17th September 2020

How we reach out to customers who don’t pay

Shoaib Nasir, Customer Credit Manager

Debt collection team phone banner

Paying for the energy you use is a responsibility. We know that sometimes, life throws unexpected things at you that can make paying difficult, and when this happens, we’re here to help. We’ve put lots of thought into how to support customers who struggle to pay – especially given what’s happened these past few months – so if you ever need support or advice, all you need to do is ask.

There is a tiny percentage of customers who don’t pay their bills. A few customers switch to us, and then never ever get in contact with us again or pay us a penny, despite using energy as normal. The biggest problem with this? We have to build customer debt into our business costs – which means when people don’t pay, other customers have to ‘pick up the tab’.

I’m going to take you through the whole process we go through to reach the small group of customers who don’t pay for what they use – and let you know the reasoning behind it, too.

Most of what you pay for your energy bill doesn’t go directly to your energy company (us).

A visual breakdown showing the different costs involved in an energy tariff – 36.2% wholesale energy, 27.8% transmission, 15.8% environmental and social obligations, 8% 3rd party metering,  7.5% staff, technology and business costs, 4.8% VAT

A big chunk of your bill goes to pay for energy, wholesale, from the people who generate it (even suppliers who generate their own energy have to account for this in pricing). Then there’s a wedge which goes to pay the companies who deliver the energy to you through pipes, wires and your meter. Then we have to pay various government obligations.

Another big cost is something energy companies call ‘bad debt’ – i.e. assuming that some of their customers will underpay, or even never pay their bills. This estimated cost is added up, and added to the costs that we have to factor in as a business. All energy companies do this, and it can run into hundreds of millions of pounds a year for the biggest ones.

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Energy companies work on incredibly tight margins. Our technology and team means we run an incredibly efficient business at Octopus, which means we can keep our prices as low as possible for customers, whilst still covering all these costs.

But we don’t think it’s fair that some customers have to ‘pick up the tab’ for other people’s ‘bad debt’, which is why we have an extensive process in place to reach out to customers who aren’t paying, to minimise our bad debt as much as possible. It’s our responsibility to do this. Not only does it bring tariff prices down, but it makes our business run better, so we can keep taking care of customers and our team in the best way possible.

If you’re struggling to pay, there are many ways we can help

Don’t get us wrong, many people have trouble paying their bills, especially in the current climate. And as we said above, we’re here to help.

A simple form allowing you to select the kind of support you need when impacted financially by Covid-19

A few months ago as the pandemic began causing real hardship for many people, we set up a simple way of contacting us to explain any Covid-19 related difficulties (cut in income, furlough or redundancy) so that we could work with you to help manage your bills.

This support is still available for customers – just get in touch with our team and you'll be offered a link to fill in a few details so we can help you.

If ever you're struggling to pay, no matter your circumstances, our friendly team are also always here, on the phone or on email, to help you manage your bills –we've written about how we can help when you're struggling to pay here.

As long as you talk to us, we’ll never disconnect your power.

But we have a duty to all of our customers to make sure that we ask everyone to pay their bills. And those people who decide that they don’t have to pay, we carefully contact to make sure other customers don’t end up having to pick up the tab.

So, how do we do our best to make sure customers are paying for their energy?

When you switch to us, we ask you to set up a direct debit (or arrange another way to pay, like via bank transfer or online card payment when you receive a bill).

If we don’t hear from you for a long time after that, and you’re beginning to fall behind on your payments, we’ll send regular contacts to you in a few different ways.

  1. Over a period of months, we’ll send emails, SMS messages, and letters letting you know you’re behind on your payments, explaining how we can help, and asking you to get in touch
  2. If we don’t get any response, we’ll try phoning up a few times over a period of weeks alongside more written communications, again, stressing that we are here to help and to get in touch
  3. We make sure to outline some of the options we might need to take if we still don’t hear back
  4. After several months of trying to reach out with no response, we may take further action, like passing your details onto a carefully selected debt collection partner, who’ll work on getting in touch to recover payments on our behalf. They might do this by sending more written communications, or by sending someone round to discuss repayment options. In some very rare cases, we might think about installing a prepayment meter at your property to help you manage your energy better.

At any point in this process, you can contact our team to discuss your circumstances, seek advice on saving energy or government aid that might be available, and organise a payment plan that works for you.

Coming to your home with one of our carefully selected partners to ask you to pay is very much a last resort – but we do it in cases where customers often owe us thousands of pounds, and have continuously not paid, and have been contacted by email, letter, phone call and text many times.

We had one customer who had never paid any of his bills. He told us he was living in poverty, and stopped communicating. One of our Directors went to his house, and phoned him, it rang internationally - he was on holiday in Mauritius.

The majority of people pay their bills, and our customers are amazing, even in these tough times people worried about the security of their jobs, and under incredible pressure, will talk to us, ask for advice, and pay what they can. That makes it even more important that we can help those who need it by making sure everyone pays what they can.

So please, if you are struggling with your bills – get in touch with us. But if people wilfully decide that they don’t need to pay, if they avoid the responsibilities that we all have, we can’t just let it go or other customers - those who abide by the rules - end up paying instead.

image of Shoaib Nasir

Shoaib Nasir

Customer Credit Manager

Hey I'm Constantine, welcome to Octopus Energy!

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