundreds of pounds worth of unclaimed benefits and support. 

 

        Tens of thousands of electric blankets for those who need it most. Last winter we gave out just over 35k electric blankets and we’re preparing a similar number for this winter. Using an electric blanket is not a long term solution but can provide short term reductions in costs and warmth to vulnerable customers. Last winter we measured savings averaging £300 on bills as a result of using a blanket. This is a huge assistance to many people, but especially helpful to many older people and others with health and mobility issues.

 

        Home visits by our energy helpers. We use a dedicated team of field agents to visit our vulnerable customers to help them reduce bills/improve home efficiency and support customers’ ability to pay. These agents are equipped with thermal imaging cameras (we also separately offer out free loans of these cameras) so they can provide meaningful energy saving advice. They also can help adjust boiler flows and assist customers in locating or understanding how to use the government support vouchers issued through winter 22/23. Last year, we conducted 250,000 home visits.

 

        Recruiting social workers to offer more support to customers. We are bringing experienced social workers into our Operational team, following a successful trial this Spring. This team guides our energy specialists when they are dealing with vulnerable customers to help in crisis situations. They have been reaching out directly to our customers and completing local authority referrals to adults and children's social care with the consent of the customer. Their presence also means social service teams in the council have a named person to come to if their service user is struggling to manage their account.

 

Request 2:  Duration of basic customer service agent training

 

We invest heavily in our  Energy Specialists, providing them with a 4 week intensive training programme when they join Octopus. In the months following the initial training Energy Specialists must complete a further 8 foundation modules to deepen their understanding of key areas. Having completed these modules Energy Specialists can then take on additional training in specialist areas, for example becoming a Vulnerability Champion, supporting peers with difficult conversations and supporting the development of our offering in line with customer needs. In parallel all new and existing Energy Specialists receive bitesize training sessions, fortnightly. These ensure Energy Specialists always have access to up to date information.

 

This training programme is designed to scale and is led by Energy Specialists. So far this year we have trained over 1000 new Energy Specialists whilst maintaining exceptional customer service - as demonstrated through Which? and Trustpilot.

 

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