What the energy credit bubble tells us about trust in the sector

News this week that around twelve million customers have overpaid energy firms by £1.5 billion comes as little surprise for UK energy consumers who for years have paid upfront for estimated bills.

Comparison site uSwitch has found that credit built up from overestimated gas and electricity direct debits – a result of the mild winter and less energy usage.

Not only have energy companies overcharged but according to the research 55% of customers will have to chase the firms themselves in order for the credit to be repaid.

Given that most energy consumers devote scant attention to their energy bills in the first place, it is safe to assume that much of the credit will languish with the energy companies for many months if not years.

According to the research featured in today’s Mail and Sun, nearly half of the 12 million customers are owed an average of £126. One in ten is owed as much as £200, though the energy firms dispute these figures.

On top of this, over the past year the consumer has seen higher energy bills kick in due to rising wholesale costs to the extent that UK household energy debt surged by 24% by late 2018 over the previous year.

You wouldn’t see it elsewhere

Is there another sector where companies could get away with using the ‘culture of credit’ to manipulate consumers in quite the same manner? After all, you’d be pretty miffed if you went to the supermarket every week and saw that your grocery bill was regularly 25% higher than it should be.

If that was the case, you’d start shopping elsewhere, possibly tweet Martin Lewis, and ask for the cash to be refunded immediately.

Despite a headline or two, the media’s muted response to the survey findings speaks volumes. This could be because media outlets have become blasé towards survey findings but it’s more likely a result of the fact that we expect so little of energy companies, many of which are disappearing from the market. There is no longer currency in the outrage over energy companies.

What next?

It’s probable that this current story will run for a day or two with a few of the companies mentioned in the research scrambling their press teams to mitigate the negative publicity.

But it is self-evident that this issue runs beyond communications. Energy firms need to get back to putting the customer first.

What would be welcome is to see the energy firms come together to address the overcharging issue by taking measures to prevent it in the first place.

If this isn’t immediately possible and I suspect it might not be due to shareholder pressure, energy companies can at least take the issue seriously by communicating to the public that it is holding onto their credit and that there is a mechanism through which they can be repaid.

A simple campaign on different channels including social media (Facebook / Twitter) that informs the general public about the credit and how they can get it back isn’t an ideal solution but at the very least shows that they care about the financial pressures faced by UK energy consumers in uncertain political times.

What is truly frustrating is that the level of the overcharging by energy companies is brought to light by uSwitch and not the energy companies themselves.

Madano advises clients across the energy and industry sector space – if you’re interested in learning more please drop me or my colleagues a line. You can also follow Madano on Twitter.