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PAYGO and Paying for Energy in a Smarter Way

PAYGO and Paying for Energy in a Smarter Way. Society of St. Vincent de Paul (SVP) Energy Action European Seminar 11 th March 2013 Brendan Hennessy – John-Mark McCafferty. Contents. SVP Assistance to Households, 2008 & 2011 SVP E nergy Assistance in 2012

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PAYGO and Paying for Energy in a Smarter Way

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  1. PAYGO and Paying for Energy in a Smarter Way Society of St. Vincent de Paul (SVP) Energy Action European Seminar 11th March 2013 Brendan Hennessy – John-Mark McCafferty

  2. Contents • SVP Assistance to Households, 2008 & 2011 • SVP Energy Assistance in 2012 • Support from Social Protection and MABS • Supplier Handbook • PAYGO Promotion and Experience • (Re)Payment Plans • Warmer Homes Strategy • The Policy Bit

  3. Direct Assistance to Households – 2008 and 2011 Comparison (€)

  4. Calls for Assistance 2011

  5. 2012: Energy by Household Visit (sample of c800 households)

  6. 2012: Energy by Spend(sample of c800 households)

  7. 2012: Average Spends / Fuel Type(sample of c800 households)

  8. Energy Arrears and Support from Social Protection and MABS • Department of Social Protection (DSP) recorded €1.3m heating spend in ENP Payments in 2011 • DSP spend on Fuel Allowance and ‘Free Schemes’ (free units of either gas or electricity) substantial: approx. €215 Min 2012 on Fuel Allowance (400,000 people) and €207 million in 2011 for energy units or ‘Free Schemes’ (390,000 elec & 42,000 gas recipients in 2010) • MABS recorded 4666 utility cases from Jan-September 2012

  9. CER Supplier Handbook: Electricity and Natural Gas • Dealing with customers in difficulty Suppliers are required to assist customers in genuine financial difficulty in making a payment plan and, where appropriate, engage with a money advisor acting on behalf of the customer, e.g. MABS, a recognised charity or 3rd party. This must include offering the customer a prepayment meter or budget controller if this is possible. (6.8: pg23) • Genuine Financial Hardship A customer is taken to be in genuine financial hardship if they are unable to make payments against their bills without assistance and are finding themselves in constant arrears (9.6:pg 37)

  10. CER Supplier Handbook: Electricity and Natural Gas • Ability to Pay A supplier should take account of the customer’s ability to pay when agreeing any repayment arrangement, by credit or prepayment meter and confirm with the customer that arrangements are manageable.(6.8.2: pg23) • Identifying Customers Suppliers are expected, where possible, to work with MABS and St. Vincent de Paul who are best placed to identify individuals in need of assistance (9.6: pg37)

  11. Pay As You Go (PAYGO) Meters • Why promote / supply PAYGO meters? • More control over customer’s household energy use / budgeting • Reasonable portion of ‘vend’ servicing arrears (25%) • Similar payment experience as pay as you go mobile top-up • Customer takes greater responsibility over energy use • Energy demand reduction of around 4% • Free up SVP spend on energy for better use

  12. Experience of PAYGO • Low instalment rate for electricity, but growing • Greater instalment rate for natural gas • Lack of customer knowledge about availability of PAYGO and meter use • Stigma – less of an issue or persistent? • Electricity PAYGO are keypad meters, whereas Gas PAYGO meters require a swipe card • Most Gas PAYGO meters are situated outside of the home – not ideal but technically little alternative • Exceptions: Disconnections; certain apartment blocks; Landlord Permission and Night saver metering / storage heaters

  13. (Re)Payment Plans • Vast majority of those in arrears are currently in repayment plans rather than PAYGO arrangement • Repayments can be set too high over too short a period; leads to defaults on repayment • ‘Confirming with customer’ is not a measurement of ‘ability to pay’ • Subjectivity in assessing ‘ability to pay’ • SVP is assisting many households who struggle with other essentials while they pay their energy bills – so there are problems despite no arrears

  14. Warmer Homes Strategy • Launched November 2011 • Policy Framework in which Energy Arrears is a key concern, alongside Energy Efficiency • Key Actions that SVP want implemented in 2013: • Voluntary Code of Practice for Oil providers (scope for growing number of oil budgeting schemes) • Area Based energy efficiency Approach • Implementation timeframe for Minimum Thermal Standards (Private Rented Sector) • House Condition Survey (Dept. of the Environment)

  15. The Policy Bit PAYGO Provisions should be based on financial need not disconnections - households who struggle with other essentials while they pay their energy bills also need to be considered for PAYGO meters Overcome stigma if there’s agreement that it still exists Need to engage Landlords and their representative bodies – make it a condition of a tenancy? CER to show leadership in making Supplier Handbook work, engaging utilities and other stakeholders and ensuring a consistent approach by Credit Control Teams

  16. The Policy Bit Continued PAYGO Continued • Standardised wording in communications from Utilities - normalises the meters and gives confidence to customers and SVP members • Simple, engaging guide to PAYGO for customers Repayment Plans • Avoiding breakdown of Payment Plan by setting minimum income protection levels - as set out by VPSJ ‘Minimum Essential Budgets’ (www.budgeting.ie) - over reasonable timeframes, similar to PAYGO timeframes

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