National Energy Action (NEA) response to the consultation on Refreshing the Consumer Vulnerability Strategy

Background to our response

The current Consumer Vulnerability Strategy (CVS) was created in 2019, prior to the energy price crisis which began in 2021. Since the beginning of the crisis, energy prices have increased significantly and are set to remain at elevated levels for the rest of this decade, according to forecasts. When the current strategy was introduced, the energy price cap was set at £1,179. Currently, the price cap is £1,717. Accounting for changes to typical domestic consumption values, this means that the typical household pays £500 a year more than in 2019, despite using less electricity and less gas.

The consequences of energy unaffordability are clear. Debt has risen from £1.3bn to £3.7 billion from the introduction of the previous CVS until now. For all consumers, elevated debt levels result in additional costs on tariffs. National Energy Action estimates that on aggregate, consumers are paying around £1.5bn a year to service the costs of debt. National Energy Action’s own polling also suggests that households are turning to rationing, as well as debt, to cope with high prices. We recently found that almost half of adults are likely to ration their energy this winter.

The refresh to Ofgem’s CVS therefore comes at a time where the pressures faced by consumers are much greater than in 2019. National Energy Action hopes that the update to this strategy will result in alleviation of pressure on the most vulnerable consumers. To do this, the strategy will need to influence how suppliers, networks and Ofgem approach the identification and treatment of vulnerable consumers over the coming years.