Challenging the networks
As part of the RIIO2 price controls set out by Ofgem, network operators are required to set up independently chaired customer engagement groups (CEGs). As part of our Utility of the Future campaign, Network caught up with the chairs of four of these groups to find out more about their role and how they challenge the networks.
13th September 2019 by Networks
Maxine Frerk (MF), chair customer engagement group, SGN.
Trisha McAuley (TM) OBE, independent chair, National Grid Electricity and Gas Transmission User Groups.
Dr Mike Brooker (MB), chair of Wales & West Utilities customer engagement group.
Tracey Barlow (TB), independent chair of Scottish and Southern Electricity Networks’ new RIIO-ED2 customer engagement group.
Q. What is the purpose of your customer engagement group?
MF: To provide challenge to SGN and an assurance to Ofgem that SGN have engaged effectively on their business plan and that the plan appropriately reflects current and future consumers’ needs and wants.
TM: Our independent user groups have two key functions:
- To assess the quality of National Grid’s ET and GT RIIO2 stakeholder engagement and the extent to which stakeholder views are reflected in the RIIO2 business plans.
- To scrutinise, review and challenge the business plans.
MB: At the core of the customer engagement group (CEG) responsibilities is a sharp focus on making sure Wales & West Utilities are accountable to their customers and stakeholders. There is an unprecedented amount of change and disruption in the energy sector, with the twin challenges of decarbonisation and increasing customer expectation. So, it’s our role to make sure that Wales & West Utilities Business Plan for 2021-2025 is fit to deliver against these challenges.
TB: The primary purpose of the customer engagement group (CEG) is to test the business plans that have been developed through engagement with stakeholders and consumers. The CEG has the benefit of sitting alongside the business through their plan development period and can offer ongoing challenge and feedback to support the business, producing the best possible plan.
Q. What sort of things is the group scrutinising?
MF: We have looked in depth at the consumer research SGN are doing and have scrutinised their draft plan spanning environmental impact, customer service and vulnerable customers, resilience. We have focused more on the outputs they are proposing than the costs at this stage. We are not scrutinising their finance proposals.
TM: We’re looking closely at all material areas of the plans, from asset management and reliability to future energy networks and affordability. Our ultimate challenge across all areas is to assess National Grid’s stakeholder engagement and ask whether the plans are clearly linked to the right outcomes for end consumers.
MB: We are scrutinising the company’s plans for investment for the future, customer service and social obligations, environment, and how the company will prepare the gas network for the future while keeping customers’ bills as low as possible. And central to our role is taking a detailed look at Wales & West Utilities stakeholder engagement approach and critically examine their plans and strategies to act on the feedback they are gathering.
TB: The group will scrutinise all aspects of the plan, except the detailed financial aspects (this is the remit of the challenge group). It’s crucial the CEG assesses the overall deliverability of the plan to be confident that the business can achieve its ED2 ambitions and performance commitments.
Q. What are your views on Ofgem’s consumer vulnerability strategy?
MF: We have not discussed this as a CEG (as it goes much wider than RIIO) but welcome Ofgem’s focus on vulnerable customers in RIIO.
TM: Consumer vulnerability is a dynamic concept that is as much about the operation of the market as it is about consumers’ individual circumstances and situations. Ofgem is working hard to create the right landscape for transmission, distribution and supply companies to be able to deliver reliable, affordable energy to all consumers. We continue to challenge National Grid on how they are making sure stakeholders understand their plans and that they tackle vulnerability issues not in isolation but with the right partners to help keep costs as efficient as possible.
MB: Ofgem’s new consumer vulnerability strategy gives a framework by which Wales & West Utilities and other energy networks can measure the support they offer to the most vulnerable in society. While Wales & West Utilities already have a good record on supporting those most in need, this overarching strategy will help us make sure that their plan for the next five years is rigorous and measurable.
TB: The Ofgem strategy recognises the varied causes of vulnerability. This is very positive as it ensures the businesses assess their services through many lenses; cost to consumers, accessibility of information, ensuring consumers feel safe when visits are required, impact of disruption and how to help consumers cope with a loss of supply. Areas that I expect to see developed further are how businesses and community groups better engage vulnerable consumers in areas such as embedded generation projects, local energy schemes and energy efficiency opportunities.
Q. How do you ensure the group properly reflects the views of communities that you represent?
MF: We aim to anchor our views in the research and engagement that SGN has done. In addition, most CEG members are well plugged in to wider debates across the industry and hence will often hear directly from customers and stakeholders about the issues they face.
TM: Our members were selected to represent consumer, environmental and public interest groups, as well as large-scale and small-scale customers, distribution networks and the Electricity System Operator. Members were appointed on the basis of their expertise and experience and with the remit to represent their constituency rather than their company.
MB: The members of the Wales & West Utilities CEG are drawn from a diverse range of backgrounds, with experience in the private, public and charitable sector. With voices from business, interest groups and academia, and of course, from both England and Wales, we’re well placed to comment on the company’s plans, while balancing the needs of the wide range of customers Wales & West Utilities serves.
TB: There are two ways the group can reflect the views of the communities. Firstly, there will be group members who are knowledgeable and respected community representatives. For us this means representatives from SSEN’s two geographic areas as well as vulnerable consumers and business consumers. It is not possible, however, to have a group that directly represents every community so, secondly, the group will meet with various community representatives and nationally recognised consumer representative bodies to understand how well they have been engaged by the business.
Q. What sort of feedback does the group offer and how do you expect this to be acted upon?
MF: Sometimes we might just be asking questions or making suggestions in response to presentations. We also have a challenge log for more material points where we are clear that SGN needs to do something. We have also provided more formal feedback on their draft plan and if SGN do not take our views on board we will make that clear in our report to Ofgem at the end of the process.
TM: The groups are meeting monthly, with many bilaterals in between where we give direct feedback and challenge to National Grid. We have an extensive challenge log which National Grid has responded to openly and enthusiastically throughout the process. If we do our job properly our questions and challenges will have led to improvements not only in the way the plan is presented and well-evidenced but also how it serves all customers and consumers better.
MB: We will submit an independent report to Ofgem alongside Wales & West Utilities final business plan when it is submitted in December 2019. During the last 12 months, we’ve been examining Wales & West Utilities draft plans, providing independent scrutiny of a range of issues.
Working closely with the company we have developed a work plan that has allowed us to dive deeply into specific areas of the plan, asking detailed questions on both the content of the plan and how consumers and stakeholders views have been taken into account during its preparation.
TB: The group will be offering feedback on specific topics within the plan and on the level of performance ambition. We expect the business to take account of this feedback as they develop and finalise the various elements of the plan. Our feedback will be recorded, as will the resulting actions from the business. At the draft phase of the business plan I expect the group to provide a report of the group’s views to Ofgem and Challenge Group, and when the business submits its final business plan this will be accompanied by a full report from the group.
Q. How important is it for customers’ views to be represented?
MB: This price control review comes at a pivotal time in the energy industry: with both gas and electricity networks having a key role to play as the UK decarbonises. In an era where trust in large institutions is at an unprecedented low, it has never been more important for businesses like energy networks to really listen and respond to the wants and needs of the consumers they serve and the communities they operate within.
TB: Ofgem has very clearly stated that ED2 plans must take account of consumers views. The supply, use and cost of energy is a nationally critical topic. Our energy network will change over the next 10 years with more flexibility and control becoming available in local distribution networks and having knowledgeable and engaged communities will support these changes being successful.
Q. What are you doing to ensure that the needs of vulnerable customers are met?
MF: As in other areas we are seeking to ensure we understand their needs from the specific research SGN have done with those customers and then challenging to ensure their plan is ambitious enough in that area (taking account of Ofgem’s guidance).
TM: Challenges to National Grid have been driven by the need to show strong evidence of robust, inclusive engagement among stakeholders. We’ve looked at areas such the Willingness to Pay research and asked Citizens Advice for its views on whether the plan properly addresses the needs of vulnerable customers beyond just those who are fuel poor. Overall, we’ve urged National Grid to show that social responsibility is hard-wired into their business culture, not just a business plan.
MB: Wales & West Utilities has been gathering the views of the most vulnerable in society. Through 60 chaperoned face to face interviews with people in vulnerable situations and partnership working with a range of organisations, alongside analysis of 1.5m pieces of customer data, the company has more insight than ever before on what those most in need want from their gas network. It’s our job now to make sure that this insight is correctly interpreted and then reflected in the plans the business puts together for the price control.
TB: The group will include respected and knowledgeable member representatives of vulnerable consumers to ensure we continually consider the needs of vulnerable consumers and the impact of services being proposed by the business. These members will also help us to reach out to communities and vulnerable consumer representative bodies to ensure we take the widest possible views into consideration when we engage with the business. We will be requiring the business to demonstrate how their proposals have been informed by vulnerable consumer engagement; this will be a core element of our business plan assessment.
Q. In what ways are customers views helping you prepare the network for the future?
MF: Customers are clear that they expect SGN to prepare for the future and that environmental matters are important to them. We used that evidence to argue to Ofgem that they should be putting more emphasis on the environment in GD2 which they have done in their sector decision.
TM: Stakeholders have said they are looking for leadership on future networks. We have challenged National Grid to explain its ambition for the future of gas and electricity and to justify any claims to be leading the industry as being in the best and most efficient interests of its stakeholders. The move to net zero carbon energy is non-negotiable. Whether it’s electric vehicles or the potential for hydrogen, our job is to make sure National Grid has made the case clearly and has the evidence from stakeholders and customers to prove it will benefit them and, ultimately, end consumers.
MB: In the process of preparing their business plan, Wales & West Utilities has already spoken to more than 25,000 people about their priorities for the future and had 20,000 face to face community conversations with people who rely on them every day. Additionally, future bill payers have had their say, adding their contributions to what needs to be a ‘future proofing’ of Wales & West Utilities decision making. As a CEG, we have to make sure that the company’s business plan takes a balanced view, and that it gives appropriate weight to the views of consumers alongside expert stakeholders on the future of energy.
TB: SSEN’s business plan must set out an understanding of the future network demands and opportunities, and how it will adapt and evolve to meet these network and service requirements. A key area of this work will be demonstrating how consumer and stakeholder views have helped shape this understanding and the planning for change. The group will be assessing the scale and success of this engagement activity and how engagement feedback has been considered in planning change.
Dealing with vulnerable customers
Alex Prentice, sector lead for utilities at Huntswood, examines how energy companies can respond to Ofgem’s expectations to care for vulnerable customers.
Continuing to improve understanding of vulnerability across the UK energy sector, Ofgem recently announced its draft Consumer Vulnerability Strategy 2025 – which identifies five core areas in which it wants to drive improvements for consumers in vulnerable circumstances. This includes:
- Improving identification of vulnerability and smart use of data
- Supporting those struggling with their bills
- Driving significant improvements in customer service for vulnerable groups
- Encouraging positive and inclusive innovation
- Working with partners to tackle issues that cut across multiple sectors.
Each of the five themes are underpinned by the regulator’s desired outcomes, which includes, under the ‘Supporting those struggling with their bills’ theme for example, wanting to see better support for consumers who are at risk of self-disconnecting, as well as a decrease in self-disconnections.
For firms looking to achieve best practice in these areas, identifying which of their customers actually classify as vulnerable can be a challenge.
This is because vulnerability can take many forms – for example, it could be to do with a person’s age, physical or mental health, financial standing (i.e. unemployment) or a life event (i.e. the period following a bereavement or divorce). Because so many factors are at play, it’s important that energy companies remember that customers may move in and out of vulnerability at various points throughout their life, requiring different forms of support at different times.
Consumers in a vulnerable situation are also more likely to face barriers when trying to access the best market rates – some may not have a bank account or access to the internet, for example.
Identifying customers at risk
Early and effective identification of vulnerability is a constant challenge for companies as customers will not always self-identify in this way. Some firms have developed effective partnerships and systems to help identify customers at risk whereas others, particularly smaller suppliers and new entrants, have struggled. For consumers to be supported appropriately, energy companies need to have the appropriate policies and procedures in place for identifying them, as well as responding to them.
Once a customer’s potential vulnerability is known, the company can tailor their interactions accordingly. Some suppliers have specially trained, extra care teams to provide additional support to consumers in vulnerable situations. For example, Western Power Distribution engaged with Dementia UK and MIND to provide its staff with empathy training, in order to improve engagement and help team members to identify the warning signs of vulnerability.
How organisations treat vulnerable people is viewed as a key yardstick of an organisation’s culture and values. It’s essential that firms ensure their dealings with people in challenging circumstances are aligned with their own ethos. As well as meeting increasing regulatory expectations, having robust policies in place means that customers feel more valued and are therefore more likely to stay loyal and become an advocate for the business amongst their family and friends.
In order to bring about a corporate culture change, training is critical. Energy companies will need to consider how they can support their frontline staff and develop training that helps employees understand and identify vulnerability; know when and how to escalate vulnerability issues; deal with difficult customer emotions; deliver difficult decisions and outcomes to customers in vulnerable circumstances; manage their own emotions after a difficult call; and ensure customers are treated fairly and know what to record from interactions. In short, well-trained, knowledgeable and empathetic staff are the difference between poor and excellent outcomes for vulnerable customers.
Dealing with vulnerability goes far beyond compliance and processes. In its consultation paper, Ofgem specifically states that it wants “energy companies to have a corporate culture that focuses their efforts to identify and support consumers in vulnerable situations.” This shows how important it is for firms to act now and ensure their approach to vulnerability is thought-through and established at every level of the business.
A cross-sector approach to vulnerability
There are clear opportunities to collaborate across markets to improve outcomes for consumers, particularly for the most vulnerable. Here Stephanie Trubshaw, customer director at network operator Electricity North West, talks about their recent priority services data share trial with the water company United Utilities.
Our research tells us that vulnerable customers can be particularly disadvantaged when they lose a vital service like power, water or gas. These customers have also told us how they are reassured by targeted support services like the Priority Services Register. Some too have shared their experience of a ‘one-stop shop’ service from local councils. This recently prompted us to explore how we could provide a single sign-up point to register for the support services available from utilities.
Last year we teamed up with United Utilities, the North West’s water and wastewater provider, for an innovative priority services data-sharing trial. During the trial, 80 per cent of customers agreed to have their data shared. Qualitative research showed high-levels of endorsement and satisfaction with this approach, and the additional support service access that resulted.
The partnership complemented existing arrangements we had with Cadent, the North West’s gas network operator, where they provided us with Priority Service Register referrals from their customers. We also have a similar agreement with Northern Gas Networks.
In October 2017 Ofgem and Ofwat (the water regulator) established the ‘Making better use of data: identifying customers in vulnerable situations’ initiative through the UK Regulators’ Network (UKRN). The expectation was that water and energy companies should explore cross-sector non-financial vulnerability data sharing and continue to work together alongside third parties to support and identify customers in vulnerable situations.
Our earlier data sharing pilot with United Utilities had pre-empted this call and was cited as a ‘great demonstration of what cross-sector utility companies can achieve by working together’ in their November 2018 UKRN follow-up report.
During the pilot, we securely shared data for 13 thousand Priority Service Register customers with United Utilities. In turn, they provided us with over five thousand records from which we were able to complete two thousand new registrations on our register, matching up our priority support to customers that need it most. We met regularly throughout the trial to discuss feedback on customer experience, challenges and how we were overcoming them and to share best practice. This approach has now become business as usual between us, and our joint lessons are being taken forward with an ambition to roll out Priority Service Register data sharing nationally between the water and energy sectors by 2020.
Trials like these are the types of positive and inclusive innovation that Ofgem is encouraging in its Consumer Vulnerability Strategy, published in June 2019. It also delivers against their ambition for more partnership working to tackle issues that cut across multiple sectors, and improve identification of vulnerability and make smart use of data. We’re now leading the cross-sector conversation on the benefits this scheme is delivering for our most vulnerable customers.
In statistics published by the Department for Business, Energy and Industrial Strategy in June 2019, the North West was identified as the area with the highest incidence of fuel poverty in England. This adds urgency to our work. Our priority is straightforward; we need to develop practical solutions for our poorest and most vulnerable customers, and we’ll continue to work with our partners to deliver these.
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