OFGEM shines light on UK energy sector shortcomings

Against a backdrop of sky-high energy prices, OFGEM’s latest audit report shines a light on where UK energy providers are failing to support struggling or vulnerable customers.

A handful of suppliers are cited by OFGEM as doing the right thing to support their customers. But there’s a clear division between those getting it right and those that need to make improvements – and quickly.

Energy suppliers have an obligation to help customers save money and use energy effectively, whilst fulfilling all regulatory requirements and maintaining transparency.

But with overcharging a perpetual issue, energy suppliers are up against a number of challenges that are stopping them providing good customer support and service:

• Failure to incorporate customer top-ups in bills: Top ups by customers are being missed and are often not reflected in their bills, resulting in customers being overcharged
• Incorrect tariff rate: Expired or changed tariff rates for meters (that don’t reflect current customer usage) are being charged to customers - who are overcharged as a result 
• Incorrect exit fee: Exit fees are being charged to the customer despite them not being applicable in many cases
• Lapse in the price protection window: Despite customers opting for a capped fixed tariff, many are being overcharged due to delays or system failures
• System mismatches: Discrepancies caused by old, outdated technology have resulted in inaccurate bills being generated

With energy prices at an all-time high, suppliers need to prioritise overcoming these challenges, if they’re to not only get on the right side of the regulations, but also if they’re to retain customers in long term.

But how can they do this?

Working with a trusted analytics and digital solutions partner like EXL is a sensible first step. These experts will assess the business operations from end-to-end to map a set of diagnostic and prescriptive controls that use artificial intelligence and machine learning. These controls have the power to provide companies with practical solutions - including accurate bill generation, tackling overcharging, and meeting regulatory standards.

Just some of the ways EXL has helped suppliers tackle these issued include:

• Accurate Invoice Measure (AIM): A data diagnostic tool to check invoices before they’re printed and sent to the customer. The tool validates the invoice on multiple factors - checking whether the correct tariff is being applied, checking the correct rates are being charged in the invoice and VAT.
• Tariff Dashboard: A data-driven tool that tracks changes to tariffs being applied on an account, following requests from customers. It ensures that the correct tariff is being applied across all the supplier systems at all times.
• Bill shock model: A predictive model that compares the current invoice amount with the previous invoices to detect any anomalies. It compares current and historic consumption to create accurate bills. If an invoice deviates beyond a pre-set tolerance level, the invoice is flagged for investigation before being sent to the customer.
• Debt Alignment/Recovery on Prepay Meters: Multiple controls can be put in place to ensure that all the communication related to debt recovery, debits and credits is accurate to avoid any reconciliation issues and incorrect charges. These controls are not only limited to the supplier data but also validates data held by the Prepayment Metering Infrastructure Providers (PPMIP). 

Partnering with analytics and digital solutions experts and advisers will allow suppliers to develop these controls quickly and effectively.

Experts work with suppliers to identify gaps in customer service by deploying teams of domain experts and data scientists. With more and more customers struggling to pay their energy bills and the regulator breathing down the neck of the entire UK energy sector, energy suppliers must be proactive in correcting these systemic issues if they’re to best serve their customers and protect their licence to operate in the long term.

Written by

Rahul Arora
Senior Vice President and Head of Emerging Business Unit UK & Europe at EXL