Michael Moynihan (Cork North West, Fianna Fail) | Oireachtas source

I move: "That the Bill be now read a Second Time."

I am bringing forward this Bill to protect electricity consumers who have fallen into difficulty in the payment of their bills. It will put a revised version of the current non-binding Commission for Energy Regulation guidelines on a statutory footing. These guidelines would ensure the consumer was given a reasonable opportunity to engage with his or her energy supplier and devise a payment plan with it. Our proposals would ensure suppliers assisted customers in genuine financial difficulty in making payment plans and, where appropriate, engaged with a money adviser acting on behalf of the customer. This would have to include offering the consumer a prepayment meter or budget controller, if this was possible.

Since the onset of the financial crisis in Ireland in 2008, the number of people who have been disconnected from their energy supplier has risen dramatically. The total number of electricity disconnections for 2011 was 17,794, which represents approximately 0.8% of all electricity customers. The total number of disconnections for 2012 decreased slightly to 17,439. In the first two quarters of 2013, 5,601 customers were disconnected from their energy supply. These numbers show that although the number of disconnections has eased in recent months, it is still high.

The Commission for Energy Regulation, CER, has to be complimented on its proactive approach to the problem of disconnections. It has set out a comprehensive guide for energy suppliers outlining their responsibilities in this area. Its supplier handbook sets out minimum service requirements, to which suppliers must adhere. It comprises individual codes of practice that cover all key areas of customer-supplier interaction, including billing, disconnections, marketing, vulnerable customers and pay-as-you-go meters. These rules are correctly in place to ensure that, in line with Commission for Energy Regulation's legislative duties, customers enjoy a high standard of protection in their dealings with licensed suppliers. In accordance with the code of practice on disconnections, as detailed in section 6.7 of the supplier handbook, suppliers must offer customers assistance in managing their bills and treat disconnection as a last resort.

The guidelines are good policy and the Commission for Energy Regulation has been active in seeking compliance. It has regularly conducted an audit of suppliers' adherence with these requirements. The audits look at suppliers' processes for the disconnection of domestic customers. The most recent audit in November 2013 found the following cases of non-conformance: a supplier had failed to send written details of newly agreed payment plans to customers; and a supplier had invoiced customers for 100% of the disconnection fee and subsequently reimbursed 50% of the charge having stated it would only charge 50% of the fee.

The fundamental issue is the reason the guidelines should be put on a statutory basis. In this legislation I am proposing to put the Commission for Energy Regulation guidelines on a statutory basis to ensure the highest level of protection would be afforded to those who have fallen on difficult times and are unable to pay their energy bill as it accrues. Non-statutory guidelines which rely on soft law are not as effective as statutory legislation. That much is obvious. The Bill would introduce a code of conduct for energy suppliers on a statutory footing, ensuring full compliance with the Commission for Energy Regulation guidelines. It would ensure a higher compliance rate with the commission's guidelines and give the commission more power to act in enforcing the code of practice necessary to protect those at risk of disconnection. Our proposals would guarantee that disconnection of a customer owing to non-payment would only be carried out as a last resort. Suppliers would be required by primary legislation to provide in their code that they conduct their business in such a manner that would minimise the number of customers disconnected. Suppliers would have to work with the relevant State agencies or State-sponsored bodies or recognised charities to assist household customers in arrears with a payment plan in the event that difficulties were experienced. This provision would help to keep customers connected at a time when they were finding it difficult to pay their bills.

The social impact of being cut off from an energy supply is drastic. Energy is vital in 21st century life. A study in Australia entitled, Cut Off III: The Social Impact of Utility Disconnection, commissioned by the Public Interest Advocacy Centre’s Energy and Water Consumers’ Advocacy Program, showed the experience of people in New South Wales who had been disconnected from their electricity, water or gas supply and the impact disconnection had had on their daily lives. The main finding was that difficult financial circumstances continued to be the main factor leading to disconnection. The findings suggest disconnection is often the result of long-term financial stress, rather than a one-off event, although unforeseen circumstances such as unusually high utility bills or loss of employment can also impede the payment of bills.

What is interesting about the Australian report is how one in three or 31% of respondents reported having no contact with their utility company prior to disconnection, either at their or the utility company’s instigation. Importantly, respondents who did have contact with retailers were mainly offered a payment plan or an extension of their bill.

This shows the importance of communication between the energy supplier and the consumer. It appears that where contact is made, disconnection is far less likely as a solution to payments can be found.

The creation of payment plans through communication between both sides is a positive development. However, payment plans must not be considered unaffordable by the consumer. In the Australian research, more than half of those respondents who were offered payment plans thought they were unaffordable and, indeed, were not clearly understood by some. This clearly has implications for the Irish market. Plans put forward by energy suppliers must not be unrealistic. Embarrassment continues to be the most common barrier to people seeking assistance, followed by a lack of information and knowledge when payments mount up.

In Australia, a large majority of consumers - 79% - were aware they could ask for assistance and a vast majority knew who to contact for assistance but we do not have any figures in Ireland. It is important to ensure people are aware of the options open to them when they get into difficulty in paying their energy bills.

There is no question but that the social impact of disconnection from the energy supply is drastic and dramatic. Disconnection is utterly disruptive to households, often with those households having to resort to uncomfortable and upsetting actions, including using candles or lanterns, having cold showers or baths and buying takeaway or prepared food. A range of impacts also result from disconnection, most commonly anxiety and emotional disorders, loss of food and an inability to wash. These impacts are compounded the longer the disconnection. This situation should be avoided at all costs.

This Bill provides a way forward to ensure that any disconnection only occurs when all other options are exhausted. It protects electricity consumers who have fallen into difficulty in the payment of their bills and it will strengthen the Commission for Energy Regulation's ability to ensure compliance from energy suppliers when dealing with customers. It will also ensure the customer is given a reasonable opportunity to engage with the energy supplier and devise a payment plan with him or her.

Given the rise in disconnections over the past three years and the social impact those disconnections have, I hope the Government and the Minister see some worth in this legislation.

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