Western Power Distribution pays £14.9mn for customer failure

Western Power Distribution (WPD), the largest electricity distribution network operator in the UK, has agreed to make a voluntary redress payment of £14.9 million after accepting it failed to meet its obligations to provide information to some of its most vulnerable customers.

Ofgem’s Redress Fund is operated on its behalf by the Energy Saving Trust and allows companies to pay a sum of money to appropriate charities, trusts, organisations or consumers as a result of breaches of licence conditions.

Network companies are required to provide additional services to households in vulnerable circumstances who are on their Priority Services Registers (PSR). There are approximately 6mn customers registered for priority assistance across the UK.

These additional services include providing prompt information and advice during unplanned power cuts to these customers, for whom a loss of electricity supply may be particularly difficult. This helps these customers take steps to keep themselves safe and access any additional assistance from network companies.

Examples of additional assistance could include, in appropriate circumstances, mobile power generators, hot meals and drinks, alternative accommodation and on-site welfare units.

Ofgem launched an investigation into WPD’s compliance with its PSR obligations in 2020. Ofgem found WPD, which has around 1.7 million PSR customers, failed to promptly notify and update some of those affected on the register by power cuts about when power would be restored and what assistance was available.

WPD also did not promptly provide specific information on how to prepare for power cuts for the majority of its newly added PSR Customers, with some waiting up to a year after sign up for the information to be provided.

This made it harder for these PSR customers to plan ahead to ensure their needs were met and access the available assistance. This issue occurred over a period of five years.

Ofgem’s investigation also found that WPD failed to ensure all staff visiting the homes of customers, including those in vulnerable circumstances, had sufficient background checks, in particular DBS checks.

Following the investigation and lengthy engagement with Ofgem, WPD has acted to address all areas of concern, changing its policies, procedures and processes.

WPD has agreed to make a voluntary redress payment of £14.9mn to Ofgem’s Redress Fund, reflecting the seriousness of the failings and the importance of complying with all regulatory obligations, especially concerning vulnerable customers.

Cathryn Scott, director of enforcement and emerging issues at Ofgem, said: “WPD did not meet all of its obligations to provide additional support to some of its most vulnerable customers to safeguard their well-being. In our view it also took too long to put this right. This is totally unacceptable.

“Our enforcement against the company sends a strong message that when companies fail to provide the required services to their Priority Services Register customers, Ofgem will take action.”

Anita Dougall, CEO and co-founder, Sagacity, said Ofgem has made a clear statement that energy distributors and suppliers need to stand up and support vulnerable people.

"However, we must consider that while there are six million customers registered for priority assistance across the UK, there’s likely more vulnerable customers that haven’t been identified," she said.

“Vulnerable people aren’t always forthcoming in asking for help, so it’s really up to providers to proactively identify these households and ensure they are aware of the assistance that’s available to them. This ranges from short-term safeguarding advice during a power outage, to social tariffs they may qualify for."

She said one of the biggest issues it faces is being able to know who is and isn’t financially vulnerable out of a database of millions of customers.

"Even if providers do have a system for flagging accounts, people’s situations are fluid – someone who was fine last year may have now hit upon hard times – so the data is constantly changing,"she added.

"By enriching data with third party information, such as government records on benefits, pensions and affordability information organisations can cross check against the customer base and identify those in need.

“With rising bills coming from every direction, it’s never been more critical for energy companies to get a complete, accurate view of customers so they can support the most vulnerable. By failing to do so, they risk fines from the regulator, driving up the amount of bad debt on their books and more importantly letting vulnerable people down and plunging them into poverty.”