The Government requires that any energy price support provided to some businesses is passed on to domestic and microbusiness consumers in certain circumstances.
On Monday 28th March 2022, Ofgem confirmed Ombudsman Services will be an Alternative Dispute Resolution provider for the new Energy Broker scheme.
Smart meters are similar to standard gas and electricity meters but have additional features and functions. Smart meters differ from traditional meters in that they offer two-way communication, which means they can wirelessly send and receive information.
Smart meters can:
let you know how much energy you are using;
automatically send meter readings to your energy supplier;
allow you to change from prepayment mode to credit mode and back again;
spot meter tampering; and
detect when power has been lost.
Under industry rules set by energy regulator Ofgem, energy suppliers are required to ‘take all reasonable steps’ to ensure that a smart meter is installed before 30 June 2025. There is currently no requirement for suppliers to install a smart meter on request, but if you would like one you can contact your supplier to discuss availability in your area.
There might be coverage issues, meaning that readings can’t be sent to your supplier. Signal loss will happen when signal has to pass through the walls of a building. It may be that prior to arriving to install a smart meter, the supplier checked the signal strength for the area and it was okay. That check only shows the signal strength from the roadside, not the signal strength within the building. It is usually only once the supplier has put the electricity meter and communications hub on the wall that the installer realises that the signal strength is poor. The industry is working on a solution to try and resolve these issues. The industry is aware of the need to have this solution in place by the 30 June 2025.
No communications network works perfectly at all times. If a customer loses smart meter functionality, as the Energy Ombudsman when looking at a complaint we will consider whether the energy supplier has taken reasonable steps to try to resolve the issue and what ‘detriment’, if any, the loss of functionality has caused the customer. We may not be able to require a supplier to correct signal issues in the short term.
The communications hub is typically situated within or near to the electricity meter. If the gas meter is too far away it may not be able to communicate with the communications hub. Often this only becomes clear once the meters have been installed. The energy industry is working on ways to try to achieve communication between the gas meter and the communications hub when there is a significant distance between them. Currently there is no simple solution and customers in this situation may have to be patient until the industry develops a solution.
An in-home display gives consumers information about the energy they are using. Its this device that allows consumers to see their ongoing consumption in pounds and pence.
Communications issues can prevent the smart meter from connecting to the in-home display. A drop in signal can result in the in-home display showing inaccurate information. For example, we have seen cases where due to signal drop, not all of the energy the customer has used is displayed on the in-home display. This causes confusion when the customer receives their bill, as typically the usage and total cost on the bill is higher than that shown on the in-home display. The bill is usually accurate as it is based on readings from the meter. While this can cause confusion, it does not necessarily mean that the billing is wrong or the meter is faulty.
Also, when there is a distance where the meter is located and the property (e.g. flats) the signal from the meter may not reach the in-home display – resulting in the customer not having real-time consumption information. The energy industry has developed a solution to this problem, but it is not yet widely available. It is not clear when this issue will be resolved but suppliers need to take all reasonable steps to ensure that the smart metering system is in place and working by 30 June 2025.
You can refuse to have a smart meter installed in your home if you do not want one. However, choosing not to have a smart meter will mean you will miss out on many benefits.
One of the benefits of smart meters is that bills are no longer based on estimated meter readings. Estimated billing can result in consumers later receiving large ‘catch-up’ bills, leaving them with a debt to repay. Smart meters send meter readings to your energy supplier, so they can produce accurate bills. Estimated bills and backbilling are common reasons for complaints to the Energy Ombudsman. We believe that smart meters will reduce the problems that we see from estimated billing.
As the energy industry moves towards a smart and flexible system, manufacturers are less likely to produce traditional meters. This means energy suppliers may not have any traditional meters in stock. While it is your right to refuse the installation of a smart meter, if your traditional meter needs to be replaced due to safety concerns there may be limited options available.
It may be possible in exceptional circumstances to install a smart meter with the smart functionality turned off, so that it works just as a traditional meter would. Contact your supplier to check what is possible.
We wouldn’t expect an energy supplier to change a smart meter to a traditional meter without good reason.
If the energy supplier does have traditional meters in stock, it would be up to the individual supplier to decide whether they will replace a smart meter with a traditional meter. The installation and removal of meters costs money. If the energy company agrees to replace a working smart meter, it is entitled to charge you the costs for doing so.
As our society has become more technologically advanced, there has been a significant increase in the number of devices that emit radio waves. These devices include laptops, Wi-Fi routers, mobile phones, computer monitors, game consoles, baby monitors, and smart meters.
There has been a lot of scientific research carried out over several decades examining the effects of exposure to radio waves on health. In light of this body of research, Public Health England, the agency responsible for protecting people from health hazards, has stated:
“The evidence to date suggests exposures to the radio waves produced by smart meters do not pose a risk to health.”
Based on the statement made by Public Health England, we as the Energy Ombudsman have no reason to believe that smart meters are a risk to health. Therefore, it is unlikely that we would require an energy supplier to replace a smart meter on health grounds unless you can provide medical evidence that the smart meter is causing harm to your health.
Energy suppliers need to liaise with the Data Communications Company (DCC) to resolve some communications issues. Energy suppliers have experienced long delays waiting for the DCC to resolve queries and this can impact on the time taken to resolve consumer complaints.
Ordinarily, when we uphold a complaint we ask the energy supplier to put things right for the customer within 28 days. Where an energy supplier is waiting for action from the DCC this may not be possible, but we would expect the energy supplier to keep you updated.
First and second-generation smart meters are similar in that they record how much energy a consumer uses and allow two-way communication with the energy supplier. One of the key differences is the cross-compatibility of second-generation meters, which comes down to the communications network they use. Cross-compatibility means a smart meter will keep its smart functions across all energy suppliers, so if you switch supplier the smart meter will continue to work in the same way.
A national communications network has been purpose built for smart meters and is managed by the Data and Communications Company (DCC). This national network was not ready when energy suppliers started installing smart meters. In order for consumers to have the benefits of smart meters, energy suppliers used third-party communications networks. All first-generation smart meters use a third-party communications network to send metering information to the energy supplier. Second-generation smart meters use the purpose-built national network.
With first-generation smart meters, it is possible that consumers will lose smart functionality when transferring between suppliers. But this problem will be resolved in the future as a technical upgrade will allow first generation smart meters to connect to the national network.
Economy 7 meters record day and night consumption separately. Consumers will pay a cheaper rate for night-time consumption and a higher rate for day-time consumption.
In general, Economy 7 Smart Meters are available to consumers. But some Economy 7 meters are linked to heating systems, with storage radiators or boilers only able to charge overnight. The meters that support such a set up are known as 5-terminal Economy 7 meters.
Energy suppliers should now be replacing traditional meters with second-generation smart meters. But no manufacturer is currently producing second-generation 5-terminal Economy 7 meters. The industry is working on a solution to this but lack of availability may mean consumers with 5-terminal Economy 7 meters are not able to receive a smart meter at present. As the deadline to provide a working smart meter has not passed, there is no obligation for supplies to provide 5-terminal Economy 7 meters at this time.
There is also a shortage of traditional 5-terminal Economy 7 meters. If such a meter becomes faulty, there may be a challenge for a supplier in sourcing a working meter. However, as consumers can lose their heat and/or hot water because of a fault, we consider it to the supplier’s responsibility to find a replacement meter as soon as possible.
Consumers with smart prepayment meters have had difficulty transferring to a new supplier because of a mismatch with Meter Timeswitch Codes (MTCs).
Before some suppliers will permit a transfer, they check that the records on the industry database match the way the account needs to be set up on their systems. First generation smart meters are set to credit mode on transfer, so the gaining supplier will expect the industry database to show a credit meter MTC to align with the initial set up in its system. But the industry records will show a prepayment meter MTC because the losing supplier is supplying energy through a prepayment meter.
Consumers end up stuck between the two suppliers: told by the gaining supplier that they cannot complete the transfer until the losing supplier has amended the industry database. And told by the losing supplier that they cannot update the industry database because the information recorded is accurate. Consumers do not know which company is at fault leading to complaints about both.
Suppliers have an obligation to keep accurate records. It would be wrong for the losing supplier to update the national database to claim that it was supplying a consumer through a credit meter when this was untrue. Therefore, we would not expect the losing supplier to update the national database with incorrect information to allow the transfer to take place.
It is our view that the gaining supplier should not refuse a transfer because the industry records show a prepayment MTC for a prepayment smart meter. Therefore, if a consumer is stuck between suppliers in these circumstances, our recommendation would be that the consumer complains to the gaining supplier.
We have developed some FAQs surrounding Feed in Tariff (FIT) complaints. The aim is to help you understand the type of issue that we can investigate and how we would approach these.
Am I responsible for ensuring the generation meter is recording accurately?
Yes, it’s the customer’s responsibility to ensure the generation meter (the meter which records the amount of energy generated) is recording accurately. If the customer suspects that there is a fault with the meter, they need report this to the FIT company (energy company providing FIT payments) as soon as possible. The customer will also need to arrange for the generation meter to be replaced by the company that originally installed it.
If my generation meter has a blank screen, will I receive FIT payments based on estimated readings or another meter reading, such as an inverter reading?
No. The rules around FIT payments, set by energy regulator Ofgem, clearly state that payments should not be made in the absence of accurate meter readings taken from the generation meter. The readings being used must come from the generation meter.
If there is a fault with the generation meter what date will the FIT payments stop and when will they start again?
The FIT payments will stop from the date of the last accurate meter reading. The customer will begin to receive FIT payments again from the date that a new generation meter is installed. There will be no payments made between the date of the last accurate meter reading on the old generation meter to the date the new replacement generation meter is installed.
Since the installation of FIT generation equipment at my property, my energy consumption has changed considerably. What may have caused this change in usage?
Although rare, an import supply meter (meter which records consumption) may be affected by FIT installations. For example, if an import supply meter does not have a backstop fitted (so the import supply meter register rolls back when electricity is being exported) usage will fall. If a meter is configured to treat exported electricity as imported electricity (so the exported electricity is added to the amount imported) usage will rise.
Unless a customer has offered to supply an appropriate meter themselves, the energy company must ensure the installation and maintenance of an appropriate meter. It is expected that where the energy company is notified of an issue with import supply meters, it will take necessary steps to investigate and resolve this at the earliest opportunity, treating consumers fairly and in accordance with any relevant legislation. This would include re-billing usage based on available, undisputed meter reading information.
I think I’m eligible for FIT payments, but the FIT company disagrees and says there is a dispute over the ownership of the generating equipment. What should happen?
FIT companies are responsible for establishing that a FIT applicant is the owner of the eligible installation. FIT companies are required to obtain documented evidence that shows the relationship between the owner and the eligible installation. Examples include:
A receipt or other documentation stating ownership, or the transfer of ownership from the previously stated owner (invoices may be accepted if the values are redacted).
A copy of the sale and purchase agreement transferring ownership from one party to another as part of a property sale, or equivalent documentation showing the installation has been paid for in full.
A copy of a death certificate where required
Where ownership of an existing installation is disputed, the party disputing the ownership will need to provide evidence to support this claim to the FIT company. On receiving the evidence, the FIT company will need to assess its validity against that provided during the application process. The matter can, if necessary, then be escalated to a formal ownership dispute with the FIT company. If the customer remains unhappy with the actions of the FIT company, they have the option to escalate the matter to our service.
Who is responsible for contacting the FIT company if ownership changes during the eligibility period (the period in which an installation is entitled to receive payments) for a FIT installation?
The previous owner must inform the FIT company of the change as soon as reasonably possible. The new owner will need to provide evidence of the change in ownership to the FIT licensee, so this can be recorded and assessed.
I bought a house that has PV solar panels fitted but I am not sure who owns the equipment. Who do I contact to request information regarding the ownership of the solar panels?
A FIT company can only provide details of an installation when the person requesting it has a legitimate claim over the ownership of the installation. In situations where there is no legitimate claim, e.g. there is no evidence confirming that the customer owns the PV solar panels, the FIT company cannot provide the ownership information. If the information is missing surrounding the ownership of the installation you may be able to request this from the solicitor who arranged the sale.
My husband who was listed as the FIT generator account holder has passed away, can I take over the account and continue to receive the FIT payments?
Yes, you would need to submit meter readings and provide the relevant evidence to the FIT company. Each FIT company has its own ‘transfer of ownership’ form that will need to be completed in full. Supporting evidence will also need to be provided in line with the FIT company’s request.
Who are the other accredited suppliers of the ADR scheme?
Currently the EO is the only qualifying provider of the new scheme that is due to go live 1 December 2022, however other providers may emerge in the future.
Is there a time period for enrolment, how do new TPI's entering the market enrol in an ADR?
New TPI entrants to the energy market after the go-live date of the 1st December 2022 will need to sign up to a scheme before they broker any energy supply contracts with microbusiness consumers. If you have missed the registration date of the 31st August you can still register, however there is no guarantee you will be enrolled by the 1st December.
Can a broker application be saved in draft and completed at a later date?
The application cannot be saved in draft. We recommend having the deed poll and complaint handling process completed and saved before completing the rest of the online application form. Once submitted, the broker can use the link in the application acknowledgement to check the status of the application and to upload additional documents (such as revised Complaint Handling Procedures).
We are already members of an ADR scheme. Does this cover us for the Broker Scheme?
No. Each scheme, e.g. Communications Sector, Energy, and Broker, is self-funded by the scheme members. Membership is required in each scheme applicable to the area of business the organisation is operating in.
What kind of organisations need to be a part of the ADR scheme?
Ofgem has defined an energy broker as follows: “An organisation or individual that, either on its own or through arrangements with other organisations or individuals, provides information and/or advice to a Microbusiness Consumer about the licensee’s Charges and/or other terms and conditions and whose payment or other consideration for doing so is made or processed by the licensee.” Organisations meeting this definition will be required to be members of the scheme.
Are only aggregators required to join the scheme or do sub-brokers need to join as well?
If you are an entity which meets the definition which Ofgem has set out, you need to join the broker ADR scheme.
What is the definition of a microbusiness?
A non-domestic consumer is defined as a microbusiness if they:
employ fewer than 10 employees (or their full time equivalent) and has an annual turnover or balance sheet no greater than €2 million
uses no more than 100,000 kWh of electricity per year
uses no more than 293,000 kWh of gas per year.
Can a non-microbusiness raise a dispute via the ADR Scheme?
The new ADR scheme only relates to complaints raised by microbusinesses.
Are there plans for this scheme to be extended into other markets, such as the domestic or large business markets?
The Microbusiness Strategic Review was in consideration of microbusiness energy consumers. Please refer to Ofgem’s 2022/23 Forward Work Programme for further detail on any domestic and non-domestic work and BEIS’s TPI call for evidence for what may be future Government policy in this area.
What TPI activities fall under the legislation?
‘Relevant Third Party Activities’ means any activity undertaken by a Third Party in respect of a Micro Business Supply Contract including (but without prejudice to the generality of the foregoing): (a) any written or oral communications relating to the supply of electricity to a Micro Business Consumer including: (i) any pre-sales communications; (ii) any communications regarding Billing or Contractual Information; and (iii)any matters falling within the scope of standard conditions 7A, 14, 14A and 21B (insofar as they relate to a Micro Business Consumer); and (b) any processing of information relating to the supply of electricity to a Micro Business Consumer, together with any other Relevant Activities as the Authority may direct from time to time, following consultation.
Do outsourced call or sales centres classify as TPI's and need to come under the new regulations?
An outsourced sales function would fall inside of the Third Party and Third Party Costs definition and would therefore need to declare their costs on the Principal Terms and register on the ADR scheme if they intend to continue with relevant Third Party activities in respect of a microbusiness supply contract.
Are you able to investigate complaints about sales which took place before 1st December 2022?
Our ToR say that we shall not accept a complaint about something which the consumer was aware of before the scheme goes live unless the energy broker agrees to allow us to investigate. So, there may be occasions when we investigate the sale of a contract that occurred before December 2022, if the consumer only became aware of a problem after that date, but we would take the passage of time into consideration when considering what evidence is available.
What happens if a microbusiness wants to raise a complaint about a TPI which isn't registered on the EO Broker ADR scheme?
We would be unable to register the complaint under the broker ADR scheme as the broker will not be a member of this scheme. We would work with the broker to ensure they are registered with the scheme.
If you decide a contract has been miss-sold by a broker, what action would you require to put things right?
The objective is to put the microbusiness back into the position they would have been in had the issue not occurred. This will be decided based on the circumstances of each complaint.
Can a microbusiness nominate a third party (which could be a claims agency) to make the complaint on their behalf?
EO requires a signed Letter of Authority (LOA) from the account holder indicating that a third party can act on their behalf. We can also accept verbal authority from the account holder once data protection has been checked and confirmed. If the claim agency has appropriate authority from the microbusiness to represent them in their complaint, We would log them as a third party and interact with them as the complaint progresses through our process.
Can a broker elect a third party to respond to a complaint on their behalf?
A broker can decide how they wish to handle complaints and may want to outsource. However, this should not affect the microbusiness' right to an ADR scheme. A broker either has eight weeks or can issue a deadlock letter before the complaint can be escalated to the ADR scheme.
Why is there both a subscription fee and separate case fees? What are the fees used for?
The subscription fee covers the fixed charge of setting up and administering the scheme, case fees cover the cost of handling each case individually.
Is there a risk of double compensation?
One by the energy supplier and another by the broker if a microbusiness raises a complaint in both schemes.
A microbusiness has the right to raise a complaint against either broker or supplier or both. We won't hold a supplier responsible for the actions of a broker and vice versa.
Why does a small company (or sole trader) pay the same as a large broker?
Every energy broker organisation – large, medium, small, or sole practitioner – will pay the same membership subscription fee in year one. We appreciate that this means sole practitioners will pay the same membership subscription fees as larger companies, but without knowing the breakdown of the broker industry, it’s not initially possible to tier the membership subscription cost. As we establish the Broker ADR scheme, we’ll review our costings to ensure that fees are fair. It’s possible that, with more information about the scheme’s membership, a tiered membership could apply to subscription fees based on organisational size.
Will EO consider commission complaints?
The requirement around disclosing third party costs falls on suppliers as part of the new licence condition, although in practice it will often be the broker disclosing third party costs prior to a contract being agreed. If we receive complaints which are linked to third party costs and call into question the actions of a broker we would consider whether the microbusiness had been treated fairly.
What is the expectation around the way commission is disclosed?
Information on brokerage costs must be provided to microbusinesses via the Principal Terms, for all contracts, and this information must be presented as a total cost in pounds/pence covering the duration of the contract. You are free to also present the costs as price per kWh.
Do suppliers’ internal sales teams also have to disclose commission fees?
Brokers perform a different service to a supplier and offer a range of services to the microbusiness for which they are paying. A microbusiness would expect that a supplier’s charges would be a total of all their costs, including that of any sales staff. However it’s not always clear to a microbusiness that the prices they are quoted include broker commissions, and what portion of the prices they are quoted goes to the broker, and what are for the supply of energy. Hence the need to clarify the split of payments in the principal terms.
I get paid directly rather than via commissions, do I need to declare my commissions and register for the ADR scheme?
Third Party costs are defined as “any fees, commission or other consideration including a benefit of any kind, processed by the licensee and paid or made or due to be paid or made to the Third Party in respect of a Micro Business Consumer Contract, that are passed on to the Micro Business Consumer.” If a microbusiness consumer is paying, or due to pay, any Third Party costs in respect of the energy supply contract then these costs fall under the new rules and you would also need to register for the ADR scheme.
What does EO consider a fair rate of commission?
The requirement around disclosing third party costs falls on suppliers as part of the new licence condition. The ADR scheme does not regulate broker behaviour and we are unable to comment on what a fair rate is. If we receive complaints which are linked to third party costs and call into question the actions of a broker we would consider whether the microbusiness had been treated fairly.
What kind of information will you be looking for as a backup for a complaint raised by a microbusiness? What would you expect to be included in a case file?
This will depend on the nature of the complaint. As a guide, we will be looking to see any written or verbal communications from both parties, contract terms and conditions, any testimony or other documentation you feel is relevant to the complaint.
What happens if the supplier is slow to respond to the broker's questions and this results in a complaint about the broker?
We would encourage brokers to work with suppliers or aggregators to establish realistic time frames for providing information. It’s in a supplier’s interest to provide information as required as this may prevent a complaint from the consumer about the supplier. If a broker receives a complaint in relation to a supplier issue, they should signpost the microbusiness to the supplier. The outcome of a complaint and associated remedies (if any) will be communicated to the broker to implement.
We don’t work with call recordings and all our sales are documented electronically. What can we provide as evidence?
Any sales options are covered under the scheme and either party should provide evidence in support of their position. If the dispute is surrounding what was said during a telephone call and there is no call recording, we would need to make a conclusion on the balance of probability.
What is the process if the broker disagrees with the decision of EO? Can the broker appeal the decision?
When we publish a decision, if the broker or consumer can demonstrate a significant error or there’s new evidence that wasn’t previously available that makes a material difference to the decision, they have 14 days to appeal. We then have up to 14 days to issue our final decision for consideration by the microbusiness.
Will you be publicising the outcomes/sharing data of the investigations of Broker complaints?
As an ombudsman service we want to share data and insight about the issues people are facing. We think very carefully about the data shared to ensure its accurate and helpful. We will not share data about individual organisations without further consultation.
Do you have any statistics on the percentage of complaints upheld?
Yes. We have statistics about outcomes of complaints for the current energy scheme. These are published on our consumer website: https://www.ombudsman-services.org/about-us/annual-reports/complaints-data/energy-complaints-data